Tracked Senate Bills – February 2020
Bricker & Eckler LLP
Industry Sector Partnership Grants: On January 23, Lt. Governor Jon Husted announced the launch of the Industry Sector Partnership Grant program which was established by HB 2 and funded in the state operating budget (HB 166). The program is designed to drive collaboration among employers, training providers and community stakeholders to assist with workforce development. Applications can be submitted through March 13 to: https://workforce.ohio.gov/wps/portal/gov/workforce/initiatives/initiatives/isp/
Bills Being Tracked: Changes from last month are noted below in bold.
SB 1 REGULATIONS (McColley, R., Roegner, K.) This bill would require each state agency to reduce the regulatory restrictions contained in its rules by 30% by 2022, according to a schedule and criteria set forth in the bill. It also prohibits an agency from adopting new regulatory restrictions that would increase the percentage of restrictions in the agency’s rules and requires an agency that does not achieve a reduction in regulatory restrictions according to the required schedule to eliminate two restrictions before enacting a new rule containing a restriction. It allows the Joint Committee on Agency Rule Review (JCARR) to lessen an agency’s required reduction in regulatory restrictions if the agency fails to meet a reduction goal and show cause why the agency’s required reduction should be lessened. Effective January 1, 2023, it limits the total number of regulatory restrictions that may be in effect in Ohio. The bill passed in the Senate May 8 and has been referred to the House State and Local Government Committee, where a first hearing occurred June 12.
SB 8 OPPORTUNITY ZONES (Schuring, K.) This bill would authorize tax credits for investments in an Ohio Opportunity Zone. As introduced, 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 one percent of the amount invested. At a fourth hearing in the Senate Ways & Means Committee, a substitute bill was introduced March 12 which establishes an Opportunity Zone Investment Tax Credit program and a new opportunity zone fund that must be used exclusively for projects in opportunity zones. The new program creates a non-refundable 10% tax credit that that would be capped at $50 million over the course of a biennium. The revisions would prohibit a single entity from utilizing both the proposed program and the Invest Ohio program credit. The bill was passed by the Senate April 3 and referred to the House Economic and Workforce Development Committee, where a first hearing occurred May 8. The main provisions of this bill were included in the final Budget Bill (HB 166).
SB 37 TAX CREDIT (Schuring, K.) This bill would extend eligibility for and make other changes to the motion picture tax credit. Among other changes, “Broadway theatrical productions” would become eligible for the credit, the types of expenses upon which the credit is based would be broadened to include post-production, advertising, and promotional expenditures, and the Director of Ohio Development Services Agency would begin awarding motion picture and Broadway theatrical production tax credit certificates in two competitive rounds each fiscal year. The first round of applications would be approved by July 31, and the second round would be approved by January 31. The bill passed in the Senate May 8 and was referred in the House to the Finance Committee. The main provisions of this bill were included in the Budget Bill.
SB 39 INSURANCE TAX (Schuring, K.) This measure would authorize an insurance premiums tax credit for capital contributions to transformational mixed use development projects. To qualify, projects must:
(a) have a transformational economic impact within the project area approved by the director of the development services agency;
(b) be a mixed use development that integrates some combination of retail, office, residential, recreation, structured parking, and other similar uses; and
(c) include at least one building that is fifteen or more stories in height or has a floor area of at least three hundred fifty thousand square feet.
The bill was assigned to the Senate Finance Committee, and the Senate passed a Substitute Bill June 26, 2019:
- allowing projects involving two or more connected buildings to qualify for the credit as long as they collectively meet the program’s square-footage requirements, and
- establishing public reporting requirements regarding projects supported by the program.
The bill passed in the Senate June 26 and was referred to the House Economic & Workforce Development Committee, where a fourth hearing occurred November 6. A substitute bill was introduced December 11 which would:
- Limit the DSA director to approving only four TMUDs per fiscal year with a carryover provision (in lieu of a cap).
