Tracked House Bills – October 2018
Bricker & Eckler LLP
State Political and Legislative Activity:
Ohio Legislature: Recent House and Senate Sessions have been sparse, and legislators are in full campaign-mode. However, work has continued in legislative committees.
Gubernatorial Race: With the three scheduled gubernatorial debates completed, most polls show the race between Democratic candidate Richard Cordray and Republican candidate Mike DeWine too close to call. The outcome could well rest on voter turnout.
Early Voting Underway: Early voting for Ohio’s November 6 General Election began October 10 and lasts through November 5. Voters can either vote early by mail (Request a ballot from your county’s board of elections, fill out the form and mail it back or drop it off at your local board of elections headquarters) or in person by going to your county’s Board of Elections with an acceptable form of identification. Hours are as follows: between 8 a.m. and 5 p.m. weekdays between Oct. 10 and Oct. 26; 8 a.m. to 4 p.m. on Saturday, Oct. 27; 8 a.m. to 7 p.m. between Oct. 29 and Nov. 2; 8 a.m. to 4 p.m. on Saturday, Nov. 3; 1 p.m. to 5 p.m. on Sunday, Nov. 4 and 8 a.m. to 2 p.m. on Monday, Nov. 5.
State Issue 1: Voters will see one state issue on the November ballot, State Issue 1. State Issue 1 is titled “To Reduce Penalties for Crimes of Obtaining, Possessing, and Using Illegal Drugs”, and it would add a new Section 12 to Article XV of the Ohio Constitution designed to reshape the funding and implementation of Ohio’s drug treatment and correctional rehabilitation programming. The Ohio Ballot Board issued the following description of the components of State Issue 11: Require sentence reductions of incarcerated individuals, except individuals incarcerated for murder, rape, or child molestation, by up to 25% if the individual participates in rehabilitative, work, or educational programming; Mandate that criminal offenses of obtaining, possessing, or using any drug such as fentanyl, heroin, methamphetamine, cocaine, LSD, and other controlled substances cannot be classified as a felony, but only a misdemeanor; Prohibit jail time as a sentence for obtaining, possessing, or using such drugs until an individual’s third offense within 24 months; Allow an individual convicted of obtaining, possessing, or using any such drug prior to the effective date of the amendment to ask a court to reduce the conviction to a misdemeanor, regardless of whether the individual has completed the sentence; Require any available funding, based on projected savings, to be applied to state-administered rehabilitation programs and crime victim funds, and Require a graduated series of responses, such as community service, drug treatment, or jail time, for minor, non-criminal probation violations. The Issue is very controversial. Opponents say it could decrease the effectiveness of Ohio’s drug courts and that its decriminalization of fentanyl will lead to increased overdoses. Proponents include Former Ohio Attorney General Rich Cordray, the Democrat running for governor; Christian Coalition of Ohio; American Civil Liberties Union and numerous church and social service organizations. Opponents include Ohio Gov. John Kasich; Ohio Attorney/Republican Gubernatorial candidate General Mike DeWine, and the Ohio Prosecuting Attorneys Association and numerous law enforcement agencies in Ohio.
Bills Being Tracked: Changes from last month are noted below in bold.
House Bills and Joint Resolutions
HJR 14 INFRASTRUCTURE IMPROVEMENTS (Smith, K., Lepore-Hagan, M.) This joint resolution was introduced March 28, 2018 and proposes to enact Section 2t of Article VIII of the Constitution of the State of Ohio to permit the issuance of general obligation bonds to fund sewer and water capital improvements. It was referred to the House State and Local Government Committee.
