Tracked House Bills – July 2019
Bricker & Eckler LLP
Governor’s Budget Bill: After missing the statutory deadline of June 30 and enacting a 17 day budget extension for the first time in many years, the General Assembly finally approved the state’s operating budget for the 2020-2021 Biennium (HB 166) on July 17. The bill was then sent to Governor DeWine and on July 18 after issuing 25 line-item vetoes, the Governor signed the bill into law.
The Governor’s veto message is available at: https://content.govdelivery.com/attachments/OHOOD/2019/07/18/file_attachments/1250127/Veto%20Message%20Signed%20%287.18.19%29.pdf
OEDA worked with a local government coalition to obtain a line-item veto of the provisions of HB 149. The program would have frozen property taxes on undeveloped land in residential developments that have been subdivided and slated for development until the land was either sold or housing construction began. OEDA’s concerns were based on the fact that the exemptions were automatic, and the failure to include an “opt-in” provision stripped local economic development professionals and governments of the ability to assess the need. OEDA was also concerned that the resulting decrease in communities’ property tax revenues could have negatively impacted their abilities to fund infrastructure, transportation, schools, libraries, and other projects necessary to support existing businesses and attract new ones. The OEDA is grateful to Governor DeWine for his help on this matter.
Other economic development provisions in the Budget Bill include:
- Rural Industrial Park Loan Fund (provisions of HB 98 as summarized below): The program is available to counties with a population less than 125,000 that meet certain economic distress criteria.
- Opportunity Zone Tax Credits (provisions of SB 8 below with some revisions): The variations from the Governor’s original bill include:
- Credits may be transferred;
- 100% amounts invested into an opportunity fund must then be invested in an opportunity zone to be eligible for the credit;
- Excess credits may be carried forward for up to 5 years, and
- Taxable trusts, estates and pass-through entities are eligible for the credit.
- TIF Term Extension: The bill provides that project or parcel TIFs may be extended by the political subdivision that enacted them for up to an additional 30 years if they: 1. had service payments that exceeded $1.5 million in the calendar year preceding the adoption of the extension; 2. had service payments that did not exceed $1.5 million in prior years, but this condition only applies to extensions adopted on or after January 1, 2021, and 3. provide in the extension for compensation to the local school district in which the parcel(s) is located equal to the amount of taxes that would otherwise have been paid if the extension had not been granted;
- Motion Picture Tax Credit: The program is included in the bill as modified by the provisions of Senate Bill 37 (see below);
- Modification of Job Retention Tax Credit program under ORC 122.171: This program was promoted by manufacturers in the state and will expand the eligibility of the JRTC program based on new capital investment rather than payroll or employee count, per the provisions of SB 153 (see below);
- TechCred Program: This is a new program among the Ohio Department of Higher Education, the Development Services Agency, and the Governor’s Office of Workforce Transformation. It will reimburse employers and employees for technical training courses to equip employees with the skills needed for employment and advancement. $15 million was appropriated for each year of the biennium for this part of the program. The Budget Bill also provided funding of $2.5 million per year to assist the formation and operation of regional industry sector partnerships which collectively work to address local workforce needs.
- Small Business Pass-through Entity Income Tax Deduction: This deduction was maintained for the first $250,000 of small-business income; provided, however, this will no longer be available to attorneys and lobbyists, and
- Tax Cut: A 4% across-the-board income tax cut was provided for Ohioans.
Bills Being Tracked: Changes from last month are noted below in bold.
HB 2 CREDENTIAL PROGRAMS (Cross, J., Lepore-Hagen, M.) This legislation introduced May 13 would provide $35 million in state funding in FY 2020 and FY 2021 for its programs, with funding allocated as follows:
- TechCred Program — $15 million a year to reimburse employers and individuals for training to receive a micro-credential, at the rate of $500-$2000 per credential;
- Industry Sector Partnerships Program — $2.5 million a year to support regional partnerships across the state, including a grant program to develop the partnerships and promote their mission.
