January 2017 OEDA Legislative Update



December Overview:

True to predictions, Ohio Legislators ran fast and furious in December, trying to accomplish the year’s goals in several weeks during their Lame Duck Session.  While they had signaled that their top priorities would include renewable and energy efficiency standards, unemployment compensation reform, some education reforms, and the heroin crisis, they were not able to finish work on these complex subjects.  A stop-gap energy measure was passed in HB 554, which was then vetoed by Governor Kasich December 27, 2016.  Legislators accomplished a lot in the economic development arena.  Those changes are listed below.

132nd General Assembly:

The 132nd General Assembly got underway January 3 with the swearing in of members.  New Senate President Larry Obhof (R-Medina) stated that his priorities will be to reduce the number of burdensome regulations as well as reducing and simplifying Ohio’s income taxes.  House Speaker Cliff Rosenberger (R-Clarksville) said his priorities include House Bill 1 which extends protections to victims of dating violence, Ohio’s education system, improving Ohio’s long term care system, continuing the battle against addiction, and ensuring energy policies are market-based.

Leaders: Leadership for the 132nd General Assembly is as follows: House Committees: On January 12, Speaker Rosenberger announced his slate of committees including their chairs and vice-chairs.  Key committees of importance to economic development include Economic Development, Commerce & Labor (Chair: Ron Young /Vice Chair: Anthony DeVitis); Education & Career Readiness (Chair: Andrew Brenner/Vice Chair: Marilyn Slaby); Energy & Natural Resources (Chair: Al Landis/Vice Chair: Christina Hagan); Finance (Chair: Ryan Smith/Vice Chair: Scott Ryan); Higher Education & Workforce Development (Chair: Mike Duffey/Vice Chair: Niraj Antani); Public Utilities (Chair: Bill Seitz/Vice Chair: Rick Carfagna); Transportation & Public Safety (Chair: Doug Green/Vice Chair: Dave Greenspan) and Ways & Mean (Chair: Tim Schaffer/Vice Chair: Gary Scherer).  Committee memberships will be announced in late January.Governor’s Operating Budget: Governor Kasich will release his final biennial state budget for FY2018-19 at the end of January. It is predicted that this will be a tight and challenging budget – with deficits ranging from $2 - $4 billion over the biennium – primarily caused by changes in how sales taxes apply to Medicaid services.  The budget must be approved by June 30, 2017.

Economic Development Bills Passed in Lame Duck:

Several bills were passed in December that will impact economic development in Ohio.  Key provisions are summarized below.

House Bills:                                  

HB 463 CRA CHANGES (formerly HB 482) : The CRA and Brownfield revisions formerly proposed in HB 482 were added to HB 463 and the bill was signed into law by Governor Kasich January 4, 2017.  For CRAs, the new law clarifies that for remodeling projects, the tax-exempt value eligible for CRA exemption is to be determined based on the structure’s increased value after the remodeling activities begin (effectively exempting all increases in the value from January 1 of the tax year when the work begins, regardless of whether proof can be provided that the increased values are due to the remodeling).  The bill also extends the maximum CRA exemption term for remodeling projects to 15 years for all structures.  These changes apply to all pending CRA applications as well as those filed after the bill’s effective date.  Regarding Brownfields, the bill amends current law that provides a partial property tax exemption for sites undergoing a voluntary action plan (VAP) and specifies that the tax exemption applies to any increase in value from the beginning of the year in which environmental remediation activities begin.

HB 555   PORT AUTHORITY TELE/VIDEO CONFERENCE BOARD ATTENDANCE (formerly HB 614): This bill, signed into law by the Governor January 4, 2017 allows port authority board members to participate in board meetings by teleconference or videoconference if specific provisions are followed.  The board meeting must still take place in a public place, public notice must be provided, meeting materials must be sent to off-site board members before the meetings, votes must be taken by roll call voice vote and written minutes must be taken.  Additionally, before such tele or video-conferenced participation begins, port authority boards must adopt a rule establishing their procedures.  Among other things, the rules must establish a process to verify the identity of off-site board members, set geographic limitations, clarify that no more than one off-site member can be in the same location and establish the minimum number of members who must be physically present at the main meeting location.

Senate Bills:

SB 235   IDLE PROPERTY TAX ABATEMENT, DRD CLARIFICATION, HISTORIC TAX CREDIT PROGRAM CHANGE, WORKFORCE GRANT CHANGE, TIF AND NCA CHANGES: This bill, as originally introduced, would have exempted from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences, upon the filing of a document by the landowner with their County Auditor.  Interested parties who expressed concerns about unintended consequences included the OEDA, the County Commissioners Association of Ohio, the Ohio Township Association and the Ohio Municipal League.  The bill became what is known as a “Christmas Tree Bill” during the Lame Duck session, with numerous unrelated provisions added, and it was signed into law by Governor Kasich December 27, 2016.  The changes to the Ohio Revised Code provide the following:

1.      Idle Property Tax Abatement: This new program authorizes (but does not require) municipalities, townships or counties to approve a property tax exemption for increases in the value of a parcel of land while it is in the pre-development stage.  If approved, the exemption period will be up to a 6 years.  If a parcel is already subject to a tax increment financing (TIF) exemption, the owner must apply to the entity that approved the TIF.  Parcels subject to a lien for taxes or special assessments are not eligible.  Notice to the applicable school district/joint vocational school is required.  The tax abatement will end if a disqualifying event occurs, which include the following:  The owner receives a certificate of occupancy for the property; Commercial, agricultural, or industrial activities occur on the property; the Owner transfers title of the property to another person, or the Property is zoned or re-zoned such that the construction of a commercial or industrial building is no longer allowed.  If a qualifying parcel is subdivided during the term of the exemption, the exemption continues to apply to the subdivided parcels that are constituted entirely of the original parcel for the remaining period of the original exemption or until one of the above disqualifying events occurs with respect to the parcel before the end of the period.

2.      DRD Clarification: The bill amended the Downtown Redevelopment District program to clarify that DRDs may include property that had once been in an active TIF (but the TIF is no longer active for that property).

3.      Historic Preservation Tax Credit: The bill discontinues at the end of Fiscal Year 2017 (June 30, 2017) provisions of the state’s Historic Preservation Tax Credit Program that had allowed the Ohio Development Services Agency to issue one historic building rehabilitation tax credit certificate per fiscal biennium to a project recognized as being “catalytic”.  The Director of ODSA must approve the application of each qualified person who applied for a catalytic program certificate in the FY 2016-2017 biennium but did not receive one.

4.      Workforce Grant Program: The bill revises the Workforce Grant Program to require the Chancellor of Higher Education to disburse funds to a public or private institution, which in turn will award grants to eligible students, rather than requiring the Chancellor to award those grants directly to eligible students as under current law.  Public and private institutions include state institutions of higher education, private nonprofit colleges and universities, and Ohio Technical Centers that provide adult technical education services as recognized by the Chancellor.

5.      TIF and NCA Changes: The bill revises TIF laws to allow cities that qualify as “impacted cities” to use TIF payments in lieu of taxes (PILOTs) for infrastructure projects that do not directly benefit the parcels originally designated in the applicable TIF ordinance.  Impacted cities may do so if, before July 1, 2017, the municipality determines that "satisfactory provision" has been made for the infrastructure needs of the original parcel(s), provides by ordinance a description of the proposed, unrelated infrastructure projects, and certifies that such projects are in support of "urban redevelopment”.  The bill revises new community authority (NCA) laws to provide that an NCA can agree to pay or reimburse an impacted city or developer for services or infrastructure projects that were performed or completed within the city, but not within the new community district or as part of the NCA's development program.   This new authority is intended to add to an NCA's existing authority to contract with municipalities and developers.

 SB 257 TIF OPT OUT (formerly HB 12): This bill was signed by the Governor January 4, 2017 and provides an opt-out provision for property owners to exclude their parcels from incentive district tax increment financing (TIF) districts under certain circumstances.  The new law requires political subdivisions that are creating a new incentive district TIF to indicate a square or rectangular overlay on a map of the proposed district.  They then must provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and the notice must include a copy of the map of the proposed district with the overlay indicated.  The notice must advise that property owners whose land is partially or wholly located outside the overlay may choose to have their property excluded from the TIF by providing a written response within 45 days of the postmarked date of the notice.  If property owners properly respond, the political subdivision must amend the proposed TIF to exclude such property.





December 2016 OEDA Legislative Update


True to predictions, Ohio Legislators ran fast and furious in the last month, trying to accomplish the year’s goals in several weeks during their Lame Duck Session.  While they had signaled that their top priorities would include renewable and energy efficiency standards, unemployment compensation reform, some education reforms, and the heroin crisis, they were not able to finish work on these complex subjects.  A stop-gap energy measure was passed in HB 554, as summarized below. 

Bills Being Tracked:  Changes in the status of the bills listed below are noted in red:

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.
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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  The bill would create a bipartisan committee made up of nine individuals: three senators, three representatives and three members of the public, plus one non-voting member from the Tax Commissioner's office.  The committee would be charged with reviewing all tax expenditures including economic development incentives outside of the budget process and submitting a report of its analysis by July 1 of even-numbered years.  The bill passed in the House June 24, 2015 and passed in the Senate May 25, 2016 with amendments.  The House refused to concur in the Senate amendments on 11/29/16 but a compromise bill was passed in the House 12/8 and the bill was sent to the Governor for signature on 12/15/16.
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HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill passed in the House May 25, 2016.
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HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled.
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HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.
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HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. A substitute bill was introduced November 30 which reduces the definition of special energy improvement projects contained in the previous version to include solar, geothermal, energy efficiency and consumer generated energy projects and would also change language to reflect that only nonresidential properties are eligible, while adding language specifying that a property cannot become its own electric company or exceed certified territories.
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HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.
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HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.
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HB 190 WIND SETBACKS (Burkley, T and Tim Brown). The bill as introduced would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. At a hearing before the House Public Utilities Committee May 18, a substitute bill was adopted that would allow state officials - rather than locals - to adopt minimum setback requirements for wind farms that would be located in a newly-designated "Ohio Wind Corridor" that includes much of northwest Ohio. The substitute offered by Rep. Scott Ryan (R-Newark) also deletes sections that would have allowed county commissioners to revoke resolutions creating an alternative minimum setback; permitted the Power Siting Board to increase alternative minimum setbacks for any wind turbine, and extended by five years the deadline to qualify for ongoing real and tangible personal property tax exemptions. The substitute includes latitudinal and longitudinal coordinates of the area that would be considered part of the wind corridor (map & details), indicating that the territory where wind has proven to be economically viable. Under the new version, OPSB would be able to adopt the same alternative minimum setback included in the initial bill.
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HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.
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HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6, 2015.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27, 2015.
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HB 394 UNEMPLOYMENT COMPENSATION (Sears, B.) This bill would make Ohio’s unemployment system more employer-friendly by temporarily changing the taxable wage base under Ohio's Unemployment Compensation Law, removing dependency classes for unemployment compensation benefit eligibility, temporarily freezing automatic increases for weekly unemployment compensation benefit amounts, reducing the number of weeks for which an individual may receive unemployment compensation benefits, abolishing the Unemployment Compensation Advisory Council, and making other changes to Ohio's Unemployment Compensation Law.  House Speaker Cliff Rosenberger announced in early August that the bill is one of his top priorities for the lame duck session after the November elections.
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HB 403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance, aid,  provide, or promote transportation, economic development,  housing, health care, recreation, education, government  operations, culture, research, or purposes or activities  authorized by Section 13 or 16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.
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HB 454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February 10 and would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.
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HB 482 PROPERTY TAXES (Dever, J.) This bill was introduced March 3, 2016 and would clarify the calculation of the exempt value of improved (remodeled) property subject to a community reinvestment area (CRA) exemption, clarify the calculation of the exempt value of property subject to a brownfield remediation exemption, and authorize the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property.  As to the CRA clarification, the bill states that the CRA exemption would apply to a percentage of the increased assessed value of the property/structure. The first hearing occurred May 17. The bill’s sponsor explained that with brownfields in Ohio, owners are offered a tax exemption for the increased value of the property, as a result of remediation efforts. However, in current practice, the base value of the property is calculated as its value the year before the covenant not to sue is issued, even if remediation began years before, preventing developers from gaining the true value of the abatement. Under HB482, the base value used to calculate the exemption for a brownfield will begin when the remedial activities start. Regarding community reinvestment areas, Representative Dever explained, "Current law provides for a tax exemption 'for the amount by which the remodeling increased the exempt value of the structure.' Some county auditors take the position that much of the increase in value after remodeling occurs is not a result of the remodeling itself, but rather other outside factors, i.e. resurgence of neighborhoods, community projects, increased rankings of schools, etc. Under this proposed legislation, the increased value after remodeling will be completely attributed to the remodeling activities.
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HB 491  TRADE ZONES (Anielski, M.) This bill would establish a five-year pilot program whereby taxpayers with facilities in this state with activated foreign trade zone status may claim a nonrefundable commercial activity tax credit equal to the amount redeployed by the taxpayer to job creation or other specified projects.  The bill’s first hearing before the House Ways and Means Committee occurred May 17.  The bill’s sponsor explained that the legislation would permit companies with Activated Foreign Trade Zone status to internally re-deploy some, or all, of their CAT obligation toward five areas: Job Creation, Employee Training, Employee Continuing Education, Capital Investments - including green initiatives - and Export Initiatives.
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HB 506   JOBSOHIO (Johnson, G., Smith, K.)  This bill would allow the Auditor of State to conduct full audits of JobsOhio and would require all nonprofit economic development corporations (including CICs) that receive public funds to make annual disclosures related to both their public and private funds, and would require that JobsOhio submit a quarterly progress report to the Governor, the House and the Senate detailing all of its active projects. The bill was referred to the Government Accountability and Oversight Committee, and no hearings are currently scheduled.
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HB  540  OIL AND GAS REVENUE  (Cera, J.)  This bill would redirect a portion of the state's oil and gas severance tax revenue to communities impacted by drilling.  The bill would allocate the first $20 million in revenue to the Ohio Department of Natural Resources and allocate the rest to Ohio communities in which that drilling occurs. The bill would allocate that excess revenue as follows: 70% to the Shale Region General Local Government Fund, 10% to the Shale Region Township Road Maintenance Fund, 10% to the Shale Region Firefighting/EMS Equipment Fund, 5% to the injection well infrastructure fund of each eligible injection well county, and 5% to the general fund of each municipal corporation or township general fund in those communities. The bill would not increase the severance tax itself. The bill was referred to the House Finance Committee, and no hearings are currently scheduled.
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HB 554   RENEWABLE ENERGY (Amstutz, R.)  This bill was introduced May 9 and is one of three bills that would revise the state’s requirements for renewable energy, energy efficiency savings, and peak demand reduction and revise provisions governing which customers can opt out of related programs.   The bill went through many amendments and passed in the House 12/16, passed in the Senate 12/8 and was delivered to the Governor for signature 12/15.  If enacted, it will do the following:  1. Remove the compliance provisions regarding the renewable energy resource requirement, energy efficiency savings, and peak demand reduction for two years (2017 and 2018), with the Public Utilities Commission of Ohio's (PUCO) enforcement resuming in 2020 to review compliance with 2019 benchmarks in continuing law; 2. Modify the percentage of federal funds to be deposited to the credit of the Home Energy Assistance Block Grant Fund from up to 25% to 25%; 3. Require the chairman of the PUCO to testify in person before the committee annually no later than Sept. 1 to discuss utility compliance; 4. Include language to ensure the PUCO recognizes energy efficiency savings and peak demand reductions occurring from consumer reductions in water usage or improvements in wastewater treatment, nonelectric energy efficiency savings or nonelectric peak demand reductions occurring from the portfolio plan. The commission must also recognize savings and reductions associated with heat rate improvements in certain circumstances, though those savings would not qualify for shared savings, and 5. Expand and clarify language permitting utilities to bank energy efficiency savings or peak demand reduction amounts in excess of the standards.  The added language states the utility will be eligible for incentives approved by the PUCO in years in which actual cumulative efficiency and reduction savings meet or exceed the cumulative mandates.
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HB 567   BROWNFIELDS REMEDIATION (Dreihaus, D.) This bill was introduced May 17 and would require that, if JobsOhio provides financial assistance for the cleanup and remediation of brownfields, at least 85% of the assistance must be in the form of grants.  The bill was recently referred to the House Government Accountability & Oversight Committee.
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HB 583   COLLECTIVE BARGAINING (Becker, J.) This bill was introduced June 30 and would remove any requirement under the Public Employees Collective Bargaining Law that public employees join or pay dues to any employee organization.
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HB 614   PORT AUTHORITY MEETINGS (Patterson, J. and Perales, R.) This bill was introduced November 10 and would allow port authorities to conduct meetings by video conferences and teleconference.  The provision was added as an amendment to Substitute House Bill 455, which passed in the Senate 12/7 and the House 12/8.   If enacted into law, it will allow meetings by video or teleconferencing but: 1. Boards must establish a way to verify the identity of a member who is meeting remotely; 2. Meetings must still take place in one primary location that's open to the public; 3. Any meeting materials must be emailed, faxed or otherwise delivered beforehand to remote members; 4. A clear audio or video connection must be established; 5. No more than two board members can participate from the same remote location, and 6. Members joining the meeting remotely must be recorded as such, along with their voice roll call votes.