HB 10 CROWDFUNDING (Arndt, S.) This bill would permit intrastate equity crowdfunding under certain circumstances. The bill would provide an exemption from registration under the Ohio Securities Law for certain crowdfunding initiatives. The bill passed in the House on June 21, 2018 and was referred in Senate to the Transportation, Commerce & Workforce Committee. A substitute bill was offered February 7 which changed the culpable mental state for violations of the crowdfunding provisions from recklessly to knowingly. It also simplified the process for pursuing civil remedies and clarifies the conditions a company must meet to qualify as an “OhioInvests Issuer.” The substitute bill passed out of committee April 21. On June 6, the bill was amended to provide the State Auditor with more authority in the audit process used for JobsOhio. Under the proposal, JobsOhio would collaborate with the Auditor of State when determining the scope of the audit to be conducted by a private firm. The amendment also would grant state auditors access to the performance audit work papers. The performance audits would occur every four years starting in fiscal year 2021. The amended bill was passed by the full Senate June 6.
HB 53 UNION DUES/RIGHT TO WORK (Becker, J.) This bill is sponsored by Representative Pete Becker from Clermont County. Co-sponsors include Representatives Hood, Brinkman, Dean, Thompson, Vitale, Goodman, Riedel, Roegner, Merrin, Antani, Zeltwanger and Keller. It would remove any requirement under the Public Employees Collective Bargaining Law that public employees join or pay dues to any employee organization, prohibit public employers from requiring public employees to join or pay dues to any employee organization and prohibit an employee organization from being required to represent public employees who are not members of the employee organization. The bill was referred to the House Finance Committee. No hearings have yet occurred.
HB 102 SCHOOL FUNDING (Brenner, A.) This bill, referred to the House Finance Committee, would replace locally levied school district property taxes with a statewide property tax and require recipients of certain tax exemptions to reimburse the state for such levy revenue lost due to those exemptions. It would also increase the state sales and use tax rates and allocate additional revenue to state education purposes; to repeal school district income taxes; require the Treasurer of State to issue general obligation bonds to refund certain school district debt obligations; create a new system of funding schools where the state pays a specified amount per student that each student may use to attend the public or chartered nonpublic school of the student’s choice, without the requirement of a local contribution; eliminate the School Facilities Commission; eliminate the Educational Choice Scholarship Pilot Program, Pilot Project Scholarship Program, Autism Scholarship Program, and Jon Peterson Special Needs Scholarship Program; eliminate interdistrict open enrollment; require educational service centers to transport students on a countywide basis, and permit school districts to enter into a memoranda of understanding for one district to manage another. It was referred to the House Finance Committee, and a June 20 hearing was continued. A second hearing occurred December 12.
HB 114 RENEWABLE ENERGY (Blessing, L.) The original HB bill 114 proposed to convert the renewable energy standards to goals indefinitely, rather than for a two year period; permit residential customers of a distribution utility or electric services company to opt out of any rider, charge or other recovery mechanism designed to recoup the cost of renewable energy; clarify that renewables are bypassable charges, rather than nonbypassable charges, and specify that the 12.5% renewable energy goal to be attained by 2027 would end at that time and not continue indefinitely. The bill passed in the House March 30, 2017 and moved to the Senate, where it was referred to the Energy and Natural Resources Committee. A substitute bill was introduced and accepted by the Committee during its fifth hearing on the measure May 16, 2018 which maintains mandatory renewable energy and energy efficiency standards and loosens wind turbine setback restrictions. The substitute bill reduces the renewable portfolio standards to 8.5% by 2022 instead of 12.5% by 2026 as in current law. Each year after 2022, the 8.5% mandate would be maintained. The substitute bill would also restore penalties that the House version sought to eliminate. On the energy efficiency side, the standard would drop to 17.2% by 2026 instead of the current 22.2% by 2027. In addition, energy efficiency compliance requirements, which the House changed to three years, would revert back to current law which requires annual compliance.
The substitute bill also would negate a 2014 change in wind turbine setback requirements, establishing the setback as 1,225 feet from the tip of the blade to the exterior of the nearest, habitable residential structure. Other changes in the substitute bill would:
- Enable industrial users to opt-out of paying utilities for the energy efficiency standards, which will be subject to periodic review and approval by the Public Utilities Commission of Ohio;
- Increase the number of wind turbines a business can put on its property to generate its own electricity from three to 12;
- Allow the four utilities to carry over excess energy efficiency achieved during a particular year to subsequent years so they can receive shared savings during those subsequent years, and
- Permit competitive generators in Ohio to apply on behalf of customers for energy efficiency rebates – an option only the four major utilities currently enjoy.
