State Budget Update (HB49)

Chris Schmenk.
Bricker & Eckler.

HB 49 BIENNIAL BUDGET  (Smith, R.)  On Tuesday, June 20, the Senate Finance Committee released an updated Budget Bill incorporating all amendments (Amended Substitute House Bill 49).  The bill is now headed to the full Senate floor for a vote Wednesday June 21.   A Conference Committee will then work to reconcile the differences between the House and Senate version from about June 22 to June 25, 2017, releasing a Conference Committee Report on or about Monday, June 26, 2017. Governor Kasich will then have several days to line-item sections of H.B. 49. He must sign the budget by midnight on Friday, June 30, 2017.

The Senate Substitute Bill apparently reduces overall spending by $1.055 billion from the as-introduced version. The Senate built on prior reductions made by the House, while significantly changing numerous policy provisions.  One of the most controversial provisions would cut off new enrollment in the Medicaid expansion program after July 1, 2018.

The committee accepted a few separate amendments before the vote, including one that would clarify the wind setback changes in the omnibus amendment to ensure no property owner could waive property rights for neighbors.  Another amendment would change the state’s payment to counties and transit authorities for funding lost by the Medicaid managed care sales tax replacement from one payment in November 2017 to half in November 2017 and half in January 2018.  A third amendment specifies that wages and guaranteed payments paid by a professional employer organization to an investor in a pass-through entity that is a client employer of the PEO may be considered business income, and therefore eligible for the business income tax deduction and 3% tax rate.

Although the full text of the revised bill is still under review, summaries released by the Senate Finance Committee indicate that new provisions were added that:

• Reduce the wind farm setback requirements from the current one and one-tenth times the total height of the turbine to two-tenths the total height as measured from the turbine’s base to the tip of its highest blade. It also requires the setback to be at least 1,225 feet in horizontal distance from the tip of the nearest blade at 90 degrees to the exterior of the nearest habitable residential structure rather than the current requirement which is 1,125 feet from the property line of the nearest residence. A last-minute amendment clarifies that an owner can only waive the setback law on their own property.
• Specify that power from small hydroelectric facilities is a renewable energy source.
• Require appeals of a Board of Tax Appeals decision to be filed at the appellate level instead of directly to the Supreme Court.
  Establish a procedure for the legislature to review administrative agencies for efficiency.
• Clarify language on the centralized collection of business income taxes.
• Remove language dealing with property tax complaints and appeals, and
• Exempt people who suffer from mental illness from work requirements created in the Medicaid program.
  Provisions relating to the formation of an Economic Development Regional Alliance Study Committee, to include an OEDA representative, were not included in the omnibus amendment to the Senate sub bill.  This issue will proceed in SB 97, and bill sponsors plan to include the OEDA amendment.

Impacts on economic development provisions that had been included in the “as passed by the House” version of the bill are still under review.  It has been confirmed that the Substitute bill does include changes to the Enterprise Zone Program sought by OEDA (Elimination of the October 15, 2017 sunset date for the Enterprise Zone Program).   It appears that a provision that would have allowed local workforce development boards to conduct public meetings via teleconference was not included in the bill.  It also appears that provisions supported by port authorities that would have required that before a foreign entity provides financing for an eligible project, it must notify the local port authority or county, were not included.

Further updates will be provided as the full sub-bill is reviewed.