- Require ranking of applications by their economic value and transformational impact. Specific consideration will be given to the new state and local taxes generated from the project and its surrounding area. The project that has the most significant transformational impact and has a pro forma that shows the most expeditious schedule for the new state and local taxes to exceed the amount of the tax credit, will be the one that is approved.
- Require a project to go into construction no later than one year after the TMUD credit is approved by the DSA Director; and
- Increase the historic tax credit percentage from 25% to 35% for rural areas.
The substitute bill was amended by the Committee February 5 to:
- Provide that the Ohio Tax Credit Authority would administer the program instead of the director of the Development Services Agency;
- Sunset the law on June 30, 2022;
- Give lien rights to commercial real estate brokers;
- Remove references to the Historic Preservation Tax Credit;
- Amend the rural area provisions to annually make $20 million of the proposed annual $100 million credits available to rural sites not located within 10 miles of a major city and specify that projects in those areas need only include buildings at least four stories in height with a total square footage of 75,000, and
- Provide for a $40 million tax credit per-project cap.
On February 13, the substitute bill was further amended to:
- Amend the rural area provisions to make projects eligible that are only two stories high;
- Extend eligibility for the credit to June 30, 2023, and
- Enlarge eligibility to include development sites located within ten miles of a major city if they will provide at least $4 million in annual payroll even if the building is not 15 stories in height or 350,000 square feet.
SB 89 CAREER-TECH EDUCATION AND ENTERPRISE ZONE TAX ABATEMENTS (Huffman, M.) This bill, introduced March 6, would make changes to Ohio’s career-tech education programs, make changes regarding STEM school report cards, prohibit the use of value-added data for evaluations of career-technical educators, revise the law on community school fiscal officer liability, make changes regarding school financing studies by the Department of Education, revise the eligibility and operation of the Educational Choice Scholarship program, rename the income-based expansion of the Educational Choice Scholarship program as the Buckeye Opportunity Scholarship program and modify the Ohio Revised Code sections relating to enterprise zone tax exemptions to require that if an agreement is negotiated between the legislative authority and the school district in which the project is located to compensate the district for all or part of the taxes exempted, the legislative authority must also compensate the joint vocational school district within which the property is located at the same rate and under the same terms received by the school district. The bill passed in the Senate October 23 and was assigned to the House Primary & Secondary Education Committee. The House recently chose the bill to be the vehicle to address concerns with the state’s EdChoice program, in which eligibility requirements had been loosened last fall due to changes made in HB 166 (the state budget bill). The EdChoice program provides vouchers and thus helps fund private school tuition for students at public schools that fail to meet state performance guidelines. On February 5, the Committee accepted an amendment that would change eligibility for vouchers to be based on family income, versus being based on whether schools meet state performance guidelines, and then the bill was passed in a House Session that same day. Other changes made by the amendment would, among other things, repeal a process established in the budget allowing residents within a township split between two or more school districts to petition to transfer territory to a new school district, and permit career centers to earn STEM and STEAM school designations. The Senate has not yet concurred with the amended bill. In the meantime, the Senate moved to make the EdChoice changes through House Bill 9, and a conference committee was named to reconcile the matters. Hearings of the committee have commenced, and 9 are scheduled to occur by February 20. Witnesses have included private school students, parents and officials who continue to push for no change in the state’s voucher programs, while public school representatives continue to ask for tighter voucher eligibility requirements.
SB 95 BUSINESS INVESTMENTS (Peterson, B., Kunze, S.) Introduced as SB 309 in the last General Assembly, this bill would lengthen the maximum term of the job creation tax credit available under ORC 121.171 from 15 to 30 years for businesses making substantial fixed asset and employment investments (and meeting the definition of “megaprojects” as set forth in the bill) and for their suppliers, authorize commercial activity tax exclusions for receipts of those suppliers from sales to such businesses, and authorize local governments to grant longer term (up to 30 years) property tax exemptions (enterprise zones or community reinvestment areas) for such businesses or suppliers. To qualify as a “megaproject”, projects must involve unique sites, extremely robust utility service, and a technically skilled workforce; the megaproject operator of the project must compensate the project’s employees at an average hourly wage of at least three hundred per cent of the federal minimum wage under U.S.C. 206, exclusive of employee benefits, at the time the tax credit authority approves the project for a credit under this section; and the project must satisfy either of the following by the metric evaluation date applicable to the project : (i) The megaproject operator makes at least one billion dollars in fixed-asset investments in the project, or (ii) The megaproject operator creates at least seventy-five million dollars in Ohio employee payroll at the project. The bill passed in the Senate June 12 and was referred to the House Ways and Means Committee where a second hearing occurred November 19.