A 7th hearing with opponent and interested party testimony occurred June 20, with more than 60 opponents providing testimony. Some expressed support for tougher renewable energy standards, while others expressed concern regarding the lessening of wind turbine setback requirements. A Committee vote scheduled for June 27 was postponed pending additional discussions.
HB 122 ECONOMIC DEVELOPMENT (Hambley, S., Rogers, J.) Signed into law May 2, this new legislation establishes a Regional Economic Development Alliance Study Committee to study the benefits and challenges involved in creating regional economic development alliances. Co-chairs of the Regional Economic Development Alliance Study Committee are Rep. Steve Hambley (R-Brunswick) and Sen. Rob McColley (R-Napoleon). They recently announced the following committee members: Dr. Edward Hill of Ohio State University’s John Glenn College of Public Affairs; Dr. Rainer von Hofe from the University of Cincinnati School of Planning; Joy Davis, executive director of the Hocking County Community Improvement Corporation; and Tim Mayle, director of economic development for the Findlay-Hancock County Economic Development. Other members of the committee include Senators Jay Hottinger (R-Newark) and Sean O’Brien (D-Cortland) and Representatives Gary Scherer (R-Circleville) and John Rogers (D-Mentor-on-the-Lake). Representatives from the Regional Prosperity Initiative and the Ohio Economic Development Association will also participate as nonvoting members. According to the co-chairs, the study committee plans to meet monthly to discuss economic development hurdles Ohio faces and the benefits or drawbacks of collaborative economic development. The committee will hear from community and economic development leaders on steps that can be taken to benefit communities, businesses and Ohio as a whole. The committee now awaits appointments from Gov. John Kasich and plans to start regional meetings across Ohio by the end of 2018. All individuals who are interested in participating in future committee meetings should contact Hambley’s office at Rep69@ohiohouse.gov.
HB 155 COMMERCIAL VEHICLE TRAINING (Sprague, R., Howse, S.) This bill would authorize a nonrefundable tax credit to be taken against either personal income tax or commercial activity tax liability for expenses incurred by an employer to train a commercial vehicle operator. Under the proposed program, employers would submit to the Director of the Development Services Agency, by December 1, eligible training expenses expected to be incurred during the next calendar year. The ODSA Director would then certify up to $50,000 per employer of such expenses as being eligible for tax credits. After incurring eligible training expenses, employers could then apply to ODSA for tax credits in amounts equal to one-half of the incurred eligible expenses. It was referred to the House Ways & Means Committee, where a second hearing occurred May 15, 2018 and the bill was amended to remove the commercial activity tax as an option for which the tax credit could apply, leaving only the income tax. A third hearing occurred June 19, and the bill was voted out of Committee.
HB 166 WORKFORCE DEVELOPMENT (Reineke, B., Cupp, R.) This bill would revise the laws governing the state’s workforce development system. On March 7, 2018, a substitute bill was adopted by the House Higher Education & Workforce Committee that would categorize technical centers as higher education institutions, making them and their students eligible for state grant money.
HB 173 TAX CREDITS (LaTourette, S., Patton, T.) This bill was introduced April 5, 2017 and would provide that compensation paid to certain home-based employees may be counted for purposes of an employer qualifying for and complying with the terms of a Job Creation Tax Credit. It was referred on May 1 to the House Ways & Means Committee, and a first hearing with Sponsor’s testimony occurred May 9, 2017.