The Bill was assigned to the House Economic & Workforce Development where several hearings occurred. An amendment was submitted June 5 that moved the TechCred application and due date to better align with education standards, better defined regional sector partnerships, removed audit authority from the bill, included race and gender demographic information gathering requirements, and barred employers with recent minimum wage violations. The revised bill passed in the House June 12 and was referred to the Senate Finance Committee. It is not likely to move forward since funding for a TechCred program was included in the state Budget Bill.
HB 4 INDUSTRY CREDENTIALS (Richardson, T., Robinson, P.) This bill, introduced May 16 would permit the Governor’s Office of Workforce Transformation to develop industry-recognized credentials and certificate programs after being requested to do so by Ohio employers. The proposed credential or program must be aligned with the knowledge and skills necessary to meet Ohio’s workforce needs, and the Office of Workforce Transformation must consult with the Department of Education, the Chancellor of Higher Education, and other stakeholders while developing such credentials. The bill passed in the House June 6 and has been assigned to the Senate Transportation, Commerce & Workforce Committee.
HB 6 ENERGY (Callender, J., Wilkin, S.) Introduced April 12, this bill would create the Ohio Clean Air Program, to facilitate and encourage electricity production and use from clean air resources, to facilitate investment to reduce the emissions from other generating technologies that can be readily dispatched to satisfy demand in real time, and proactively engage the buying power of consumers in this state for the purpose of improving air quality in this state. The bill would support FirstEnergy Solutions’ nuclear plants by creating a surcharge for all Ohio customers to fund the program to be overseen by the Ohio Air Quality Development Authority (“OAQDA”). The Bill passed in the House May 29. After numerous hearings, the Senate Energy and Public Utilities Committee adopted a substitute bill July 17 and the bill was then passed by the full Senate. As drafted, the Substitute Bill will provide FirstEnergy Solutions’ nuclear plants up to $150 million a year and eligible solar projects $20 million. The program would sunset December 31, 2026 and be overseen by the Ohio Air Quality Development Authority with monthly customers charges capped at $85 cents for residential and $2,400 for large users. A late floor amendment was accepted that will delay the bill’s subsidy collections and payments to power plants by one year (until 2021). The Public Utilities Commission of Ohio would establish costs for other customers to reach the $170 million total. The bill also lowers the state’s renewable energy standards to 8.5% by 2027, enables the PUCO to end energy efficiency standards if the 17.5% target has been reached, and enables extension of cost recovery for the Ohio Valley Electric Corp.’s gas-fired plants. The Substitute Bill came before the House the evening of July 17 but lacked enough votes to pass, so the House will meet again August 1 to consider the measure.
HB 7 WATER FUND (Ghanbari, H., Patterson, J.) This bill, introduced May 13, would create the H2Ohio Trust Fund for the protection and preservation of Ohio’s water quality, create the H2Ohio Advisory Council to disburse money from the Fund for water quality programs, and create the H2Ohio Endowment Board to make recommendations to the Treasurer of State regarding the issuance of securities to pay for costs related to the purposes of the Fund. The bill authorizes the H2Ohio Advisory Council to disburse up to $50 million per fiscal year by issuing loans and awarding grants to applicants that apply for money to address water quality issues in Ohio. If Fund money is appropriated specifically to the Department of Natural Resources, Department of Agriculture, or the Environmental Protection Agency, it requires the Directors of those state agencies to each prepare an annual plan detailing how the money will be spent. It also requires the Council to review and approve each agency’s annual plan before the agency may spend the appropriated money. The bill was referred to the House Finance Committee where a substitute bill was approved on June 18. The revised bill passed in the House June 20 and would increase the cap on the annual disbursement of funds from $50 million to $100 million and eliminate the creation of the H2Ohio Advisory Council, instead vesting authority over the disbursements in the Ohio Water Development Authority. It also included a provision allowing the Department of Natural Resources to establish a pilot program to study water withdrawals by using streamflow monitoring in Eastern Ohio and another provision which enables the Controlling Board to approve or deny an amount recommended by the director of the Office of Budget Management for year-end unspent balances. It has been referred to the Senate Finance Committee.