SB 109 TAX CREDITS (Schuring, K.) Introduced on March 13, this bill would establish a Workforce Scholarship Program and authorize the Chancellor of Higher Education to designate five public or private institutions to participate in the program. It also authorizes the granting of scholarships and tax credits to students who pursue and complete the training programs for in-demand jobs at these designated institutions. The bill was referred to the Finance Committee, where a second hearing occurred October 8.
SB 132 GAS TAX ALLOCATIONS (Williams, S.) This bill would modify the amount of revenue derived from any increase in the motor fuel tax rate that is allocated to local governments and to change the manner in which that revenue is divided between municipal corporations, counties, and townships. It was referred to the Senate Transportation, Commerce & Workforce Committee on May 1.
SB 153 TAX CREDITS (Dolan, M.) Introduced May 21, this bill focused on assisting manufacturers and entities with significant corporate administrative functions in Ohio by amending the state’s Job Retention Tax Credit program under ORC 122.171 to expand eligibility based on new capital investment rather than payroll or employee count. Manufacturers that invest the lesser of either $50 million or 5% of the book value of their tangible personal property used at the project site over a 3 year consecutive period would be eligible. If such manufacturers receive the credit, they must commit to maintain an agreed-upon number of full-time equivalent employees during the term of the credit. Entities with significant corporate administrative functions are eligible if: 1. They are either located in a foreign trade zone, employ at least five hundred full-time equivalent employees, or have an annual Ohio employee payroll of at least thirty-five million dollars; and 2. They make a capital investment of at least $20 million at the project site over 3 consecutive calendar years. Such entities must commit either: 1. To retain at least 500 FTEs at the project site during the term of the credit, or 2. Maintain an annual Ohio employee payroll of at least $35 million for the term of the credit or remain in a foreign trade zone for the entire term of the credit. The bill’s provisions were included in the final Budget Bill (HB 166), and the Ohio Development Services Agency is working on program guidelines.
SB 180 DEVELOPMENT BONDS (Schaffer, T.) Introduced August 5, 2019, this bill would authorize the issuance of industrial development bonds by a township and would authorize counties, townships, and municipal corporations to issue industrial development bonds without requiring the county, township, or municipal corporation to designate a community improvement corporation as its agency for industrial, commercial, distribution, and research development. On September 10, the bill was referred to the Senate Finance Committee where a first hearing occurred October 1.
SB 212 NEIGHBORHOOD DEVELOPMENT AREAS (Schuring, K.) Introduced October 7, this bill would authorize townships and municipal corporations to designate areas as “Neighborhood Development Areas” (NDAs) within which new homes and improvements to existing homes are wholly or partially exempted from property taxation. The designation would be done by a resolution or ordinance that includes the following:
(a) A description of the boundaries of the neighborhood development area;
(b) Identification of the municipal or township officer or employee who will accept applications;
(c) Findings to demonstrate that the designation of the area will encourage the construction of new single-family dwellings, or the improvement of existing single-family dwellings, that in either case would be unlikely to occur in the absence of such a designation;
(d) The number of years during which the area will be designated as a neighborhood development area or that the area will be designated as such for a continuing period of time;
(e) A description of how the designation of the neighborhood development area would (i) improve the overall quality of life in the township or municipal corporation and (ii) cause additional property tax revenue to be generated once exemptions no longer apply than if the area had not been designated;
(f) The percentage of value that will be exempt from taxation which shall be seventy per cent of assessed value or, if the approval of the board of education of each school district within which parcels in the area are located is obtained, one hundred per cent.