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings are currently scheduled.
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SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee and the first hearing occurred April 27.  The tax credit would be similar to the federal Work Opportunity Tax Credit.  A business owner who hired a qualified veteran could claim the same amount on state returns as the federal tax credit. The amount could vary from $2,400-$9,600, and if a business hires a member of the Ohio National Guard or reserves, the business could claim 40% of that employee's wages up to $6,000, or $2,400 total, on their state tax return. The term "qualified veteran" would have the same meaning as defined by the IRS for the Work Opportunity Tax Credit.
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SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.
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SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings are currently scheduled.
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SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.
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SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.
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SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  Current law requires that a Special Improvement District or “SID” first be created before using PACE financing.  The bill would remove that requirement and instead allow a streamlined process whereby property owners could directly petition municipalities or townships to allow special assessments on their property to finance Special Energy Improvement Projects or “SEIPs”.  The streamlined process created by the bill only applies to energy efficiency projects and not those pertaining to renewable energy, specifically excluding clean and renewable energy-based energy efficiency technologies, products and activities from the definition of "energy efficiency improvement."
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 SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries. No hearings are currently scheduled.
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SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21, 2015 and was referred to the House Agricultural and Rural Development Committee on November 16, 2015.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8, 2015 was continued.
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 SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill, as introduced, would have exempted from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences upon the filing of a document by the landowner with their County Auditor.  Testimony from proponents including the Associated General Contractors of Ohio has stated that the bill would bolster local economic development by incentivizing business expansion, new construction and renovations.   Interested parties with concerns included the OEDA, the County Commissioners Association of Ohio, the Ohio Township Association and the Ohio Municipal League who expressed overall support for the goals of the bill but expressed concerns that the changes could have unintended consequences, affecting local jurisdictions’ ability to offer incentives tailored to their circumstances or inhibiting the ability to effectively use other tools such as tax increment financing.  Written opponent testimony was submitted by the Ohio Association of School Business Officials, Buckeye Association of School Administrators and Ohio School Boards Association.  The Bill began moving in the House Finance Committee during the Lame Duck session and became what is known as a “Christmas Tree Bill”, with numerous unrelated provisions added so that legislators could pass those measures as well.  House Finance Chair Ryan Smith listened to concerns expressed by the various entities and introduced a substitute bill that would require the following: 1. The submission of an Application for the exemption by landowners with their local municipality, township or county, along with a tax clearance certificate from their County Treasurer; 2. The passage of legislation by the appropriate local entity; 3. The exemption, if granted, would last for 6 years unless a disqualifying trigger occurs (a Certificate of Occupancy is issued, the owner transfers title, zoning regulations change to no longer permit development, the plat is subdivided or any commercial/agricultural or industrial operations are conducted on the property) , and 4. A recoupment charge will occur if the owner transfers title to the property before making any improvements or if commercial/agricultural or industrial operations are conducted on the property before a cert of occupancy is obtained.  The charge equals the difference between the amount of taxes paid in the 3 prior tax years and the taxes that would have been paid w/o the exemption.  The Bill was passed by the House and the Senate concurred in the amendments 12/8 and the bill was sent to the Governor 12/15.  Unrelated provisions that affect economic development include the following 1. Language that clarifies that districts formed under the new Downtown Redevelopment District (DRD) program can include property that had once been in a TIF but is no longer, and 2. Revisions to the Historic Preservation Tax Credit program allowing the third and fourth ranked projects to receive a catalytic certificate through the Historic Preservation Tax credit in addition to the two highest ranked projects.
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SB 320   RENEWABLE ENERGY (Seitz, B.) This bill would extend by another three years the renewable energy mandates freeze put in place several years ago by Senate Bill 310. The bill as introduced would expand the definition of energy efficiency to include post-consumer recycled glass by mercantile customers, consumer reductions in water usage, and improvements in wastewater treatment. It would also expand the consumer base eligible for opting out of energy efficiency programs.  The bill contains language prohibiting any state agency from issuing certain guidelines on carbon dioxide emissions, electric dispatch protocols, natural gas utilization, or regulating the acquisition of renewable energy and more "without new and specific state statutory authority to do so.”  It was referred to the Senate Energy and Natural Resources Committee, where it had a first hearing May 11.   Senator Larry Obhof (R-Medina), the Senate's president pro tem and likely next chamber leader, said in an interview in mid-July that lawmakers may not act on the soon-to-end freeze on renewable energy and energy efficiency standards until sometime next year due to a limited number of days in session.  By not acting by December 31, the freeze would thaw, allowing the standards to kick back into effect, which Republicans argue could harm Ohio considering lingering uncertainty over the federal Clean Power Plan and other unknowns. Proponents of the standards say any effort to extend the freeze or lower the standards would take the state backward.  A second hearing on the bill occurred Tuesday November 15 at 4:00 pm.
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 SB 325   RENEWABLE ENERGY (Jordan, K.)  This bill would repeal the requirement that electric distribution utilities and electric services companies provide 12.5% of their retail power supplies from qualifying renewable energy resources by 2027,  repeal energy efficiency and peak demand reduction requirements for electric distribution utilities, and modify the topics included in the Energy Mandates Study Committee report.  It was referred to the Senate Energy and Natural Resources Committee.
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 SB 376 BROADBAND DEVELOPMENT (Gentile, L.)  This bill was introduced 12/13/16 and would create the Ohio Broadband Development Grant Program within the Ohio Development Services Agency and make an appropriation to allow the Director of DSA to provide grants to political subdivisions, private entities, nonprofits or phone/internet co-ops for broadband infrastructure development.  Grants could be funded at the lesser of: 50% of the project cost or $5 Million.




 November 2016 OEDA Legislative Update


Election Day 2016 and the campaigns leading up to it were some of the most interesting and contentious in memory.  Below is a summary of results in some of the races of interest:

Election Day Report:

Presidential:
After quite an unusual election cycle, Donald J. Trump and his running mate Mike Pence won the presidential race after claiming many of the country’s swing states, including Ohio.  President-elect Trump won 52.05 percent of the Ohio vote and Hillary Clinton won 43.51 percent of the vote.    

U.S. Senate
: Incumbent Senator Rob Portman (R) prevailed over former Governor Ted Strickland (D) in the race for U.S. Senate in Ohio, winning 58.32 percent to 36.92 percent.  Senator Portman has held Ohio’s Senate seat since 2011.

U.S. House of Representatives:
Republicans retained control of the U.S. House of Representatives. Ohio U.S. Representatives Marcia Fudge (D), Marcy Kaptur (D), Pat Tiberi (R), Mike Turner (R), David Joyce (R), Tim Ryan (D), Steve Stivers (R) and Jim Renacci (R) all won re-election. Steve Chabot (R), Brad Wenstrup (R), Joyce Beatty (D), Jim Jordan (R), Bob Latta (R), Bob Gibbs (R), and Warren Davidson (R) were also successful.

Ohio Supreme Court: Judge Pat DeWine (R) of the 1st District Court of Appeals in Cincinnati prevailed over Judge Cynthia Rice (D) of the 11th District Court of Appeals in Northeast Ohio to fill Justice Paul Pfeifer’s (R) seat on the Ohio Supreme Court bench. (Justice Pfeifer was barred from seeking another term due to his age.) Judge DeWine, the son of former U.S. Senator and current Ohio Attorney General Mike DeWine, came away with the win, obtaining 56.42 percent of the votes.  Additionally, Judge Pat Fischer (R) of the 1st District Court of Appeals in Cincinnati is currently leading by a narrow 25,000 vote margin over Cuyahoga County Common Pleas Judge John O’Donnell for a seat on the Ohio Supreme Court bench. Judge Fischer received 50.31 percent of the votes to fill Justice Judith Lanzinger’s (R) seat. (Lanzinger must also retire due to Ohio’s age requirement.)  While some media outlets have called the race for Fischer, there are still thousands of uncounted absentee and provisional ballots to be verified and possibly counted in late November, but it is too soon to know if those outstanding ballots will affect Judge Fischer’s apparent victory in this very close Ohio Supreme Court campaign. Chief Justice Maureen O’Connor was uncontested in her bid for re-election.            

Court of Appeals:
Incumbent Judge Peter Stautberg (R) was challenged by Marilyn Zayas-Davis (D) for one of the six judge positions on the 1st District Court of Appeals. Zayas-Davis received 50.28 percent of the vote and Stautberg received 49.72 percent of the vote. Judge William Zimmerman (R) ran against Randall Basinger (D) for the 3rd District Court of Appeals seat and handedly won with 63.06 percent of the vote. Earning 66.40 percent of the vote, incumbent Judge Matt McFarland (R) prevailed over Valerie Gerlach (D) for the 4th District Court of Appeals race.  Earle Wise (D) came out on top in his close race against Judge David Gormley (R) for the 5th District Court of Appeals. Wise acquired 52.03 percent of the vote.  The race for Ohio’s 6th District Court of Appeals involved Lucas County Common Pleas Judge Gary Cook (D) and Christine Mayle (R). Christine Mayle won with 52.8 percent of the vote.  With 59.28 percent of the vote, Thomas Teodosio (D) beat Diana Stevenson (R) for a seat on the 9th District Court of Appeals.  The 11th District Court of Appeals race was between Ron Tamburrino (R) and incumbent Judge Thomas Wright (D). Incumbent Judge Thomas Wright was successful, earning 52.15 percent of the vote.      

Ohio House and Senate: Republican Majority
: In the Ohio House, the Republican majority increased to 66 seats, up 1 from the current 65. Similarly, in the Ohio Senate, with Frank Hoagland's victory over incumbent Lou Gentile, the Ohio Senate majority, in the upcoming 132nd General Assembly, will be at 24 Republican seats.

Ohio House of Representatives: New Republican Seats

Jay Edwards (R) gained a Republican seat in the 94th House District when he defeated Sarah Grace (D) with 57.82 percent of the vote. 

Ohio House of Representatives: Races of Interest

Incumbent Representative Andy Thompson (R-Marietta) of the 95th House District prevailed over Ginny Favede (D) with 61.80 percent of the vote.

The open seat race for the 23rd House District between Laura Lanese (R) and Lee Schreiner (D) went to Laura Lanese with 57.78 percent of the vote.

Incumbent Representative Steve Arndt (R-Port Clinton) of the 89th House District ran against Lawrence Hartlaub (D) and won. Representative Arndt earned 60.85 percent of the vote.

With 60.49 percent, incumbent Representative Jeff Rezabek (R-Clayton) defeated David Sparks (D) in what was predicted to be a close race for 43rd House District. 

