COLUMBUS: Columbus, Akron and other municipalities that charge outside customers more for water and sewer services could lose state funding under a bill proposed in the Ohio House.

The bill, sponsored by Rep. Mike Duffey, R-Worthington, and in the House Finance Committee, is similar to an amendment he proposed and lawmakers adopted in the state budget last summer. The biggest difference: It would affect any city that charges different rates inside and outside its boundaries, not just Columbus.

Gov. John Kasich vetoed that amendment amid protests by Columbus, which said forcing the city to equalize rates would threaten regional economic development, including major projects that already were being considered.

Under the bill, a municipality that charges higher water and sewer rates to property outside its limits would face a 20 percent reduction in local government funding and would be ineligible for state assistance for water and sewer development.

Municipalities could lose their local government funding from the state altogether if they require annexation of outside territory or require direct payments unrelated to service costs as a condition of providing water and sewer services.

Municipalities could charge higher rates to outside customers if they show that those rates are linked to “reasonable service costs,” Duffey said.

“If it costs more to serve somebody outside, you can include that in your rate charge. As long as you apply that equally and not in a discriminatory fashion, you wouldn’t run afoul,” he said.

Lawmakers likely will not act on the bill until at least September, when they return from summer recess.

Among the opponents to the legislation is the city of Akron, which provides water to several communities.

Mayor Dan Horrigan sent a letter Tuesday to members of the House Finance Committee urging them to oppose the bill. He said it would “have severe financial ramifications to Akron’s economic development.”

Horrigan noted that the city has made a significant investment in its water system to benefit its residents and businesses and has permitted other communities to share in this asset through water agreements, coupled with Joint Economic Development District (JEDD) agreements. He said Akron charges higher rates to other communities to keep rates lower for Akron residents, invest the money back into the water system and allow the city to remain competitive with other communities.

“Passage of this legislation will deter Akron and many other munipalities from extending water throughout Ohio, benefiting all communities,” Horrigan said.

Akron provides water to Fairlawn and Mogadore; portions of Hudson and Cuyahoga Falls; the JEDDs in Bath, Copley, Coventry and Springfield townships; and individual customers in Boston and Twinsburg townships. The city also provides water to Stow, Summit County and Tallmadge on a wholesale (water meter) basis.

If the bill moves forward, Akron spokeswoman Ellen Lander Nischt said city leaders may travel to Columbus to testify against it. She said local government funds, which have been cut in recent years, are used by Akron to fund public safety.

Columbus is concerned about how the term “reasonable service costs would be interpreted,” Richard Westerfield, the city’s water division administrator, said during a hearing Tuesday.

“The concerns remain [about] the impact this legislation could have on the city’s ability to partner with communities for future economic growth,” said Councilman Michael Stinziano, who oversees the Columbus City Council’s public utilities committee.

Columbus manages the water and sewer systems for much of Franklin County, with most outside communities and the county buying their water from the city. The city has three water plants and about 2,500 miles of waterlines to serve 22 communities.