HB 13 BROADBAND (Carfagna, R., O’Brian, M.) Introduced May 16, this bill is based on a proposal that passed the House last year (HB 281, 132nd GA) and would require the Development Services Agency (DSA) to establish the Residential Broadband Expansion (RBE) Program to provide grants to municipal corporations and townships (project sponsors) to help fund projects that provide broadband to any residential area within their boundaries that is without broadband (eligible area). It excludes as an eligible area under the RBE Program, any area that has received, or is designated to receive, any other state or federally funded grants that are designed to encourage broadband deployment. The program would allow the Director of DSA to accept applications from project sponsors each fiscal year, review each application within 60 days, and fund applications on a first-come, first-served basis until all program funds for the fiscal year are awarded. Program funds, up to $2 Million per biennium, would come from currently-budgeted DSA funds. It has been referred to the House Finance Committee where a third hearing occurred June 19.
HB 34 MINIMUM WAGE (Kelly, B.) This bill would increase the state minimum wage and allow municipalities, townships and counties to establish higher minimum wage requirements. The bill has been referred to the House Commerce & Labor Committee.
HB 48 ROAD IMPROVEMENT FUND (Greenspan, D.) This measure would provide for a new Local Government Road Improvement Fund for local governments to fund road improvements. It has been referred to the Finance Committee.
HB 93 PUBLIC TRANSPORTATION (Skindell, M., Upchurch, T.) Introduced February 21, in addition to any appropriations made for the 2020-2021 biennium, this bill would make additional appropriations related to public transportation in the amount of $100 million for public transportation and $50 million for the highway operating fund in both 2020 and 2021. The bill has been referred to the House Finance Committee.
HB 98 LOAN FUND (Jones, D., Cera, J.) Similar to HB 695 introduced in the last General Assembly, this bill would reinstate the rural industrial park loan program under Ohio Development Services Agency, as detailed in ORC 122.23-.25, with an appropriation of $25 million. The program would assist eligible applicants in financing the development and improvement of industrial parks by providing financial assistance in the form of loans and loan guarantees for land acquisition; constructing, reconstructing, rehabilitating, remodeling, renovating, enlarging, or improving industrial park buildings; and infrastructure improvements. The bill has been assigned to the House Economic & Workforce Development where it had its first hearing March 27. As noted above, the provisions of this bill were included in the signed Budget Bill (HB 166).
HB 116 TRANSPORTATION PLANNING (Brinkman, T.) Introduced March 4, in addition to any appropriations made for the 2020-2021 biennium, this bill would make additional appropriations related to transportation planning and research in the amount of $4.5 million for FY 2020 which shall be used to (1) study the Cincinnati Eastern Bypass Project, (2) review work done previously by the Kentucky Transportation Cabinet relative to the Brent Spence Bridge Project, and (3) make recommendations on moving forward with both projects cooperatively. The bill has been referred to the House Finance Committee.
HB 149 TAX EXEMPTION (Merrin, D.) Introduced March 19 and identical to HB 371 from the last General Assembly, this bill would amend ORC 5709.51 among other code sections and temporarily exempt from property tax the increased value of land subdivided for residential development until construction commences or the land is sold. The bill would benchmark an “ascribed taxable value” of the newly subdivided parcel, and any increase in taxable value would be exempt from taxation until either (1) Construction of a residential building on that property commences, or (2) Title to the property is transferred for consideration by a qualifying owner to another person. The construction of streets, sidewalks, curbs, or driveways or the installation of water, sewer, or other utility lines on a subdivided parcel would not cause construction of a residential building to commence for purposes of the bill, and the value of those improvements would thus automatically be exempted from taxation until construction of a residence begins or the property is sold. The bill is now being called the “Affordable Homebuilding and Housing Act” and has been referred to the House Economic and Workforce Development Committee, when two hearings have occurred. The bill appears to be generating concerns from associations representing local entities, including the Mid-Ohio Regional Planning Commission, the Ohio Library Council, the Ohio Association of School Board Officials and the County Auditors Association of Ohio. The provisions of this bill were included in the House’s Substitute Budget Bill (HB 166) but were stripped out in the Senate Substitute Bill. They were then included in the Conference Committee Bill sent to the Governor, but the Governor line-item vetoed the provisions after considering input from the OEDA and local government entities.
HB 162 TAX CREDIT (Patton, T.) This bill would increase the overall cap on the motion picture tax credit from $40 million per fiscal year to $100 million per fiscal biennium. The bill has been referred to the Finance Committee.