HB 178 NUCLEAR ENERGY (Devitis, T.) This is a companion bill to SB 128 (see explanation there) and was introduced April 10. It was referred to the House Public Utilities Committee, where several hearings have occurred. Sponsors in both chambers are continuing conversations with interested parties in order to earn support for these bills. Representative Robert Cupp recently assumed the role as Chair of the House Public Utilities Committee and confirmed that talks are still ongoing. Additionally, House Speaker Rosenberg recently appointed members to an ad hoc House task force charged with studying this bill and other energy issues in the coming months (Speaker’s Task Force on Energy Policy).
HB 203 SUMMER JOBS (Barnes, J.) This bill would require the Director of Development Services to establish a youth summer jobs pledging initiative to increase access to summer employment opportunities for high school and college youth. On March 7, the Higher Education and Workforce Development Committee accepted an amendment that clarifies that the Development Services Agency director can accept grants and other contributions to assist with the effort. A fourth hearing occurred April 11.
HB 281 BROADBAND EXPANSION (Carfagna, R.) This bill, introduced June 20, would establish the residential broadband expansion program within the Development Services Agency to award matching grants for last mile broadband expansion in municipal corporations and townships and to make an appropriation. It was referred to the House Finance Committee, where the first hearing with sponsor’s testimony occurred September 20, 2017. Committee hearings also occurred November 28 and December 12, with a comprehensive substitute bill accepted December 12 that would offer more ways to fund the projects and remove funding ratio requirements. It also would reduce the speed of internet that must be available for an area to be considered “underserved” from 25 MBbs upload speed to 10 MBbs. The bill passed in House January 31, 2018 and was assigned to the Senate Finance Committee. A first hearing occurred June 19.
HB 292 OHIO RESIDENCY (Scherer, G.) This bill would modify the test for determining an individual’s state of residence for income tax purposes. The bill would add to the requirements to prove out-of-state residency by requiring a showing that the applicant did not: 1) claim a federal depreciation deduction (which is available only for property used in business or held for the production of income — e.g., as rental property) for an abode located outside the state, which the person was required to have for the entire taxable year under current law; 2) hold a valid Ohio driver’s license or identification card; 3) receive the benefit of an Ohio homestead exemption or 4. receive a tuition discount based on residency for attending an Ohio institution of higher education. The bill passed in the House November 1 and the Senate Ways and Means Committee amended the bill at its fourth hearing February 21 with two changes that were accepted without objection. The first, which was described as “largely technical,” changes the filing deadline for the homestead exemption from September of the impacted tax year to December of the year before. The second was described as a “belt-and-suspenders” amendment to clarify that the aggregation of common law domicile criteria only applies to that section of state law. The amended bill passed in the Senate May 23, the House concurred in the Senate amendments and approved the bill June 7, it was signed by the Governor June 14 and was effective immediately.
HB 371 PROPERTY TAX (Merrin, D.) This bill, introduced October 4 would exempt from property taxation 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. The bill was reported out of the Ways and Means Committee January 16, 2018 after being amended to reduce the maximum length of time for the exemption from 10 to eight years. The bill was reported on a 15-3 vote with Rep. Janine Boyd (D-Cleveland Hts.), Rep. Green and Rep. Steve Hambley (R-Brunswick) opposed. On February 28, the bill was informally passed by the House, where a place was reserved for it on the House calendar.
HB 378 BROADBAND GRANTS (Smith, R., Cera, J.) This bill 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 2018 and 2019 through the Third Frontier Research and Development Fund, to be used to award grants under the Program. It would require $1 million of the appropriation in each fiscal year to be used to contract with one or more independent organizations that have experience working with Ohio broadband providers to collect and analyze state broadband data and do other activities regarding broadband service. Seven hearings have occurred in the House Finance Committee and on March 6, the committee accepted an amendment that Rep. Scott Ryan (R-Newark) said encourages the director of the Department of Transportation to work with telecommunications providers to lay fiber optic cable in conjunction with state highway projects. The bill was passed by the House April 11 and referred to the Senate Finance Committee May 9, 2018.