Appointed incumbent Representative Theresa Gavarone (R-Bowling Green) of the 3rd House District faced Kelly Wicks (D) in a district which was vulnerable to party turnover. Theresa Gavarone was ultimately successful with 59.05 percent of the vote.

With 71.08 percent of the vote, incumbent Representative Tim Ginter (R-Salem) ran against John Dyce (D) for the 5th House District and won.

Battling over an open seat, former U.S. Senator Sherrod Brown staffer Tommy Greene faced Republican Cuyahoga County Councilman Dave Greenspan in the 16th House District. Dave Greenspan won.

Ohio Senate: Races of Interest

Incumbent Senator Lou Gentile (D-Steubenville) ran against Frank Hoagland (R) in the race for the 30th Senate District and lost. Hoagland received 52.84 percent of the vote while Gentile received 47.16 percent in a district strongly buoyed by President-elect Trump’s turnout.

With 59.02 percent, incumbent Representative Stephanie Kunze (R-Hilliard) defeated Cathy Johnson (D) for the 16th Senate District.  

Matt Dolan (R) beat Emily Hagan (D) in the race for the 24th Senate District, receiving 58.22 percent of the vote.



With Election Day over, Ohio Legislators have begun the mad rush to finish the legislative session in what is known as “Lame Duck Session”.  Lawmakers have indicated that top priorities could include renewable and energy efficiency standards, unemployment compensation reform, some education reforms, and focus on the heroin crisis.

House Speaker Cliff Rosenberger (R-Clarksville) on November 10 announced the leadership team elected by the majority caucus for the 132nd General Assembly. Rep. Kirk Schuring (R-Canton) will serve as speaker pro tem. He replaces term-limited Rep. Ron Amstutz (R-Wooster). Rep. Dorothy Pelanda (R-Marysville) will serve in the role of majority floor leader, replacing Rep. Schuring in that post. Rounding out the rest of the leadership team is Rep. Sarah LaTourette (R-Bainbridge Twp.) as assistant majority floor leader, Sen. Tom Patton (R-Strongsville) as majority whip and Rep. Rob McColley (R-Napoleon) as assistant majority whip.

Bills Being Tracked:  Changes in the status of the bills listed below are noted in red:

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.
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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, 2015 and passed in the Senate May 25, 2016.
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HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill passed in the House May 25, 2016.
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HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled.
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HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.
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HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings are currently scheduled.
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HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.
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HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.
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HB 190 WIND SETBACKS (Burkley, T and Tim Brown). The bill as introduced would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. At a hearing before the House Public Utilities Committee May 18, a substitute bill was adopted that would allow state officials - rather than locals - to adopt minimum setback requirements for wind farms that would be located in a newly-designated "Ohio Wind Corridor" that includes much of northwest Ohio. The substitute offered by Rep. Scott Ryan (R-Newark) also deletes sections that would have allowed county commissioners to revoke resolutions creating an alternative minimum setback; permitted the Power Siting Board to increase alternative minimum setbacks for any wind turbine, and extended by five years the deadline to qualify for ongoing real and tangible personal property tax exemptions. The substitute includes latitudinal and longitudinal coordinates of the area that would be considered part of the wind corridor (map & details), indicating that the territory where wind has proven to be economically viable. Under the new version, OPSB would be able to adopt the same alternative minimum setback included in the initial bill.
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HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.
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HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6, 2015.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27, 2015.
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HB 394 UNEMPLOYMENT COMPENSATION (Sears, B.) This bill would make Ohio’s unemployment system more employer-friendly by temporarily changing the taxable wage base under Ohio's Unemployment Compensation Law, removing dependency classes for unemployment compensation benefit eligibility, temporarily freezing automatic increases for weekly unemployment compensation benefit amounts, reducing the number of weeks for which an individual may receive unemployment compensation benefits, abolishing the Unemployment Compensation Advisory Council, and making other changes to Ohio's Unemployment Compensation Law.  House Speaker Cliff Rosenberger announced in early August that the bill is one of his top priorities for the lame duck session after the November elections.
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HB 403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance, aid,  provide, or promote transportation, economic development,  housing, health care, recreation, education, government  operations, culture, research, or purposes or activities  authorized by Section 13 or 16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.
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HB 454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February 10 and would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.
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HB 482 PROPERTY TAXES (Dever, J.) This bill was introduced March 3, 2016 and would clarify the calculation of the exempt value of improved (remodeled) property subject to a community reinvestment area (CRA) exemption, clarify the calculation of the exempt value of property subject to a brownfield remediation exemption, and authorize the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property.  As to the CRA clarification, the bill states that the CRA exemption would apply to a percentage of the increased assessed value of the property/structure. The first hearing occurred May 17. The bill’s sponsor explained that with brownfields in Ohio, owners are offered a tax exemption for the increased value of the property, as a result of remediation efforts. However, in current practice, the base value of the property is calculated as its value the year before the covenant not to sue is issued, even if remediation began years before, preventing developers from gaining the true value of the abatement. Under HB482, the base value used to calculate the exemption for a brownfield will begin when the remedial activities start. Regarding community reinvestment areas, Representative Dever explained, "Current law provides for a tax exemption 'for the amount by which the remodeling increased the exempt value of the structure.' Some county auditors take the position that much of the increase in value after remodeling occurs is not a result of the remodeling itself, but rather other outside factors, i.e. resurgence of neighborhoods, community projects, increased rankings of schools, etc. Under this proposed legislation, the increased value after remodeling will be completely attributed to the remodeling activities.
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HB 491  TRADE ZONES (Anielski, M.) This bill would establish a five-year pilot program whereby taxpayers with facilities in this state with activated foreign trade zone status may claim a nonrefundable commercial activity tax credit equal to the amount redeployed by the taxpayer to job creation or other specified projects.  The bill’s first hearing before the House Ways and Means Committee occurred May 17.  The bill’s sponsor explained that the legislation would permit companies with Activated Foreign Trade Zone status to internally re-deploy some, or all, of their CAT obligation toward five areas: Job Creation, Employee Training, Employee Continuing Education, Capital Investments - including green initiatives - and Export Initiatives.
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HB 506   JOBSOHIO (Johnson, G., Smith, K.)  This bill would allow the Auditor of State to conduct full audits of JobsOhio and would require all nonprofit economic development corporations (including CICs) that receive public funds to make annual disclosures related to both their public and private funds, and would require that JobsOhio submit a quarterly progress report to the Governor, the House and the Senate detailing all of its active projects. The bill was referred to the Government Accountability and Oversight Committee, and no hearings are currently scheduled.
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HB  540  OIL AND GAS REVENUE  (Cera, J.)  This bill would redirect a portion of the state's oil and gas severance tax revenue to communities impacted by drilling.  The bill would allocate the first $20 million in revenue to the Ohio Department of Natural Resources and allocate the rest to Ohio communities in which that drilling occurs. The bill would allocate that excess revenue as follows: 70% to the Shale Region General Local Government Fund, 10% to the Shale Region Township Road Maintenance Fund, 10% to the Shale Region Firefighting/EMS Equipment Fund, 5% to the injection well infrastructure fund of each eligible injection well county, and 5% to the general fund of each municipal corporation or township general fund in those communities. The bill would not increase the severance tax itself. The bill was referred to the House Finance Committee, and no hearings are currently scheduled.
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HB 554   RENEWABLE ENERGY (Amstutz, R.)  This bill was introduced May 9 and is one of three bills that would revise the requirements for renewable energy, energy efficiency savings, and peak demand reduction and revise provisions governing which customers can opt out of related programs.  The bill would extend the freeze until at least 2027, based on a recommendation from the Energy Mandates Study Committee for an indefinite freeze.  It was referred to the House Public Utilities Committee, where it had a first hearing May 11.
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HB 567   BROWNFIELDS REMEDIATION (Dreihaus, D.) This bill was introduced May 17 and would require that, if JobsOhio provides financial assistance for the cleanup and remediation of brownfields, at least 85% of the assistance must be in the form of grants.  The bill was recently referred to the House Government Accountability & Oversight Committee.
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HB 583   COLLECTIVE BARGAINING (Becker, J.) This bill was introduced June 30 and would remove any requirement under the Public Employees Collective Bargaining Law that public employees join or pay dues to any employee organization.
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HB 614   PORT AUTHORITY MEETINGS (Patterson, J. and Perales, R.) This bill was introduced November 10 and would allow port authorities to conduct meetings by video conferences and teleconference.

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings are currently scheduled.
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SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee and the first hearing occurred April 27.  The tax credit would be similar to the federal Work Opportunity Tax Credit.  A business owner who hired a qualified veteran could claim the same amount on state returns as the federal tax credit. The amount could vary from $2,400-$9,600, and if a business hires a member of the Ohio National Guard or reserves, the business could claim 40% of that employee's wages up to $6,000, or $2,400 total, on their state tax return. The term "qualified veteran" would have the same meaning as defined by the IRS for the Work Opportunity Tax Credit.
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SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.
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SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings are currently scheduled.
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SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.
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SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.     
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SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A substitute bill was adopted April 12 by the Senate Energy and Natural Resources Committee that specifies the improvement projects in question must pertain to energy efficiency.  One addition to the bill is clarification over how condominium property owners can register their intent to belong to special improvement districts. Another addition pertains to the authorization of lake facility authorities. At a hearing May 25, the Committee adopted amendments that specify that if a special energy improvement project is located in a certified territory of an electric distribution utility, the utility should receive a copy of the completed petition. The amendments also corrects the bill by removing several lines that were enacted into law subsequent to the bill's introduction and clarify that the streamlined process created by the bill only applies to energy efficiency projects and not those pertaining to renewable energy, specifically excluding clean and renewable energy-based energy efficiency technologies, products and activities from the definition of "energy efficiency improvement."
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SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries. No hearings are currently scheduled.
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SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21, 2015 and was referred to the House Agricultural and Rural Development Committee on November 16, 2015.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8, 2015 was continued.

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SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill, as introduced, would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  Several recent hearings have occurred in the Ways and Means Committee.  Testimony from proponents including the Associated General Contractors of Ohio has stated that the bill would bolster local economic development by incentivizing business expansion, new construction and renovations.   Interested parties including the County Commissioners Association of Ohio, the Ohio Township Association and the Ohio Municipal League have expressed overall support for the goals of the bill but have expressed concerns that the changes could have unintended consequences, affecting local jurisdictions’ ability to offer incentives tailored to their circumstances or inhibiting the ability to effectively use other tools such as tax increment financing.  Written opponent testimony was submitted by the Ohio Association of School Business Officials, Buckeye Association of School Administrators and Ohio School Boards Association. A substitute bill was accepted by the committee, with the primary change being that the increased tax value would now be triggered by the issuance of a certificate of occupancy, further delaying the new valuation. The bill was subsequently amended to cap the exemption period to ten years, at which point the value would be reassessed if development has not occurred.  The bill passed in the Senate May 4 and has now began moving in the House.  It was assigned last week to the House Finance Committee, and the first hearing (Sponsor Testimony) is Tuesday November 15 at 1:30 pm in Room 313 of the Statehouse.  The Second Hearing (All Testimony) will be Wednesday November 16 at 9:00 am, also in Room 313.
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SB 320   RENEWABLE ENERGY (Seitz, B.) This bill would extend by another three years the renewable energy mandates freeze put in place several years ago by Senate Bill 310. The bill as introduced would expand the definition of energy efficiency to include post-consumer recycled glass by mercantile customers, consumer reductions in water usage, and improvements in wastewater treatment. It would also expand the consumer base eligible for opting out of energy efficiency programs.  The bill contains language prohibiting any state agency from issuing certain guidelines on carbon dioxide emissions, electric dispatch protocols, natural gas utilization, or regulating the acquisition of renewable energy and more "without new and specific state statutory authority to do so.”  It was referred to the Senate Energy and Natural Resources Committee, where it had a first hearing May 11.   Senator Larry Obhof (R-Medina), the Senate's president pro tem and likely next chamber leader, said in an interview in mid-July that lawmakers may not act on the soon-to-end freeze on renewable energy and energy efficiency standards until sometime next year due to a limited number of days in session.  By not acting by December 31, the freeze would thaw, allowing the standards to kick back into effect, which Republicans argue could harm Ohio considering lingering uncertainty over the federal Clean Power Plan and other unknowns. Proponents of the standards say any effort to extend the freeze or lower the standards would take the state backward.  A second hearing on the bill will take place Tuesday November 15 at 4:00 pm
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SB 325   RENEWABLE ENERGY (Jordan, K.)  This bill would repeal the requirement that electric distribution utilities and electric services companies provide 12.5% of their retail power supplies from qualifying renewable energy resources by 2027,  repeal energy efficiency and peak demand reduction requirements for electric distribution utilities, and modify the topics included in the Energy Mandates Study Committee report.  It was referred to the Senate Energy and Natural Resources Committee.

 




October
2016 OEDA Legislative Update


Ohio legislators have continued to spend much of their time in their districts, campaigning in preparation for the November election.   After the Election, the Senate will meet in November on the following dates: November 9-10, 15-16, 22 and 29-30.  The House will meet November 15-17 and 29-30.  Recent items of interest include:

  • The state's unemployment rate was up slightly to 4.8% in September compared to 4.7% in August, as total employment dropped by 3,100, according to the Department of Job and Family Services.  This is still lower than the U.S. unemployment rate, which was 5% in September.  Since September 2015, when the unemployment rate was 4.6%, the number of unemployed Ohioans has increased by 12,000.  The biggest job losses over the month of September occurred in state government (-4,200) and goods-producing industries (-3,800). Gains were led by service providers, which added 3,500 jobs.  Over the last 12 months, Ohio's total employment grew by 73,400 jobs, most of which were in the service-providing sector (+57,400), the state reported. Durable goods manufacturing led the declines over the period by shedding 9,000 positions.

