Tracked Senate Bills – March 2019

Chris Schmenk
Bricker & Eckler LLP

JobsOhio: Governor Mike DeWine announced on March 13 that Richard J. “Rick” Platt of Newark (Licking Co.) has been appointed to the JobsOhio Board of Directors for a term beginning March 13, 2019, and ending July 5, 2019.  Rick serves as the President and CEO of the Heath-Newark-Licking County Port Authority and has a broad background in economic development.

Governor’s State of the State Address:  On March 5, 2019, Governor Mike DeWine (R) delivered his first State of the State address during a joint House and Senate session in the Statehouse.  The Governor restated his administration’s top priorities, which include Children’s Initiatives,  Opiate/Heroin Addition Prevention & Treatment, Lake Erie’s Water Quality, Economic Development/Workforce Development and Energy.  He also called for all Ohioans to work together to move the state forward.

Governor’s Budget Bill:  Governor DeWine announced details of his new two-year budget on Friday March 15. The actual budget bill will be introduced in the legislature shortly.  The proposed spending outline for Fiscal Years 2020-2021 includes nearly $70 billion in General Revenue Fund and $150.4 billion in all funds appropriations.  It includes a $500 million increase in public-school funding targeted to pay for services for at-risk students, a $900 million “H2 Ohio” water protection fund and $200 million on new initiatives aimed at addiction and mental health.  The bill will significantly boost funding for the Ohio College Opportunity Grant and provide up to $15 million per year to provide “Micro-degrees” (industry credentials) at no cost to a minimum of 10,000 Ohioans, as long as they remain in Ohio after completion. Micro-degrees are low-cost credentials that take a student less than a year to complete and quickly qualify Ohioans to work in growing industries. State support for indigent defense would also increase under the proposal, from $30 million to $90 million, a move that will help counties who have had to bear the brunt of spending in this area.  The bill does not cut or increase taxes, and spending increases are projected to be funded by increased revenues based on an expectation of slow but steady economic growth.  Further details can be found at http://budget.ohio.gov/.   Details about workforce and innovation proposals are at http://budget.ohio.gov/WorkforceInnovation.aspx.

Although the actual bill has not yet been released, members of the House Finance Committee heard testimony March 19 from OBM Director Kimberly Murnieks and Tax Commissioner Jeff McClain.  The budget proposes spending $250 million in the first year and $300 million in the second year for funding to support student wellness.  The H2Ohio program would include a planning process between the Department of Agriculture, Environmental Protection Agency and the Department of Natural Resources.

Transportation Budget Bill: On March 7, the Ohio House passed a two-year Transportation Budget (Amended Substitute HB 62) with a vote of 71-27.  The Budget bill was dramatically revised from the original proposed by Governor DeWine and Ohio Department of Transportation Director Jack Marchbanks.  Rather than providing for an 18 cents/gallon immediate increase in the state’s gas tax, the revised bill only provides for a 10.7/cents gallon increase to be phased in over two years.  The bill was opposed by 1/3 of Republican members of the House but passed due to support from most Democratic members. The revised bill also included a fee of $200/year on electric vehicles and $100 on hybrids; increased spending on public transit to $100 million/year; repeals the requirement that vehicles have front license plates; increases deputy registrar fees by $5; requires annual transfers of $5 million from the state Oil and Gas Fund to local governments in counties with at least one oil/gas well in the Utica or Marcellus shale formation for infrastructure needs, and several provisions assisting Ohio port authorities (allowing them to tow motor vehicles when necessary and removing a requirement to have contracts with a contractor signed in triplicate).

Senate President Larry Obhof (R-Medina) has announced that the 10.7 cents-per-gallon increase in the gas tax passed by the House is likely to be reduced even further by the time it gets through the Senate.  Hearings are ongoing in the Senate Transportation, Commerce and Workforce Committee.  Led by Chair Rob McColley, the Committee includes the following members: Republicans Joe Uecker, Frank Hoagland, Jay Hottinger, Stephanie Kunze, Nathan Manning, Kristina Roegner and Michael Rulli.   Democrats include Nicki Antonio, Tina Maharath and Vernon Sykes.

On March 19, a substitute bill was approved by the Committee that maintains the 10.7 cents per gallon increase (for now) but makes numerous changes to the House bill, including:

• Elimination of the language requiring annual transfers of $5 million from the state Oil and Gas Fund to local counties with shale oil and gas wells for infrastructure needs;
• Removal of language allowing municipalities and townships to levy an additional $5 license fee;
• Reduction of annual fees on electric vehicles from $200 to $175 and hybrids from $100 to $75, and
• Adding language specifying that the motor vehicle fuel tax may only be used for roads and bridges.

Committee members have until the end of Wednesday, March 20 to submit proposed amendments to the bill, then the committee will approve an omnibus amendment later this week or by Monday, March 25.

The increase in the state’s gas tax is needed due to a combination of problems, including the need to repay debt from Ohio Turnpike bonds, the lack of increases in the gas tax since 2005 in spite of inflation, and greater fuel efficiency.  About 44% of ODOT’s budget comes from the gas tax, and much of local government’s infrastructure funding does as well.  Concerns have been expressed that the decrease in funding will adversely affect new construction, ongoing maintenance, Roadwork Development Funds (629 Funds) administered by the Jobs & Commerce section of ODOT, and local funding. The bill will be passed by the end of March, so if members wish to provide input to your legislators, it should be done in the next week.

Bills Being Tracked:  Changes from last month are noted below in bold.

Senate Bills:

SB 1 REGULATIONS  (McColley, R., Roegner, K.)  This measure would require certain agencies to reduce the number of regulatory restrictions and to amend the versions of sections 106.021 and 106.03 of the Revised Code that are scheduled to take effect August 18, 2019, to continue the provision of this act on and after that effective date.  It was referred to the Senate Government Oversight & Reform Committee where a hearing occurred March 5.

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.

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.  Three hearings have occurred in the Senate Ways & Means Committee.

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 where a first hearing occurred March 12.

SB 89   CAREER-TECH EDUCATION AND ENTERPRISE ZONE TAX ABATEMENTS (Huffman, M.) This bill, introduced March 6, would modify the Ohio Revised Code sections relating to enterprise zone tax exemptions and 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.  It has been assigned to the Senate Education Committee where a first hearing occurred March 19.

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 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 property tax exemptions 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 has been referred to the Senate Ways & Means Committee.

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.