HB 166 STATE BUDGET BILL (Oelslager, S.) As described above, this is the Biennial Budget Bill which was enacted July 18.
HB 168 BONA FIDE PURCHASER (Arndt, S.) This bill should assist with brownfield development by incorporating into Ohio law the federal Bona Fide Purchaser Defense (BFPD) established under CERCLA, which provides prospective buyers of contaminated property with an option to establish a defense to environmental liability after completing the All Appropriate Inquires and proper due diligence. The bill passed the House May 30 and has had one hearing in the Agriculture and Natural Resources Committee.
HB 185 JOBSOHIO (Ingram, C.) Introduced April 4, this bill would establish that records kept by JobsOhio are public records subject to inspection and copying under Ohio Public Records Law and to require all meetings of the JobsOhio Board of Directors to be open to the public, except when in an executive session. It has been referred to the Economic and Workforce Development Committee where a first hearing occurred May 15.
HB 190 BROADBAND PROGRAM (Smith, R.) This bill, introduced May 9 and identical to HB 378 which passed in the House during the 132nd GA, would create the Ohio Broadband Development Grant Program to provide funds to extend broadband service to unserved areas of the state. The program would be administered by the Ohio Development Services Agency. The following entities could apply for a grant: (1) private businesses, (2) political subdivisions, (3) nonprofit entities organized to provide telecommunications services, and (4) co-ops organized to provide phone and Internet services. Grant amounts cannot exceed the lesser of: (1) 50% of the total project cost, or (2) $5 million. Recipients could use funds to construct broadband infrastructure to serve unserved areas, including installing middle-mile or last-mile infrastructure, grant-project planning, obtaining construction permits, constructing facilities, purchasing equipment, and installing and testing the service. The bill would appropriate $50 million per year for FYs 2020 and 2021 from the Facilities Establishment Fund, to be used to award grants under the Program. It has been referred to the Finance Committee.
HB 218 PUBLIC-PRIVATE AGREEMENTS (Patton, T.) Introduced April 24, this bill would authorize certain public bodies, including state agencies, state institutions of higher education, counties, townships, municipal corporations, school districts, community schools, STEM schools, college-preparatory boarding schools, library districts, and port authorities, to execute a public-private agreement (“PPA”) with a private party for the planning, acquisition, financing, development, design, construction, reconstruction, replacement, improvement, maintenance, management, repair, leasing, or operation of a “facility”. “Facility” is defined to include a new or existing public building, public improvement, or public infrastructure used by a public body, by the public at large, in support of a public purpose, or for the delivery of services, and it must be owned by the public body or owned by the private party through a lease agreement under which the facility reverts to the public body upon expiration of the agreement. A public body that has authority to issue bonds/obligations may issue them for the purpose of funding the development or financing of a facility under a PPA. A public body may accept a grant, loan, or other financial assistance from the United States or any of its agencies or may enter into agreements with the United States as necessary to fund the facility. A public body may also accept from any source any grant, donation, gift, or other form of conveyance of land, money, other real or personal property or other items of value, and the public body may use federal, state, local, and private funds to finance a facility. Finally, a facility may be financed in whole or in part by contribution of any funds or property made by any operator or an affected jurisdiction that is a party to a PPA. The bill has been referred to the State and Local Government Committee where a second hearing occurred June 19.
HB 255 TAX EXPENDITURES (Hoops, J.) Introduced May 23, this bill would require the Tax Commissioner’s biennial tax expenditure report to include information on property tax exemptions and to require the Tax Expenditure Review Committee to periodically review each property tax exemption. It has been referred to the Ways & Means Committee.
HB 264 INFRASTRUCTURE LOANS (Wilkin, S., O’Brien, M.) Introduced May 28, this bill would authorize the Ohio Water Development Authority (OWDA) to make loans and grants to persons and government agencies for the refinancing of certain public water and waste water infrastructure projects. The bill also authorizes the OWDA to issue water development revenue bonds and notes for the purpose of paying any part of refinancing of these projects. The bill was referred to the State and Local Government Committee where a hearing occurred June 19.
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