  • The Ohio Development Services Agency announced that the National Institute of Standards and Technology has allocated $5.25 million per year through 2021 to the Ohio Manufacturing Extension Partnership, which supports Ohio’s small and medium-sized manufacturers by providing products, services and technical assistance to help them become more competitive and solve manufacturing challenges.  Those dollars will be matched by DSA and local businesses to generate a total of $80 million for the initiative by 2021. There are currently seven partnerships in the state that bring together regional stakeholders, including the Appalachian Partnership for Economic Growth (APEG, Nelsonville), the Center for Innovative Food Technology (CIFT, Toledo), the Manufacturing Advocacy and Growth Network (MAGNET, Cleveland), the Center for Design and Manufacturing Excellence (CDME, The Ohio State University, Columbus), PolymerOhio (Westerville), TechSolve (Cincinnati) and The University of Dayton Research Institute (FastLane, Dayton).

  • Early voting began in Ohio October 12.  Voters who choose not to vote early will head to the polls November 8.

  • On October 12, the Public Utilities Commission of Ohio rejected FirstEnergy’s proposed modified rate stability rider in favor of a staff-recommended 3 year Distribution Modernization Rider intended to ensure that FirstEnergy retains a certain level of financial health and creditworthiness so that if can invest in future distribution modernization endeavors.  The PUCO estimates the rider will cost about $3 more per month for a typical customer using 750 kilowatt hours.  FirstEnergy has 30 days to apply for another rehearing and could pursue action before the Ohio Supreme Court should that rehearing request be denied.

Bills Being Tracked:  There were no changes in the status of the bills listed below that are being tracked.

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.
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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, 2015 and passed in the Senate May 25, 2016.

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HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill passed in the House May 25, 2016.

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HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled.

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HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

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HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings are currently scheduled.
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HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.

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HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.

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HB 190 WIND SETBACKS (Burkley, T and Tim Brown). The bill as introduced would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. At a hearing before the House Public Utilities Committee May 18, a substitute bill was adopted that would allow state officials - rather than locals - to adopt minimum setback requirements for wind farms that would be located in a newly-designated "Ohio Wind Corridor" that includes much of northwest Ohio. The substitute offered by Rep. Scott Ryan (R-Newark) also deletes sections that would have allowed county commissioners to revoke resolutions creating an alternative minimum setback; permitted the Power Siting Board to increase alternative minimum setbacks for any wind turbine, and extended by five years the deadline to qualify for ongoing real and tangible personal property tax exemptions. The substitute includes latitudinal and longitudinal coordinates of the area that would be considered part of the wind corridor (map & details), indicating that the territory where wind has proven to be economically viable. Under the new version, OPSB would be able to adopt the same alternative minimum setback included in the initial bill.

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HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.

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HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6, 2015.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27, 2015.

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HB 394 UNEMPLOYMENT COMPENSATION (Sears, B.) This bill would make Ohio’s unemployment system more employer-friendly by temporarily changing the taxable wage base under Ohio's Unemployment Compensation Law, removing dependency classes for unemployment compensation benefit eligibility, temporarily freezing automatic increases for weekly unemployment compensation benefit amounts, reducing the number of weeks for which an individual may receive unemployment compensation benefits, abolishing the Unemployment Compensation Advisory Council, and making other changes to Ohio's Unemployment Compensation Law.  House Speaker Cliff Rosenberger announced in early August that the bill is one of his top priorities for the lame duck session after the November elections.
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HB 403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance, aid,  provide, or promote transportation, economic development,  housing, health care, recreation, education, government  operations, culture, research, or purposes or activities  authorized by Section 13 or 16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.

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HB 454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February 10 and would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.

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HB 482 PROPERTY TAXES (Dever, J.) This bill was introduced March 3, 2016 and would clarify the calculation of the exempt value of improved (remodeled) property subject to a community reinvestment area (CRA) exemption, clarify the calculation of the exempt value of property subject to a brownfield remediation exemption, and authorize the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property.  As to the CRA clarification, the bill states that the CRA exemption would apply to a percentage of the increased assessed value of the property/structure. The first hearing occurred May 17. The bill’s sponsor explained that with brownfields in Ohio, owners are offered a tax exemption for the increased value of the property, as a result of remediation efforts. However, in current practice, the base value of the property is calculated as its value the year before the covenant not to sue is issued, even if remediation began years before, preventing developers from gaining the true value of the abatement. Under HB482, the base value used to calculate the exemption for a brownfield will begin when the remedial activities start. Regarding community reinvestment areas, Representative Dever explained, "Current law provides for a tax exemption 'for the amount by which the remodeling increased the exempt value of the structure.' Some county auditors take the position that much of the increase in value after remodeling occurs is not a result of the remodeling itself, but rather other outside factors, i.e. resurgence of neighborhoods, community projects, increased rankings of schools, etc. Under this proposed legislation, the increased value after remodeling will be completely attributed to the remodeling activities.

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HB 491  TRADE ZONES (Anielski, M.) This bill would establish a five-year pilot program whereby taxpayers with facilities in this state with activated foreign trade zone status may claim a nonrefundable commercial activity tax credit equal to the amount redeployed by the taxpayer to job creation or other specified projects.  The bill’s first hearing before the House Ways and Means Committee occurred May 17.  The bill’s sponsor explained that the legislation would permit companies with Activated Foreign Trade Zone status to internally re-deploy some, or all, of their CAT obligation toward five areas: Job Creation, Employee Training, Employee Continuing Education, Capital Investments - including green initiatives - and Export Initiatives.

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HB 506   JOBSOHIO (Johnson, G., Smith, K.)  This bill would allow the Auditor of State to conduct full audits of JobsOhio and would require all nonprofit economic development corporations (including CICs) that receive public funds to make annual disclosures related to both their public and private funds, and would require that JobsOhio submit a quarterly progress report to the Governor, the House and the Senate detailing all of its active projects. The bill was referred to the Government Accountability and Oversight Committee, and no hearings are currently scheduled.

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HB  540  OIL AND GAS REVENUE  (Cera, J.)  This bill would redirect a portion of the state's oil and gas severance tax revenue to communities impacted by drilling.  The bill would allocate the first $20 million in revenue to the Ohio Department of Natural Resources and allocate the rest to Ohio communities in which that drilling occurs. The bill would allocate that excess revenue as follows: 70% to the Shale Region General Local Government Fund, 10% to the Shale Region Township Road Maintenance Fund, 10% to the Shale Region Firefighting/EMS Equipment Fund, 5% to the injection well infrastructure fund of each eligible injection well county, and 5% to the general fund of each municipal corporation or township general fund in those communities. The bill would not increase the severance tax itself. The bill was referred to the House Finance Committee, and no hearings are currently scheduled.

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HB 554   RENEWABLE ENERGY (Amstutz, R.)  This bill was introduced May 9 and is one of three bills that would revise the requirements for renewable energy, energy efficiency savings, and peak demand reduction and revise provisions governing which customers can opt out of related programs.  The bill would extend the freeze until at least 2027, based on a recommendation from the Energy Mandates Study Committee for an indefinite freeze.  It was referred to the House Public Utilities Committee, where it had a first hearing May 11.

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HB 567   BROWNFIELDS REMEDIATION (Dreihaus, D.) This bill was introduced May 17 and would require that, if JobsOhio provides financial assistance for the cleanup and remediation of brownfields, at least 85% of the assistance must be in the form of grants.

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HB 583   COLLECTIVE BARGAINING (Becker, J.) This bill was introduced June 30 and would remove any requirement under the Public Employees Collective Bargaining Law that public employees join or pay dues to any employee organization.


Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings are currently scheduled.

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SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee and the first hearing occurred April 27.  The tax credit would be similar to the federal Work Opportunity Tax Credit.  A business owner who hired a qualified veteran could claim the same amount on state returns as the federal tax credit. The amount could vary from $2,400-$9,600, and if a business hires a member of the Ohio National Guard or reserves, the business could claim 40% of that employee's wages up to $6,000, or $2,400 total, on their state tax return. The term "qualified veteran" would have the same meaning as defined by the IRS for the Work Opportunity Tax Credit.

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SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.

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SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings are currently scheduled.

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SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

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SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.     

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SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A substitute bill was adopted April 12 by the Senate Energy and Natural Resources Committee that specifies the improvement projects in question must pertain to energy efficiency.  One addition to the bill is clarification over how condominium property owners can register their intent to belong to special improvement districts. Another addition pertains to the authorization of lake facility authorities. At a hearing May 25, the Committee adopted amendments that specify that if a special energy improvement project is located in a certified territory of an electric distribution utility, the utility should receive a copy of the completed petition. The amendments also corrects the bill by removing several lines that were enacted into law subsequent to the bill's introduction and clarify that the streamlined process created by the bill only applies to energy efficiency projects and not those pertaining to renewable energy, specifically excluding clean and renewable energy-based energy efficiency technologies, products and activities from the definition of "energy efficiency improvement."

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SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries. No hearings are currently scheduled.

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SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21, 2015 and was referred to the House Agricultural and Rural Development Committee on November 16, 2015.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8, 2015 was continued.

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SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill, as introduced, would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  Several recent hearings have occurred in the Ways and Means Committee.  Testimony from proponents including the Associated General Contractors of Ohio has stated that the bill would bolster local economic development by incentivizing business expansion, new construction and renovations.   Interested parties including the County Commissioners Association of Ohio, the Ohio Township Association and the Ohio Municipal League have expressed overall support for the goals of the bill but have expressed concerns that the changes could have unintended consequences, affecting local jurisdictions’ ability to offer incentives tailored to their circumstances or inhibiting the ability to effectively use other tools such as tax increment financing.  Written opponent testimony was submitted by the Ohio Association of School Business Officials, Buckeye Association of School Administrators and Ohio School Boards Association. A substitute bill was accepted by the committee, with the primary change being that the increased tax value would now be triggered by the issuance of a certificate of occupancy, further delaying the new valuation. The bill was subsequently amended to cap the exemption period to ten years, at which point the value would be reassessed if development has not occurred.  The bill passed in the Senate May 4 and will move to the House.

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SB 320   RENEWABLE ENERGY (Seitz, B.) This bill would extend by another three years the renewable energy mandates freeze put in place several years ago by Senate Bill 310. The bill as introduced would expand the definition of energy efficiency to include post-consumer recycled glass by mercantile customers, consumer reductions in water usage, and improvements in wastewater treatment. It would also expand the consumer base eligible for opting out of energy efficiency programs.  The bill contains language prohibiting any state agency from issuing certain guidelines on carbon dioxide emissions, electric dispatch protocols, natural gas utilization, or regulating the acquisition of renewable energy and more "without new and specific state statutory authority to do so.”  It was referred to the Senate Energy and Natural Resources Committee, where it had a first hearing May 11.   Senator Larry Obhof (R-Medina), the Senate's president pro tem and likely next chamber leader, said in an interview in mid-July that lawmakers may not act on the soon-to-end freeze on renewable energy and energy efficiency standards until sometime next year due to a limited number of days in session.  By not acting by December 31, the freeze would thaw, allowing the standards to kick back into effect, which Republicans argue could harm Ohio considering lingering uncertainty over the federal Clean Power Plan and other unknowns. Proponents of the standards say any effort to extend the freeze or lower the standards would take the state backward.

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SB 325   RENEWABLE ENERGY (Jordan, K.)  This bill would repeal the requirement that electric distribution utilities and electric services companies provide 12.5% of their retail power supplies from qualifying renewable energy resources by 2027,  repeal energy efficiency and peak demand reduction requirements for electric distribution utilities, and modify the topics included in the Energy Mandates Study Committee report.  It was referred to the Senate Energy and Natural Resources Committee.




September 2016 OEDA Legislative Update

Activity at the Statehouse continues to be minimal while Ohio legislators campaign in their districts.  The Senate is scheduled to hold sessions on the following dates: September 27-29, October 4-6, November 9-10, 15-16, 22,29-30 and December 1, 6-8, 13-15 and 28.  The House, meanwhile, is set to reconvene after the November election for sessions on November 15-16 and29-30,and December 6-7 and 13-14.Recent items of interest include:
  • The Ohio Department of Job & Family Services announced September 16 that the state’s unemployment rate in August decreased to 4.7%;
  •  The U.S. Census Bureau announced September 15 that for 2015, the state’s median household income rose by 3.5% and the poverty rate fell by a percentage point;
  • Amended Substitute House Bill 233 became effective August 5, 2016 allowing municipalities to create Downtown Redevelopment Districts and Innovation Districts and to incentivize redevelopment in the areas with the proceeds from exempted taxes on the increased value of the redeveloped real property as well as from special assessments on parcels of real property; 
  • The state’s new Medical Marijuana law took effect September 8.  Under the law,the Department of Commerce, the State Board of Pharmacy and the Medical Board will promulgate rules by September 17, 2017 for the cultivation, dispensing,testing and purchase of medical marijuana;
  • Amendments to the state’s JEDD statutes took effect September 13.  Among other things, the new law: 1. Consolidates the JEDD Statutes into ORC 715.72;   2. Expands the applicability of JEDDs to redevelopment and residential areas if part of a mixed-use development; 3.Allows contracting parties to exclude certain parcels that are within a designated JEDD area either during formation of the JEDD or afterward by modification; 4. Clarifies that JEDD proceeds may be used for provision of utilities; 5. Eliminates requirement that contracting parties send notice after JEDD formation to counties in which JEDD located (assuming counties are not parties), and 6. Creates new processes whereby businesses within a JEDD area may file suit in common pleas court to be exempt from JEDD income taxes, if businesses can prove they were in JEDD area before it was formed, they did not consent to participate and neither the businesses nor their employees would receive material benefits due to the JEDD.
  • Legislation pursuant to House Bill 429 took effect September 15  and made employers and employees of automotive technicians and motor vehicle technicians eligible to participate in the Incumbent Workforce Training Voucher Program.

Bills Being Tracked:  There were no changes in the status of the bills listed below that are being tracked.