The legislative authority or board may not include in the designated areas any parcel that is already subject to an exemption authorized under a community reinvestment area (CRA) or tax increment financing (TIF).
If the intended exemption if 100%, written notice must be provided to the board of education of the affected school district, which may approve or disapprove the designation of the neighborhood development area not later than 14 days prior to the date intended for the proposed municipal or township action. If the board of education fails to timely certify a resolution to the board of township trustees or the legislative authority of the municipal corporation, the board of education shall be considered to have approved of the designation of the neighborhood development area. If all boards of education that receive notice approve the designation of the neighborhood development area, the board of township trustees or legislative authority of the municipal corporation may adopt a resolution or ordinance prescribing a percentage of value under division (B)(1)(f) of this section of one hundred per cent.
The bill was assigned to the Senate Ways & Means Committee, where a Substitute Bill was approved February 4. The changes made would require that before approving an area as an NDA, there must be showing that the community lacks housing and that development would not occur without an NDA. Also, projections must be presented showing how an NDA would generate funds. Finally, the amendment clarified the process to be followed in negotiating an agreement with the applicable school district if the NDA will offer a 100% tax exemption. At a hearing February 11 for interested parties testimony, a representative from the Greater Ohio Policy Center suggested that it may make more sense to amend the existing CRA statutes rather than enact a new NDA program.
SB 219 APPRENTICE PROGRAM (Williams, S.) Introduced October 15, this bill would empower the Ohio Departments of Education and Higher Education to establish a career pathways apprentice program for high school grades 9-12. The purposes of the program would be to establish partnerships between schools, businesses, communities, local government entities, and nonprofit organizations to create career pathways for apprenticeships in the following professions: (a) Manufacturing; (b) Information technology; (c) Financial services; (d) Business operation (e) Healthcare, and (f) Education. The program would also be charged with providing information and technical assistance to high school students who enroll in the program and reducing obstacles to and ensure compatibility with division (J)(3) of section 3313.603 of the Revised Code. The program may incorporate or work in conjunction with other apprentice and pre-apprentice programs already in operation under the Revised Code. The bill was referred to the Senate Education Committee where a first hearing occurred February 11. Sponsor Sandra Williams said that the program is similar to one in Colorado called “CareerWise Colorado” and that the goal of the measure is to help students obtain free college credit, receive industry certifications and earn wages while gaining relevant work experience.
SB 234 WIND REGULATIONS (McColley, R.) This bill, introduced November 6, is a companion bill to HB 401 and its provisions are identical. A first hearing occurred December 10 in the Energy and Public Utilities Committee. At a second hearing January 28, numerous proponents in favor of stronger local controls submitted testimony in favor of the bill. A third hearing February 11 caused numerous opponents to turn out, many of whom testified that providing a referendum process to local townships after a wind project has been approved by the Ohio Power Siting Board would deter future wind development.
SB 257 ELECTRIC VEHICLES (O’Brien, S., Rulli, M.) Introduced December 23, this bill would authorize tax incentives for the purchase of plug-in electric motor vehicles and charging stations. It has been referred to the Ways and Means Committee where a first hearing occurred February 11.
SJR 3 TAX INCREASES (Burke, D.) Introduced December 11, this Senate Resolution proposes to enact Section 7 of Article XII of the Constitution of the State of Ohio to require that any increase in income tax rates be approved by a supermajority (two-thirds) of the membership of each house of the General Assembly. If the Resolution is approved by three-fifths of the members of both the House and the Senate, then the proposed amendment would be submitted to the electors of the state to be voted on at the general election to be held on November 3, 2020. The measure was referred to the Ways and Means Committee December 17 where a third hearing occurred February 11, 2020. During opponent testimony, concerns were expressed that the measure could hurt the state’s bond ratings, as has occurred in states with similar measures.
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