HB 381 ZERO EMISSIONS (DeVitis, A.). This is a third bill to propose the creation of a zero-emission nuclear credit program to benefit Ohio’s nuclear plants and is very similar to HB 178. However, one of the major differences is new language capping a residential customer’s monthly nonbypassable charge at $2.50 and capping a nonresidential customer’s monthly charge to be the lesser of $3,500 or 5% of the total bill. It also downsizes the lifespan of the ZEN program – terminating the credits after 12 years on Dec. 31, 2030, unless extended by the General Assembly. HB178 would terminate the program after 16 years. Other changes include requiring the Public Utilities Commission to conduct an inquiry in 2029 to determine if continuing the program is in the public interest, and removing language from HB178 requiring a PUCO evaluation during years six and 11 of the program. It has been referred to the House Public Utilities Committee, where a first hearing occurred December 12.
HB 469 TAX CREDIT (Schuring, K., Patton, T.) This bill, introduced January 17 and referred to the House Government Accountability & Oversight Committee would authorize a nonrefundable insurance company tax credit for contributions of capital to transformational mixed use development projects. The bill as amended in April defines a “transformational mixed use development” (TMUDs) as a development having a transformational impact from a quarter mile to a mile around, including a building that is 15 stories or more and having a development cost exceeding $50 million. It also must generate more new taxes than it would receive through the tax credit. The bill directly names retail, office, residential, hotel, recreation, and structured parking as potential uses that could be incorporated into a TMUD, but none of those uses is required and they are not the only uses that would qualify a project for the credit. Under the bill, the Development Services Agency Director must review and certify projects as eligible. In doing so, the Director also must consider the potential impact of the project in terms of “architecture, accessibility to pedestrians, retail entertainment architecture, retail entertainment and dining sales, job creation, property values, connectivity, and revenue from sales, income, lodging, and property taxes.” If the project is certified, the property owner may sell or transfer the rights to “preliminarily approved” tax credits to one or more insurance companies in order to raise capital for the project. Once the TMUD is complete, the Director must issue tax credit certificates to the property owner or to the insurance companies that acquired the rights to the credit.
The bill passed out of committee May 22, 2018 after an amendment was accepted that adds having a floor area of 350,000 square feet or more to the qualifications for a project. The bill passed in the House June 27 and on September 27, it was referred to the Senate Ways and Means Committee.
HB 500 TOWNSHIP LAWS (Carfagna, R.) Introduced February 13, this bill would make changes to various township laws. Of particular interest to economic development professionals is a proposed change to township laws regarding the formation of new community authorities (NCAs) to remove the requirement that NCA areas be at least 1000 acres in size. HB 500 would also require 100% compensation for any post 2006 Township fire and EMS levy effective rates for any new Township incentive district TIFs (tax increment financing) enacted after the effective date of HB 500, but only if the Trustees choose to require that 100% compensation. On April 10, two amendments were accepted by the Committee. The first narrows the legislation to apply only to limited home rule townships – a change that makes the bill applicable to only 32 townships rather than the prior 1,308 townships. The second change removes language that had required townships to designate legal counsel rather than a private citizen to investigate fire chief conduct and removal proceedings. Three additional amendments were accepted by the committee on May 16. These amendments remove the proposed authority of townships to levy an admissions tax on events within their boundaries; establish January 1, 2021 as the date by which county boards of election must accept the electronic submission of ballot issues from political subdivisions, and allow subdivisions other than townships to levy one property tax to cover capital costs related to infrastructure projects and emergency services. The bill was reported out of committee May 24, 2018 and was passed by the House June 27. On September 25, it was referred to the Senate Local Government, Public Safety & Veterans Affairs Committee for consideration.
HB 512 EDUCATION DEPARTMENT (Reineke, B.) Introduced February 14, this bill would combine the functions of the Departments of Education and Higher Education and the Governor’s Office of Workforce Transformation to create the Ohio Department of Learning and Achievement. The new agency would be headed by a director appointed by the governor and confirmed by the Senate. The bill also includes language to limit the State Board of Education’s authority to making quasi-judicial decisions on licensure, disciplinary actions and school charters. Members would also still have the authority to hire a superintendent of public instruction to lead their work. The bill was referred to the Government Accountability & Oversight Committee where five hearings have occurred. A substitute bill is apparently expected.