House Bills:                                  

HB1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year,and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an"in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.
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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives,and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, 2015and passed in the Senate May 25, 2016.
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HB12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre“overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF)incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill passed in the House May 25, 2016.
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HB 13 PUBLIC SAFETY REVENUES (Butler, J.,Burkley, T.)The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled. 
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HB 65 TAX EXPENDITURES (Driehaus,D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees,but no hearings have yet been scheduled.
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HB72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects,customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner,rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings are currently scheduled.
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HB103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship,would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.
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HB175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the"Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships,promoting their business, and conducting transactions in foreign markets.Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.
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HB190 WIND SETBACKS (Burkley,T and Tim Brown). The bill as introduced would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. At a hearing before the House Public Utilities Committee May 18, a substitute bill was adopted that would allow state officials - rather than locals - to adopt minimum setback requirements for wind farms that would be located in a newly-designated "Ohio Wind Corridor" that includes much of northwest Ohio. The substitute offered by Rep. Scott Ryan (R-Newark)also deletes sections that would have allowed county commissioners to revoke resolutions creating an alternative minimum setback; permitted the Power Siting Board to increase alternative minimum setbacks for any wind turbine, and extended by five years the deadline to qualify for ongoing real and tangible personal property tax exemptions. The substitute includes latitudinal and longitudinal coordinates of the area that would be considered part of the wind corridor (map & details), indicating that the territory where wind has proven to be economically viable. Under the new version, OPSB would be able to adopt the same alternative minimum setback included in the initial bill. ______________________________________________________________________________________________________

HB203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund. ______________________________________________________________________________________________________

HB 253RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds,which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6, 2015.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27, 2015.
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HB394 UNEMPLOYMENT COMPENSATION (Sears, B.) This bill would make Ohio’s unemployment system more employer-friendly by temporarily changing the taxable wage base under Ohio's Unemployment Compensation Law, removing dependency classes for unemployment compensation benefit eligibility, temporarily freezing automatic increases for weekly unemployment compensation benefit amounts,reducing the number of weeks for which an individual may receive unemployment compensation benefits, abolishing the Unemployment Compensation Advisory Council, and making other changes to Ohio's Unemployment Compensation Law.  House Speaker Cliff Rosenberger announced in early August that the bill is one of his top priorities for the lame duck session after the November elections.
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HB403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance,aid,  provide, or promote transportation, economic development, housing, health care, recreation, education, government  operations,culture, research, or purposes or activities  authorized by Section 13 or16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.
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HB454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February10 and would provide for a permanent three-day sales tax "holiday"each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.
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HB482 PROPERTY TAXES (Dever, J.) This bill was introduced March 3, 2016 and would clarify the calculation of the exempt value of improved (remodeled) property subject to a community reinvestment area (CRA) exemption, clarify the calculation of the exempt value of property subject to a brownfield remediation exemption, and authorize the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property.  As to the CRA clarification, the bill states that the CRA exemption would apply to a percentage of the increased assessed value of the property/structure. The first hearing occurred May 17. The bill’s sponsor explained that with brownfields in Ohio, owners are offered a tax exemption for the increased value of the property, as a result of remediation efforts. However, in current practice, the base value of the property is calculated as its value the year before the covenant not to sue is issued, even if remediation began years before, preventing developers from gaining the true value of the abatement. Under HB482, the base value used to calculate the exemption for a brownfield will begin when the remedial activities start. Regarding community reinvestment areas, Representative Dever explained, "Current law provides for a tax exemption 'for the amount by which the remodeling increased the exempt value of the structure.' Some county auditors take the position that much of the increase in value after remodeling occurs is not a result of the remodeling itself, but rather other outside factors, i.e. resurgence of neighborhoods, community projects, increased rankings of schools, etc. Under this proposed legislation, the increased value after remodeling will be completely attributed to the remodeling activities.
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HB491  TRADE ZONES (Anielski, M.) This bill would establish a five-year pilot program whereby taxpayers with facilities in this state with activated foreign trade zone status may claim a nonrefundable commercial activity tax credit equal to the amount redeployed by the taxpayer to job creation or other specified projects.  The bill’s first hearing before the House Ways and Means Committee occurred May 17.  The bill’s sponsor explained that the legislation would permit companies with Activated Foreign Trade Zone status to internally re-deploy some, or all, of their CAT obligation toward five areas:  Job Creation, Employee Training, Employee Continuing Education, Capital Investments - including green initiatives - and Export Initiatives.
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HB506   JOBSOHIO (Johnson, G., Smith, K.)  This bill would allow the Auditor of State to conduct full audits of JobsOhio and would require all nonprofit economic development corporations (including CICs) that receive public funds to make annual disclosures related to both their public and private funds, and would require that JobsOhio submit a quarterly progress report to the Governor, the House and the Senate detailing all of its active projects. The bill was referred to the Government Accountability and Oversight Committee, and no hearings are currently scheduled.
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HB 540  OIL AND GAS REVENUE  (Cera, J.)  This bill would redirect a portion of the state's oil and gas severance tax revenue to communities impacted by drilling.  The bill would allocate the first $20 million in revenue to the Ohio Department of Natural Resources and allocate the rest to Ohio communities in which that drilling occurs. The bill would allocate that excess revenue as follows: 70% to the Shale Region General Local Government Fund,10% to the Shale Region Township Road Maintenance Fund, 10% to the Shale Region Firefighting/EMS Equipment Fund, 5% to the injection well infrastructure fund of each eligible injection well county, and 5% to the general fund of each municipal corporation or township general fund in those communities. The bill would not increase the severance tax itself. The bill was referred to the House Finance Committee, and no hearings are currently scheduled.
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HB554   RENEWABLE ENERGY (Amstutz, R.)  This bill was introduced May 9 and is one of three bills that would revise the requirements for renewable energy, energy efficiency savings, and peak demand reduction and revise provisions governing which customers can opt out of related programs.  The bill would extend the freeze until at least 2027, based on a recommendation from the Energy Mandates Study Committee for an indefinite freeze.  It was referred to the House Public Utilities Committee, where it had a first hearing May 11.
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HB567   BROWNFIELDS REMEDIATION (Dreihaus, D.) This bill was introduced May 17 and would require that, if JobsOhio provides financial assistance for the cleanup and remediation of brownfields, at least 85% of the assistance must be in the form of grants.
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HB583   COLLECTIVE BARGAINING (Becker, J.) This bill was introduced June 30 and would remove any requirement under the Public Employees Collective Bargaining Law that public employees join or pay dues to any employee organization.

SenateBills:

SB12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings are currently scheduled.
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SB18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee and the first hearing occurred April 27.  The tax credit would be similar to the federal Work Opportunity Tax Credit.  A business owner who hired a qualified veteran could claim the same amount on state returns as the federal tax credit. The amount could vary from $2,400-$9,600, and if a business hires a member of the Ohio National Guard or reserves, the business could claim 40% of that employee's wages up to $6,000, or $2,400 total, on their state tax return.The term "qualified veteran" would have the same meaning as defined by the IRS for the Work Opportunity Tax Credit.
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SB41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.
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SB45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings are currently scheduled.
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SB88 TAX CREDITS(Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.
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SB109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.    
 
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SB 185IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as“Property Assessed Clean Energy” or “PACE” projects.  A substitute bill was adopted April 12 by the Senate Energy and Natural Resources Committee that specifies the improvement projects in question must pertain to energy efficiency.  One addition to the bill is clarification over how condominium property owners can register their intent to belong to special improvement districts. Another addition pertains to the authorization of lake facility authorities. At a hearing May 25, the Committee adopted amendments that specify that if a special energy improvement project is located in a certified territory of an electric distribution utility, the utility should receive a copy of the completed petition. The amendments also corrects the bill by removing several lines that were enacted into law subsequent to the bill's introduction and clarify that the streamlined process created by the bill only applies to energy efficiency projects and not those pertaining to renewable energy, specifically excluding clean and renewable energy-based energy efficiency technologies, products and activities from the definition of"energy efficiency improvement." ______________________________________________________________________________________________________

SB 198MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries. No hearings are currently scheduled.
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SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act”which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21, 2015 and was referred to the House Agricultural and Rural Development Committee on November 16, 2015.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8, 2015 was continued.
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SB235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill, as introduced,would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  Several recent hearings have occurred in the Ways and Means Committee.  Testimony from proponents including the Associated General Contractors of Ohio has stated that the bill would bolster local economic development by incentivizing business expansion, new construction and renovations.   Interested parties including the County Commissioners Association of Ohio, the Ohio Township Association and the Ohio Municipal League have expressed overall support for the goals of the bill but have expressed concerns that the changes could have unintended consequences, affecting local jurisdictions’ ability to offer incentives tailored to their circumstances or inhibiting the ability to effectively use other tools such as tax increment financing.  Written opponent testimony was submitted by the Ohio Association of School Business Officials, Buckeye Association of School Administrators and Ohio School Boards Association. A substitute bill was accepted by the committee, with the primary change being that the increased tax value would now be triggered by the issuance of a certificate of occupancy, further delaying the new valuation. The bill was subsequently amended to cap the exemption period to ten years, at which point the value would be reassessed if development has not occurred.  The bill passed in the Senate May 4 and will move to the House. ______________________________________________________________________________________________________

SB320   RENEWABLE ENERGY (Seitz, B.) This bill would extend by another three years the renewable energy mandates freeze put in place several years ago by Senate Bill 310. The bill as introduced would expand the definition of energy efficiency to include post-consumer recycled glass by mercantile customers, consumer reductions in water usage, and improvements in wastewater treatment. It would also expand the consumer base eligible for opting out of energy efficiency programs.  The bill contains language prohibiting any state agency from issuing certain guidelines on carbon dioxide emissions,electric dispatch protocols, natural gas utilization, or regulating the acquisition of renewable energy and more "without new and specific state statutory authority to do so.”  It was referred to the Senate Energy and Natural Resources Committee, where it had a first hearing May 11.  Senator Larry Obhof (R-Medina), the Senate's president pro tem and likely next chamber leader, said in an interview in mid-July that lawmakers may not act on the soon-to-end freeze on renewable energy and energy efficiency standards until sometime next year due to a limited number of days in session.  By not acting by December 31, the freeze would thaw, allowing the standards to kick back into effect, which Republicans argue could harm Ohio considering lingering uncertainty over the federal Clean Power Plan and other unknowns. Proponents of the standards say any effort to extend the freeze or lower the standards would take the state backward.

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SB325   RENEWABLE ENERGY (Jordan, K.)  This bill would repeal the requirement that electric distribution utilities and electric services companies provide 12.5% of their retail power supplies from qualifying renewable energy resources by 2027,  repeal energy efficiency and peak demand reduction requirements for electric distribution utilities, and modify the topics included in the Energy Mandates Study Committee report.  It was referred to the Senate Energy and Natural Resources Committee.




August 2016 OEDA Legislative Update


Significant recent events of interest include the following:

  • The Democratic National Convention got off to a rocky start July 25 in Philadelphia, with Cleveland-area Representative Marcia Fudge taking over as the convention chair after former Chairwoman Debbie Wasserman Schultz resigned.  Hillary Clinton made history, becoming the first female presidential nominee of a major party in U.S. history;
  • Former Lake County prosecutor and longtime U.S. House of Representatives member Steve LaTourette passed away at his home in McLean, Virginia on Aug. 3 after a battle with pancreatic cancer;
  • The Senate race between former Governor Ted Strickland and current Senator Rob Portman remains heated.  A Quinnipiac poll released August 11 shows Senator Portman ahead by 9 points, but the battle will continue to be closely watched, as it is among a handful of races likely to determine which political party controls the U.S.Senate next year.  Republicans hold 54 seats to 44 for the Democrats,although independents Bernie Sanders of Vermont and Angus King of Maine caucus with the Democrats, and
  • While Ohio lawmakers have continued work in committees and in their districts this summer, the Senate is not scheduled to hold session until late September with at most 21 days set for work in committees, and much fewer days anticipated for full sessions. The House, meanwhile, is set to reconvene after the November election with at most eight full session days.

Bills Being Tracked:  Updates to bills being tracked are noted below in red.