HB 519 TRANSPORTATION TECHNOLOGY (West, T., Kick, D.) This bill, introduced February 21 would create the Ohio Council on Transportation Technology to make recommendations regarding state policies related to autonomous technology. The Council’s role would be to examine and evaluate methods and changes in state policy that will ensure that the state is the world leader in autonomous, driverless, and connected vehicle technology. They will also be charged with issuing a report with their recommendations no later than 1 year following the effective date of the bill. It has been referred to the Transportation and Public Safety Committee.
HB 525 TAX CREDIT (Schuring, K.) This bill would extend eligibility for the motion picture tax credit to certain live stage theater productions, to increase the maximum amount of credits that may be awarded from $40 million to $100 million per fiscal year, and to make other revisions to the law governing administration of the credit. It was referred to the House Government Accountability and Oversight Committee. The bill was reported out of committee May 22 after a substitute bill was accepted reducing the $100 million proposed cap for the tax credits to the current $40 million total.
HB 604 WIND SETBACKS (Strahorn, F.) This bill, introduced April 17 and referred to the Public Utilities Committee, would alter the minimum setback requirement for wind farms of five or more megawatts to require turbines to be no closer than 1,125 feet from the tip of a turbine to the exterior of the nearest habitable residential structure, and also make the authorization of qualified energy project property tax exemptions permanent. A first hearing occurred May 22.
HB 641 TAX EXEMPTION (Antani, N.) This bill would exempt from sales and use tax things purchased by an interstate logistics business and used primarily to move completed manufactured products to the point from which they are shipped from a manufacturing facility and related power sources. It was assigned to the Ways and Means Committee where a second hearing occurred June 26, 2018.
HB 695 INDUSTRIAL PARK LOANS (Thompson, A., Edwards, J.) This bill was introduced May 22 and 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 was referred to the House Finance Committee, where a first hearing occurred June 26.
HB 670 MUNICIPAL TAXES (Barnes, J.) This bill would enact the “Simplified Alternative Withholding Tax Compliance Act” authorizing an employer to enter into an agreement with a municipal tax administrator to prescribe, subject to certain parameters, the portion of nonresident employee wages that will be subject to the municipal corporation’s income tax. It was referred to the State & Local Government Committee where a first hearing occurred June 13.
HB 715 WATER/SEWER FUNDS (SCHURING, K., KICK, D.) This bill, introduced July 24, 2018, would authorize a municipal corporation to use up to 5% of its water and sewer funds for sewerage or water system extensions in each fiscal year when the extension is for economic development purposes. It has not yet been referred to a committee.
HB 720 SALES TAX (Antani, N., Smith, T.) Introduced August 14, this bill would require voter approval of any increase in the rate of a county sales tax. It has not yet been assigned to a committee.
HB 727 OPPORTUNITY ZONES (Schuring, K.) Introduced August 29, this bill would authorize a state income tax credit for investments in an Ohio Opportunity Zone. To qualify for the tax credit, investors must invest at least $250,000 during the taxable year, and the amount of the credit allowed shall be equal to ten percent of the amount invested.
HB 731 TAX EXPENDITURES (Hoops, J.): Introduced September 19, this bill would require that real or personal property tax abatements be included in the periodic report on tax expenditures produced by the Department of Taxation.
HB 735 JOBSOHIO AUDITS (Smith, K., West, T.) Introduced September 25, this bill would require that a performance audit of JobsOhio be conducted each fiscal year pursuant to a written agreement by and among a firm of independent certified public accountants or a management consulting firm, the auditor of state and JobsOhio. It would also require that a report of each performance audit be provided to the governor, to the auditor of state, and to the general assembly under section 101.68 of the Revised Code.
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