House Bills:                                  

HB1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year,and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an"in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.
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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives,and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, 2015and passed in the Senate May 25, 2016.
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HB12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre“overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill passed in the House May 25, 2016.
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HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.)The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled.
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HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees,but no hearings have yet been scheduled.
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HB72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects,customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings are currently scheduled.
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HB103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship,would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.
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HB175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the"Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships,promoting their business, and conducting transactions in foreign markets.Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.
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SUBSTITUTE HB 182 DEVELOPMENT ZONES (Schuring, K.) This new law revises the laws governing the creation and operation of joint economic development districts (JEDDs) and makes slight changes to the laws relating enterprise zones. Changes to the JEDD laws include the following: 1. Statutes will be consolidated into ORC 715.72;  2. Authority expanded to allow JEDDs to be created for purpose of redevelopment, as well as to include residential areas if part of a mixed-use development; 3. Allows contracting parties to exclude certain parcels that are within a designated JEDD area either during formation of the JEDD or afterward by modification; 4. Clarifies that JEDD proceeds may be used for provision of utilities; 5. Eliminates requirement that contracting parties send notice after JEDD formed to counties in which JEDD located (assuming counties are not parties), and 6. Creates new process whereby businesses within a JEDD area may file suit in common pleas court to be exempt from JEDD income taxes, if businesses can prove they were in JEDD area before it was formed, they did not consent to participate and neither the businesses nor their employees would receive material benefits due to the JEDD.   The new law also: 1.Revises the enterprise zone statutes to allow the inclusion of retail facilities if exclusion waived by the local school district; 2. extends the deadline for municipal corporations to report information to enable a computation of fiscal effects of recent changes to net operating loss deductions for municipal income tax purposes and 3. modifies the eligible investment criteria for the state New Markets Tax Credit.  The bill was signed into law by the Governor June 13 and takes effect September 13, 2016.
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HB190 WIND SETBACKS (Burkley, T and Tim Brown). The bill as introduced would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. At a hearing before the House Public Utilities Committee May 18, a substitute bill was adopted that would allow state officials - rather than locals - to adopt minimum setback requirements for wind farms that would be located in a newly-designated "Ohio Wind Corridor" that includes much of northwest Ohio. The substitute offered by Rep. Scott Ryan (R-Newark)also deletes sections that would have allowed county commissioners to revoke resolutions creating an alternative minimum setback; permitted the Power Siting Board to increase alternative minimum setbacks for any wind turbine, and extended by five years the deadline to qualify for ongoing real and tangible personal property tax exemptions. The substitute includes latitudinal and longitudinal coordinates of the area that would be considered part of the wind corridor (map & details), indicating that the territory where wind has proven to be economically viable. Under the new version, OPSB would be able to adopt the same alternative minimum setback included in the initial bill.
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HB203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.
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HB233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring, K.) This new law authorizes municipalities to create downtown redevelopment districts (DRDs) and innovation districts and allows them to incentivize redevelopment in the areas with the proceeds from exempted taxes on the increased value of the redeveloped real property as well as from special assessments on parcels of real property.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to10 years.  Proceeds could then be used for infrastructure development as well as municipal grant or loan programs to owners of businesses within the districts.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  Special assessments may also be placed on parcels within the DRDs, with consent of property owners, to raise funds for improvements to the districts.Municipalities may designate areas within DRDs as “Innovation Districts” if they provide high-speed broadband internet connectivity of at least 100gigabits/second and offer incentives to tech businesses, incubators or accelerators within the district.  If school district approval is obtained, exemptions may be in place for up to 30 years.  The bill was signed by the Governor May 6, 2016 and takes effect August 5, 2016.
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HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds,which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27.
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HB 394 UNEMPLOYMENT COMPENSATION (Sears, B.) This bill would make Ohio’s unemployment system more employer-friendly by temporarily changing the taxable wage base under Ohio's Unemployment Compensation Law, removing dependency classes for unemployment compensation benefit eligibility, temporarily freezing automatic increases for weekly unemployment compensation benefit amounts,reducing the number of weeks for which an individual may receive unemployment compensation benefits, abolishing the Unemployment Compensation Advisory Council, and making other changes to Ohio's Unemployment Compensation Law.  House Speaker Cliff Rosenberger announced in early August that the bill is one of his top priorities for the lame duck session after the November elections.
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HB403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance,aid,  provide, or promote transportation, economic development, housing, health care, recreation, education, government  operations,culture, research, or purposes or activities  authorized by Section 13 or16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.
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HB429  AUTO TECHNICIANS (Antani, N., Reineke, B.) This new law will make employers and employees of automotive technicians and motor vehicle technicians eligible to participate in the Incumbent Workforce Training Voucher Program.The bill was signed by the Governor June 14 and is effective September 15,2016.
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HB454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February10 and would provide for a permanent three-day sales tax "holiday"each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.
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HB482 PROPERTY TAXES (Dever, J.) This bill was introduced March 3, 2016 and would clarify the calculation of the exempt value of improved (remodeled) property subject to a community reinvestment area (CRA) exemption, clarify the calculation of the exempt value of property subject to a brownfield remediation exemption, and authorize the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property.  As to the CRA clarification, the bill states that the CRA exemption would apply to a percentage of the increased assessed value of the property/structure. The first hearing occurred May 17. The bill’s sponsor explained that with brownfields in Ohio, owners are offered a tax exemption for the increased value of the property, as a result of remediation efforts. However, in current practice, the base value of the property is calculated as its value the year before the covenant not to sue is issued, even if remediation began years before, preventing developers from gaining the true value of the abatement. Under HB482, the base value used to calculate the exemption for a brownfield will begin when the remedial activities start. Regarding community reinvestment areas, Representative Dever explained, "Current law provides for a tax exemption 'for the amount by which the remodeling increased the exempt value of the structure.' Some county auditors take the position that much of the increase in value after remodeling occurs is not a result of the remodeling itself, but rather other outside factors, i.e. resurgence of neighborhoods, community projects, increased rankings of schools, etc. Under this proposed legislation, the increased value after remodeling will be completely attributed to the remodeling activities.
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HB491  TRADE ZONES (Anielski, M.) This bill would establish a five-year pilot program whereby taxpayers with facilities in this state with activated foreign trade zone status may claim a nonrefundable commercial activity tax credit equal to the amount redeployed by the taxpayer to job creation or other specified projects.  The bill’s first hearing before the House Ways and Means Committee occurred May 17.  The bill’s sponsor explained that the legislation would permit companies with Activated Foreign Trade Zone status to internally re-deploy some, or all, of their CAT obligation toward five areas:Job Creation, Employee Training, Employee Continuing Education, Capital Investments - including green initiatives - and Export Initiatives.
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HB506   JOBSOHIO (Johnson, G., Smith, K.)  This bill would allow the Auditor of State to conduct full audits of JobsOhio and would require all nonprofit economic development corporations (including CICs) that receive public funds to make annual disclosures related to both their public and private funds, and would require that JobsOhio submit a quarterly progress report to the Governor, the House and the Senate detailing all of its active projects. The bill was referred to the Government Accountability and Oversight Committee, and no hearings are currently scheduled.
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HB523 MEDICAL MARIJUANA (Huffman, S.) This new laws authorizes the use of marijuana for medical purposes and would establish the Medical Marijuana Control Commission under the Ohio Department of Health.  “Medical conditions” include HIV/AIDS; Alzheimer's disease; Amyotrophic lateral sclerosis (ALS); cancer; chronic traumatic encephalopathy (CTE); Crohn's disease; epilepsy or another seizure disorder; fibromyalgia; glaucoma; hepatitis C; inflammatory bowel disease; multiple sclerosis; pain that is chronic, severe, and intractable; Parkinson's disease; post traumatic stress disorder; sickle cell anemia; spinal cord disease or injury; Tourette's syndrome; traumatic brain injury; and ulcerative colitis. Individuals can petition the state medical board to add conditions. It would create requirements for tracking and monitoring of production and sale as well as requirements for doctors to maintain relationships with prescribed patients. Doctors must register with the state, which will require completing continuing education about cannabis, before being able to recommend marijuana to patients with whom they have bona fide relationships.The patient registration process would be determined by the Ohio State Pharmacy Board. The rules and regulations for dispensaries, testing labs and marijuana processors, which will make marijuana-infused products and package everything for sale, must be determined by September 2017. The law requires 500 feet between any marijuana business and a school, church, public library or public playground. Local governments can restrict where cultivators, processors and dispensaries can be located or ban them altogether. The state pharmacy board will decide how many dispensary licenses to issue, and the law requires it take into account the state's population, patient demand and ensuring dispensaries are not just concentrated in certain parts of the state. The bill does not require employers to accommodate employees’ use of medical marijuana and does not prohibit employers from refusing to hire, discharging or taking adverse employment actions due to an employee’s use of medical marijuana.  The bill also contains language considering that a person discharged from employment due to use of medical marijuana was discharged for just cause and is thus ineligible for unemployment benefits.  It also maintains a rebuttable presumption that an employee is ineligible for workers’ compensation if he or she was under the influence of medical marijuana and that was the proximate cause of injury.  The bill was signed into law by the Governor on June 8 and is effective September 8, 2016.
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HB 540  OIL AND GAS REVENUE  (Cera, J.)  This bill would redirect a portion of the state's oil and gas severance tax revenue to communities impacted by drilling.  The bill would allocate the first $20 million in revenue to the Ohio Department of Natural Resources and allocate the rest to Ohio communities in which that drilling occurs. The bill would allocate that excess revenue as follows: 70% to the Shale Region General Local Government Fund, 10% to the Shale Region Township Road Maintenance Fund, 10% to the Shale Region Firefighting/EMS Equipment Fund, 5% to the injection well infrastructure fund of each eligible injection well county, and 5% to the general fund of each municipal corporation or township general fund in those communities. The bill would not increase the severance tax itself. The bill was referred to the House Finance Committee, and no hearings are currently scheduled.
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HB554 RENEWABLE ENERGY (Amstutz, R.)  This bill was introduced May 9 and is one of three bills that would revise the requirements for renewable energy, energy efficiency savings, and peak demand reduction and revise provisions governing which customers can opt out of related programs.  The bill would extend the freeze until at least 2027, based on a recommendation from the Energy Mandates Study Committee for an indefinite freeze.  It was referred to the House Public Utilities Committee, where it had a first hearing May 11.
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HB567 BROWNFIELDS REMEDIATION (Dreihaus, D.) This bill was introduced May 17 and would require that, if JobsOhio provides financial assistance for the cleanup and remediation of brownfields, at least 85% of the assistance must be in the form of grants.
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HB583 COLLECTIVE BARGAINING (Becker, J.) This bill was introduced June 30 and would remove any requirement under the Public Employees Collective Bargaining Law that public employees join or pay dues to any employee organization.

Senate Bills:

SB12 TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings are currently scheduled.
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SB18 TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee and the first hearing occurred April 27.  The tax credit would be similar to the federal Work Opportunity Tax Credit.  A business owner who hired a qualified veteran could claim the same amount on state returns as the federal tax credit. The amount could vary from $2,400-$9,600, and if a business hires a member of the Ohio National Guard or reserves, the business could claim 40% of that employee's wages up to $6,000, or $2,400 total, on their state tax return.The term "qualified veteran" would have the same meaning as defined by the IRS for the Work Opportunity Tax Credit.
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SB41 NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.
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SB45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings are currently scheduled.
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SB88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.
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SB109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.      
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SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as“Property Assessed Clean Energy” or “PACE” projects.  A substitute bill was adopted April 12 by the Senate Energy and Natural Resources Committee that specifies the improvement projects in question must pertain to energy efficiency.  One addition to the bill is clarification over how condominium property owners can register their intent to belong to special improvement districts. Another addition pertains to the authorization of lake facility authorities. At a hearing May 25, the Committee adopted amendments that specify that if a special energy improvement project is located in a certified territory of an electric distribution utility, the utility should receive a copy of the completed petition. The amendments also corrects the bill by removing several lines that were enacted into law subsequent to the bill's introduction and clarify that the streamlined process created by the bill only applies to energy efficiency projects and not those pertaining to renewable energy, specifically excluding clean and renewable energy-based energy efficiency technologies, products and activities from the definition of"energy efficiency improvement."
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SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident. The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries. No hearings are currently scheduled.
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SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act”which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21 and was referred to the House Agricultural and Rural Development Committee on November 16.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8 was continued.
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SB235 PROPERTY TAXES (Beagle, B., Coley, B.) This bill, as introduced,would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  Several recent hearings have occurred in the Ways and Means Committee.  Testimony from proponents including the Associated General Contractors of Ohio has stated that the bill would bolster local economic development by incentivizing business expansion, new construction and renovations.   Interested parties including the County Commissioners Association of Ohio, the Ohio Township Association and the Ohio Municipal League have expressed overall support for the goals of the bill but have expressed concerns that the changes could have unintended consequences, affecting local jurisdictions’ ability to offer incentives tailored to their circumstances or inhibiting the ability to effectively use other tools such as tax increment financing.  Written opponent testimony was submitted by the Ohio Association of School Business Officials, Buckeye Association of School Administrators and Ohio School Boards Association. A substitute bill was accepted by the committee, with the primary change being that the increased tax value would now be triggered by the issuance of a certificate of occupancy, further delaying the new valuation. The bill was subsequently amended to cap the exemption period to ten years, at which point the value would be reassessed if development has not occurred.  The bill passed in the Senate May 4 and will move to the House.
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SB264 TAX HOLIDAY (Bacon, K.) This new law provides for a three-day sales tax "holiday" August 5-7, 2016 during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes with the following limitations: 1. Clothing items must be priced at $75 or less per item to be exempt; 2. School supplies must be priced at $20 or less per item to be exempt, and 3. Instructional materials must be priced at $20 or less per item to be exempt.  The bill was signed by the Governor May 6.
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SB312 CAPITAL APPROPRIATIONS (Oelslager, S.)  The state enacts capital bills in even years and provides appropriations for the repair,reconstruction and construction of capital assets of state agencies, colleges,universities and school districts as well as funds for community projects of local or regional interest when available.  The $2.62 billion capital appropriations budget for fiscal years 2017-2018 generally includes $650million for K-12 buildings through the Ohio School Facilities, $500 million for local infrastructure through the Public Works Commission, including $100million for Clean Ohio, $100 million for health and human services facilities and $160 million for community projects. A full list of community projects to be funded is available at: http://obm.ohio.gov/Budget/capital/doc/fy-17-18/County_Report_FY17-18_Summary.pdf. The bill also contains $428 million, or about $24 million more than two years ago, for higher education projects vetted ahead of time by representatives of two- and four-year institutions.  The bill was signed by the Governor May17, 2016.
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SB320 RENEWABLE ENERGY (Seitz, B.) This bill would extend by another three years the renewable energy mandates freeze put in place several years ago by Senate Bill 310. The bill as introduced would expand the definition of energy efficiency to include post-consumer recycled glass by mercantile customers, consumer reductions in water usage, and improvements in wastewater treatment. It would also expand the consumer base eligible for opting out of energy efficiency programs.  The bill contains language prohibiting any state agency from issuing certain guidelines on carbon dioxide emissions, electric dispatch protocols, natural gas utilization, or regulating the acquisition of renewable energy and more "without new and specific state statutory authority to do so.”  It was referred to the Senate Energy and Natural Resources Committee, where it had a first hearing May 11.   Senator Larry Obhof (R-Medina), the Senate's president pro tem and likely next chamber leader, said in an interview in mid-July that lawmakers may not act on the soon-to-end freeze on renewable energy and energy efficiency standards until sometime next year due to a limited number of days in session.  By not acting by December 31, the freeze would thaw, allowing the standards to kickback into effect, which Republicans argue could harm Ohio considering lingering uncertainty over the federal Clean Power Plan and other unknowns. Proponents of the standards say any effort to extend the freeze or lower the standards would take the state backward.
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SB325 RENEWABLE ENERGY (Jordan, K.)  This bill would repeal the requirement that electric distribution utilities and electric services companies provide 12.5% of their retail power supplies from qualifying renewable energy resources by 2027,  repeal energy efficiency and peak demand reduction requirements for electric distribution utilities, and modify the topics included in the Energy Mandates Study Committee report.  It was referred to the Senate Energy and Natural Resources Committee.

 

 


July
2016 OEDA Legislative Update



The OEDA Mid-Year Briefing was held in Columbus on July 15.  Click Here for the legislative update presented by Bricker & Eckler LLP.

Significant recent events of interest include the following:

  • Former U. S. Senator and Governor George Voinovich, a Republican from Cleveland passed away in early June.  Mr. Voinovich, who retired from the U.S. Senate at the end of his second, six-year term in 2010, had a distinguished career in public service that spanned 47 years, including stints in the Ohio House of Representatives in the late 1960’s, the executive branch serving as Lt. Governor under Governor James A. Rhodes and as Governor from 1991-1998 and as Cleveland Mayor from 1979-1989.  Mr. Voinovich earned the reputation of being a fiscal conservative, balancing the budgets of both Cleveland and the State.
  • Appointment by Governor Kasich of Attorney Howard Petricoff to the Public Utilities Commission of Ohio.  Both Mr. Petricoff and newly-appointed Chair Asim Haque face further hearings in the legislature, and
  • Appointment by presumptive Republican Presidential candidate Donald Trump of his Vice-Presidential running mate, Mike Pence, Governor of Indiana.  Additionally, the Republican National Convention kicked off in Cleveland July 18, with the Democratic Convention slated for Philadelphia July 25.

Bills Being Tracked:  Updates to bills being tracked are noted below in red.

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.
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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, 2015 and passed in the Senate May 25, 2016.
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HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill passed in the House May 25, 2016.
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HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled.
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HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.
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HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings are currently scheduled.
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HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.
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HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.
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SUBSTITUTE HB 182 DEVELOPMENT ZONES (Schuring, K.) This new law revises the laws governing the creation and operation of joint economic development districts (JEDDs) and makes slight changes to the laws relating enterprise zones. Changes to the JEDD laws include the following: 1. Statutes will be consolidated into ORC 715.72;   2. Authority expanded to allow JEDDs to be created for purpose of redevelopment, as well as to include residential areas if part of a mixed-use development; 3. Allows contracting parties to exclude certain parcels that are within a designated JEDD area either during formation of the JEDD or afterward by modification; 4. Clarifies that JEDD proceeds may be used for provision of utilities; 5. Eliminates requirement that contracting parties send notice after JEDD formed to counties in which JEDD located (assuming counties are not parties), and 6. Creates new process whereby businesses within a JEDD area may file suit in common pleas court to be exempt from JEDD income taxes, if businesses can prove they were in JEDD area before it was formed, they did not consent to participate and neither the businesses nor their employees would receive material benefits due to the JEDD.   The new law also: 1. Revises the enterprise zone statutes to allow the inclusion of retail facilities if exclusion waived by the local school district; 2. extends the deadline for municipal corporations to report information to enable a computation of fiscal effects of recent changes to net operating loss deductions for municipal income tax purposes and 3. modifies the eligible investment criteria for the state New Markets Tax Credit.  The bill was signed into law by the Governor June 13 and takes effect September 13, 2016.
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HB 190 WIND SETBACKS (Burkley, T and Tim Brown). The bill as introduced would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. At a hearing before the House Public Utilities Committee May 18, a substitute bill was adopted that would allow state officials - rather than locals - to adopt minimum setback requirements for wind farms that would be located in a newly-designated "Ohio Wind Corridor" that includes much of northwest Ohio. The substitute offered by Rep. Scott Ryan (R-Newark) also deletes sections that would have allowed county commissioners to revoke resolutions creating an alternative minimum setback; permitted the Power Siting Board to increase alternative minimum setbacks for any wind turbine, and extended by five years the deadline to qualify for ongoing real and tangible personal property tax exemptions. The substitute includes latitudinal and longitudinal coordinates of the area that would be considered part of the wind corridor (map & details), indicating that the territory where wind has proven to be economically viable. Under the new version, OPSB would be able to adopt the same alternative minimum setback included in the initial bill.
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HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.
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HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring, K.) This new law authorizes municipalities to create downtown redevelopment districts (DRDs) and innovation districts and allows them to incentivize redevelopment in the areas with the proceeds from exempted taxes on the increased value of the redeveloped real property as well as from special assessments on parcels of real property.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for infrastructure development as well as municipal grant or loan programs to owners of businesses within the districts.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  Special assessments may also be placed on parcels within the DRDs, with consent of property owners, to raise funds for improvements to the districts. Municipalities may designate areas within DRDs as “Innovation Districts” if they provide high-speed broadband internet connectivity of at least 100 gigabits/second and offer incentives to tech businesses, incubators or accelerators within the district.  If school district approval is obtained, exemptions may be in place for up to 30 years.  The bill was signed by the Governor May 6, 2016 and takes effect August 5, 2016.
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HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27.
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HB 403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance, aid,  provide, or promote transportation, economic development,  housing, health care, recreation, education, government  operations, culture, research, or purposes or activities  authorized by Section 13 or 16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.
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HB 429  AUTO TECHNICIANS (Antani, N., Reineke, B.) This new law will make employers and employees of automotive technicians and motor vehicle technicians eligible to participate in the Incumbent Workforce Training Voucher Program. The bill was signed by the Governor June 14 and is effective September 15, 2016.
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HB 454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February 10 and would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.
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HB 482 PROPERTY TAXES (Dever, J.) This bill was introduced March 3, 2016 and would clarify the calculation of the exempt value of improved (remodeled) property subject to a community reinvestment area (CRA) exemption, clarify the calculation of the exempt value of property subject to a brownfield remediation exemption, and authorize the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property.  As to the CRA clarification, the bill states that the CRA exemption would apply to a percentage of the increased assessed value of the property/structure. The first hearing occurred May 17. The bill’s sponsor explained that with brownfields in Ohio, owners are offered a tax exemption for the increased value of the property, as a result of remediation efforts. However, in current practice, the base value of the property is calculated as its value the year before the covenant not to sue is issued, even if remediation began years before, preventing developers from gaining the true value of the abatement. Under HB482, the base value used to calculate the exemption for a brownfield will begin when the remedial activities start. Regarding community reinvestment areas, Representative Dever explained, "Current law provides for a tax exemption 'for the amount by which the remodeling increased the exempt value of the structure.' Some county auditors take the position that much of the increase in value after remodeling occurs is not a result of the remodeling itself, but rather other outside factors, i.e. resurgence of neighborhoods, community projects, increased rankings of schools, etc. Under this proposed legislation, the increased value after remodeling will be completely attributed to the remodeling activities.
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HB 491  TRADE ZONES (Anielski, M.) This bill would establish a five-year pilot program whereby taxpayers with facilities in this state with activated foreign trade zone status may claim a nonrefundable commercial activity tax credit equal to the amount redeployed by the taxpayer to job creation or other specified projects.  The bill’s first hearing before the House Ways and Means Committee occurred May 17.  The bill’s sponsor explained that the legislation would permit companies with Activated Foreign Trade Zone status to internally re-deploy some, or all, of their CAT obligation toward five areas: Job Creation, Employee Training, Employee Continuing Education, Capital Investments - including green initiatives - and Export Initiatives.
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HB 506   JOBSOHIO (Johnson, G., Smith, K.)  This bill would allow the Auditor of State to conduct full audits of JobsOhio and would require all nonprofit economic development corporations (including CICs) that receive public funds to make annual disclosures related to both their public and private funds, and would require that JobsOhio submit a quarterly progress report to the Governor, the House and the Senate detailing all of its active projects. The bill was referred to the Government Accountability and Oversight Committee, and no hearings are currently scheduled.
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HB 523   MEDICAL MARIJUANA (Huffman, S.) This new laws authorizes the use of marijuana for medical purposes and would establish the Medical Marijuana Control Commission under the Ohio Department of Health.  “Medical conditions” include HIV/AIDS; Alzheimer's disease; Amyotrophic lateral sclerosis (ALS); cancer; chronic traumatic encephalopathy (CTE); Crohn's disease; epilepsy or another seizure disorder; fibromyalgia; glaucoma; hepatitis C; inflammatory bowel disease; multiple sclerosis; pain that is chronic, severe, and intractable; Parkinson's disease; post traumatic stress disorder; sickle cell anemia; spinal cord disease or injury; Tourette's syndrome; traumatic brain injury; and ulcerative colitis. Individuals can petition the state medical board to add conditions. It would create requirements for tracking and monitoring of production and sale as well as requirements for doctors to maintain relationships with prescribed patients. Doctors must register with the state, which will require completing continuing education about cannabis, before being able to recommend marijuana to patients with whom they have bona fide relationships. The patient registration process would be determined by the Ohio State Pharmacy Board. The rules and regulations for dispensaries, testing labs and marijuana processors, which will make marijuana-infused products and package everything for sale, must be determined by September 2017. The law requires 500 feet between any marijuana business and a school, church, public library or public playground. Local governments can restrict where cultivators, processors and dispensaries can be located or ban them altogether. The state pharmacy board will decide how many dispensary licenses to issue, and the law requires it take into account the state's population, patient demand and ensuring dispensaries are not just concentrated in certain parts of the state. The bill does not require employers to accommodate employees’ use of medical marijuana and does not prohibit employers from refusing to hire, discharging or taking adverse employment actions due to an employee’s use of medical marijuana.  The bill also contains language considering that a person discharged from employment due to use of medical marijuana was discharged for just cause and is thus ineligible for unemployment benefits.  It also maintains a rebuttable presumption that an employee is ineligible for workers’ compensation if he or she was under the influence of medical marijuana and that was the proximate cause of injury.  The bill was signed into law by the Governor on June 8 and is effective September 8, 2016.
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HB  540  OIL AND GAS REVENUE  (Cera, J.)  This bill would redirect a portion of the state's oil and gas severance tax revenue to communities impacted by drilling.  The bill would allocate the first $20 million in revenue to the Ohio Department of Natural Resources and allocate the rest to Ohio communities in which that drilling occurs. The bill would allocate that excess revenue as follows: 70% to the Shale Region General Local Government Fund, 10% to the Shale Region Township Road Maintenance Fund, 10% to the Shale Region Firefighting/EMS Equipment Fund, 5% to the injection well infrastructure fund of each eligible injection well county, and 5% to the general fund of each municipal corporation or township general fund in those communities. The bill would not increase the severance tax itself. The bill was referred to the House Finance Committee, and no hearings are currently scheduled.
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HB 554   RENEWABLE ENERGY (Amstutz, R.)  This bill was introduced May 9 and is one of three bills that would revise the requirements for renewable energy, energy efficiency savings, and peak demand reduction and revise provisions governing which customers can opt out of related programs.  The bill would extend the freeze until at least 2027, based on a recommendation from the Energy Mandates Study Committee for an indefinite freeze.  It was referred to the House Public Utilities Committee, where it had a first hearing May 11.
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HB 567   BROWNFIELDS REMEDIATION (Dreihaus, D.) This bill was introduced May 17 and would require that, if JobsOhio provides financial assistance for the cleanup and remediation of brownfields, at least 85% of the assistance must be in the form of grants.
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HB 583   COLLECTIVE BARGAINING (Becker, J.) This bill was introduced June 30 and would remove any requirement under the Public Employees Collective Bargaining Law that public employees join or pay dues to any employee organization.

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings are currently scheduled.
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SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee and the first hearing occurred April 27.  The tax credit would be similar to the federal Work Opportunity Tax Credit.  A business owner who hired a qualified veteran could claim the same amount on state returns as the federal tax credit. The amount could vary from $2,400-$9,600, and if a business hires a member of the Ohio National Guard or reserves, the business could claim 40% of that employee's wages up to $6,000, or $2,400 total, on their state tax return. The term "qualified veteran" would have the same meaning as defined by the IRS for the Work Opportunity Tax Credit.
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SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.
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SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings are currently scheduled.
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SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.
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SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.      
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SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A substitute bill was adopted April 12 by the Senate Energy and Natural Resources Committee that specifies the improvement projects in question must pertain to energy efficiency.  One addition to the bill is clarification over how condominium property owners can register their intent to belong to special improvement districts. Another addition pertains to the authorization of lake facility authorities. At a hearing May 25, the Committee adopted amendments that specify that if a special energy improvement project is located in a certified territory of an electric distribution utility, the utility should receive a copy of the completed petition. The amendments also corrects the bill by removing several lines that were enacted into law subsequent to the bill's introduction and clarify that the streamlined process created by the bill only applies to energy efficiency projects and not those pertaining to renewable energy, specifically excluding clean and renewable energy-based energy efficiency technologies, products and activities from the definition of "energy efficiency improvement."
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SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries. No hearings are currently scheduled.
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SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21 and was referred to the House Agricultural and Rural Development Committee on November 16.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8 was continued.

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SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill, as introduced, would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  Several recent hearings have occurred in the Ways and Means Committee.  Testimony from proponents including the Associated General Contractors of Ohio has stated that the bill would bolster local economic development by incentivizing business expansion, new construction and renovations.   Interested parties including the County Commissioners Association of Ohio, the Ohio Township Association and the Ohio Municipal League have expressed overall support for the goals of the bill but have expressed concerns that the changes could have unintended consequences, affecting local jurisdictions’ ability to offer incentives tailored to their circumstances or inhibiting the ability to effectively use other tools such as tax increment financing.  Written opponent testimony was submitted by the Ohio Association of School Business Officials, Buckeye Association of School Administrators and Ohio School Boards Association. A substitute bill was accepted by the committee, with the primary change being that the increased tax value would now be triggered by the issuance of a certificate of occupancy, further delaying the new valuation. The bill was subsequently amended to cap the exemption period to ten years, at which point the value would be reassessed if development has not occurred.  The bill passed in the Senate May 4 and will move to the House.

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SB 264    TAX HOLIDAY (Bacon, K.) This new law provides for a three-day sales tax "holiday" August 5-7, 2016 during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes with the following limitations: 1. Clothing items must be priced at $75 or less per item to be exempt; 2. School supplies must be priced at $20 or less per item to be exempt, and 3. Instructional materials must be priced at $20 or less per item to be exempt.  The bill was signed by the Governor May 6.

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SB 312    CAPITAL APPROPRIATIONS (Oelslager, S.)  The state enacts capital bills in even years and provides appropriations for the repair, reconstruction and construction of capital assets of state agencies, colleges, universities and school districts as well as funds for community projects of local or regional interest when available.  The $2.62 billion capital appropriations budget for fiscal years 2017-2018 generally includes $650 million for K-12 buildings through the Ohio School Facilities, $500 million for local infrastructure through the Public Works Commission, including $100 million for Clean Ohio, $100 million for health and human services facilities and $160 million for community projects. A full list of community projects to be funded is available at: http://obm.ohio.gov/Budget/capital/doc/fy-17-18/County_Report_FY17-18_Summary.pdf.  The bill also contains $428 million, or about $24 million more than two years ago, for higher education projects vetted ahead of time by representatives of two- and four-year institutions.  The bill was signed by the Governor May 17, 2016.

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SB 320   RENEWABLE ENERGY (Seitz, B.) This bill would extend by another three years the renewable energy mandates freeze put in place several years ago by Senate Bill 310. The bill as introduced would expand the definition of energy efficiency to include post-consumer recycled glass by mercantile customers, consumer reductions in water usage, and improvements in wastewater treatment. It would also expand the consumer base eligible for opting out of energy efficiency programs.  The bill contains language prohibiting any state agency from issuing certain guidelines on carbon dioxide emissions, electric dispatch protocols, natural gas utilization, or regulating the acquisition of renewable energy and more "without new and specific state statutory authority to do so.”  It was referred to the Senate Energy and Natural Resources Committee, where it had a first hearing May 11.

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SB 325   RENEWABLE ENERGY (Jordan, K.)  This bill would repeal the requirement that electric distribution utilities and electric services companies provide 12.5% of their retail power supplies from qualifying renewable energy resources by 2027,  repeal energy efficiency and peak demand reduction requirements for electric distribution utilities, and modify the topics included in the Energy Mandates Study Committee report.  It was referred to the Senate Energy and Natural Resources Committee.









June 2016 OEDA Legislative Update

May was a busy month at the Ohio Statehouse, as legislators rushed to take action on many bills before breaking for the summer recess June 8.  Perhaps the most publicized bill passed by the Legislature and signed by the Governor into law is HB 523 regarding Medical Marijuana.  The bill caused proponents of several medical marijuana ballot measures to cease their efforts and is seen as containing more favorable provisions for employers, as summarized below.

Bills Being Tracked:  Updates to bills being tracked are noted below in red.

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.

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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, 2015 and passed in the Senate May 25, 2016.

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HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill passed in the House May 25, 2016.

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HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled.

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HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

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HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings are currently scheduled.

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HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.

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HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.

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SUBSTITUTE HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill as originally proposed would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   A substitute bill was introduced November 18 that would restore current law requiring the contracting parties to obtain signatures from the majority of property owners located within the JEDD; specify that petitions must be sent by certified mail with return receipt requested and that the property owner is not deemed to have signed the petition unless the owner signs to accept delivery of the notice; restores current law requiring JEDD income tax to be levied against both the income of persons living and working in the JEDD and the net profits of businesses operating there; add that a business owner or the contracting parties may appeal the ODSA Director’s decision to the Court of Common Pleas for the JEDD area, and restore current law requiring certification of the enterprise zone by DSA but also allow the affected school districts to waive the exclusion of retail facilities from prospective zones. The bill passed in the House February 10 and had its first hearing before the Senate Ways & Means Committee April 27.  A substitute bill was offered May 11, which would do the following: provide a definition for mixed use development; remove the DSA director from the business opt-out provision, directing such issues straight to common pleas court; provide a litmus test to determine whether or not a business can get out of JEDD based on whether they are not getting substantial economic value; require contracting JEDD parties to equally share the costs of circulating petitions to property and business owners and sending notice; specify that JEDD income tax revenue must first be used to carry out the economic development plan for the district and may only be used for other purposes after the requirements of said plan were fulfilled; expand new market tax credit eligibility to include low-income community businesses that derive 15% or more of revenue from real estate sales or rentals; and provide a property tax exemption for property owned and used by nonprofit corporations such as the Economic Community Development Institute in Columbus, if said entities are certified by the Federal Small Business Administration as an intermediary lender in the Federal Microloan Program. Several miscellaneous provisions were added to the bill, including extending the deadline for municipal corporations to report information to enable a computation of fiscal effects of recent changes to net operating loss deductions for municipal income tax purposes and modifying the eligible investment criteria for the state New Markets Tax Credit.  The House concurred in Senate amendments May 25, and the bill was delivered to the Governor for signature June 8.

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HB 190 WIND SETBACKS (Burkley, T and Tim Brown). The bill as introduced would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. At a hearing before the House Public Utilities Committee May 18, a substitute bill was adopted that would allow state officials - rather than locals - to adopt minimum setback requirements for wind farms that would be located in a newly-designated "Ohio Wind Corridor" that includes much of northwest Ohio. The substitute offered by Rep. Scott Ryan (R-Newark) also deletes sections that would have allowed county commissioners to revoke resolutions creating an alternative minimum setback; permitted the Power Siting Board to increase alternative minimum setbacks for any wind turbine, and extended by five years the deadline to qualify for ongoing real and tangible personal property tax exemptions. The substitute includes latitudinal and longitudinal coordinates of the area that would be considered part of the wind corridor (map & details), indicating that the territory where wind has proven to be economically viable. Under the new version, OPSB would be able to adopt the same alternative minimum setback included in the initial bill.

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HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.

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HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring, K.) This bill would authorize municipalities to create downtown redevelopment districts and innovation districts and allow them to incentivize redevelopment with the proceeds from tax increment financing.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings, support grants and loans to technology-oriented and other businesses or finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years.  The bill was signed by the Governor May 6, 2016.


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HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27.

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HB 403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance, aid,  provide, or promote transportation, economic development,  housing, health care, recreation, education, government  operations, culture, research, or purposes or activities  authorized by Section 13 or 16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.

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HB 429  AUTO TECHNICIANS (Antani, N., Reineke, B.) This bill would make employers and employees of automotive technicians and motor vehicle technicians eligible to participate in the Incumbent Workforce Training Voucher Program. The bill was referred to the House Finance and Appropriations Committee, and hearings occurred January 27 and February 10.  The bill was passed in the House May 4, passed by the Senate May 25 and was delivered to the Governor for signature June 8.

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HB 454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February 10 and would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.

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HB 482 PROPERTY TAXES (Dever, J.) This bill was introduced March 3, 2016 and would clarify the calculation of the exempt value of improved (remodeled) property subject to a community reinvestment area (CRA) exemption, clarify the calculation of the exempt value of property subject to a brownfield remediation exemption, and authorize the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property.  As to the CRA clarification, the bill states that the CRA exemption would apply to a percentage of the increased assessed value of the property/structure. The first hearing occurred May 17. The bill’s sponsor explained that with brownfields in Ohio, owners are offered a tax exemption for the increased value of the property, as a result of remediation efforts. However, in current practice, the base value of the property is calculated as its value the year before the covenant not to sue is issued, even if remediation began years before, preventing developers from gaining the true value of the abatement. Under HB482, the base value used to calculate the exemption for a brownfield will begin when the remedial activities start. Regarding community reinvestment areas, Representative Dever explained, "Current law provides for a tax exemption 'for the amount by which the remodeling increased the exempt value of the structure.' Some county auditors take the position that much of the increase in value after remodeling occurs is not a result of the remodeling itself, but rather other outside factors, i.e. resurgence of neighborhoods, community projects, increased rankings of schools, etc. Under this proposed legislation, the increased value after remodeling will be completely attributed to the remodeling activities.

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HB 491  TRADE ZONES (Anielski, M.) This bill would establish a five-year pilot program whereby taxpayers with facilities in this state with activated foreign trade zone status may claim a nonrefundable commercial activity tax credit equal to the amount redeployed by the taxpayer to job creation or other specified projects.  The bill’s first hearing before the House Ways and Means Committee occurred May 17.  The bill’s sponsor explained that the legislation would permit companies with Activated Foreign Trade Zone status to internally re-deploy some, or all, of their CAT obligation toward five areas: Job Creation, Employee Training, Employee Continuing Education, Capital Investments - including green initiatives - and Export Initiatives.

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HB 506   JOBSOHIO (Johnson, G., Smith, K.)  This bill would allow the Auditor of State to conduct full audits of JobsOhio and would require all nonprofit economic development corporations (including CICs) that receive public funds to make annual disclosures related to both their public and private funds, and would require that JobsOhio submit a quarterly progress report to the Governor, the House and the Senate detailing all of its active projects. The bill was referred to the Government Accountability and Oversight Committee, and no hearings are currently scheduled.

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HB 523   MEDICAL MARIJUANA (Huffman, S.) The bill would authorize the use of marijuana for medical purposes and would establish the Medical Marijuana Control Commission under the Ohio Department of Health.  “Medical conditions” include HIV/AIDS; Alzheimer's disease; Amyotrophic lateral sclerosis (ALS); cancer; chronic traumatic encephalopathy (CTE); Crohn's disease; epilepsy or another seizure disorder; fibromyalgia; glaucoma; hepatitis C; inflammatory bowel disease; multiple sclerosis; pain that is chronic, severe, and intractable; Parkinson's disease; post traumatic stress disorder; sickle cell anemia; spinal cord disease or injury; Tourette's syndrome; traumatic brain injury; and ulcerative colitis. Individuals can petition the state medical board to add conditions. It would create requirements for tracking and monitoring of production and sale as well as requirements for doctors to maintain relationships with prescribed patients. Doctors must register with the state, which will require completing continuing education about cannabis, before being able to recommend marijuana to patients with whom they have bona fide relationships. The patient registration process would be determined by the Ohio State Pharmacy Board. The rules and regulations for dispensaries, testing labs and marijuana processors, which will make marijuana-infused products and package everything for sale, must be determined by September 2017. The law requires 500 feet between any marijuana business and a school, church, public library or public playground. Local governments can restrict where cultivators, processors and dispensaries can be located or ban them altogether. The state pharmacy board will decide how many dispensary licenses to issue, and the law requires it take into account the state's population, patient demand and ensuring dispensaries are not just concentrated in certain parts of the stateThe bill does not require employers to accommodate employees’ use of medical marijuana and does not prohibit employers from refusing to hire, discharging or taking adverse employment actions due to an employee’s use of medical marijuana.  The bill also contains language considering that a person discharged from employment due to use of medical marijuana was discharged for just cause and is thus ineligible for unemployment benefits.  It also maintains a rebuttable presumption that an employee is ineligible for workers’ compensation if he or she was under the influence of medical marijuana and that was the proximate cause of injury.  The bill was signed into law by the Governor on June 8.

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HB  540  OIL AND GAS REVENUE  (Cera, J.)  This bill would redirect a portion of the state's oil and gas severance tax revenue to communities impacted by drilling.  The bill would allocate the first $20 million in revenue to the Ohio Department of Natural Resources and allocate the rest to Ohio communities in which that drilling occurs. The bill would allocate that excess revenue as follows: 70% to the Shale Region General Local Government Fund, 10% to the Shale Region Township Road Maintenance Fund, 10% to the Shale Region Firefighting/EMS Equipment Fund, 5% to the injection well infrastructure fund of each eligible injection well county, and 5% to the general fund of each municipal corporation or township general fund in those communities. The bill would not increase the severance tax itself. The bill was referred to the House Finance Committee, and no hearings are currently scheduled.

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HB 554   RENEWABLE ENERGY (Amstutz, R.)  This bill was introduced May 9 and is one of three bills that would revise the requirements for renewable energy, energy efficiency savings, and peak demand reduction and revise provisions governing which customers can opt out of related programs.  The bill would extend the freeze until at least 2027, based on a recommendation from the Energy Mandates Study Committee for an indefinite freeze.  It was referred to the House Public Utilities Committee, where it had a first hearing May 11.

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HB 567   BROWNFIELDS REMEDIATION (Dreihaus, D.) This bill was introduced May 17 and would require that, if JobsOhio provides financial assistance for the cleanup and remediation of brownfields, at least 85% of the assistance must be in the form of grants.

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings are currently scheduled.

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SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee and the first hearing occurred April 27.  The tax credit would be similar to the federal Work Opportunity Tax Credit.  A business owner who hired a qualified veteran could claim the same amount on state returns as the federal tax credit. The amount could vary from $2,400-$9,600, and if a business hires a member of the Ohio National Guard or reserves, the business could claim 40% of that employee's wages up to $6,000, or $2,400 total, on their state tax return. The term "qualified veteran" would have the same meaning as defined by the IRS for the Work Opportunity Tax Credit.

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SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.

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SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings are currently scheduled.

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SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

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SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.     

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SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A substitute bill was adopted April 12 by the Senate Energy and Natural Resources Committee that specifies the improvement projects in question must pertain to energy efficiency.  One addition to the bill is clarification over how condominium property owners can register their intent to belong to special improvement districts. Another addition pertains to the authorization of lake facility authorities. At a hearing May 25, the Committee adopted amendments that specify that if a special energy improvement project is located in a certified territory of an electric distribution utility, the utility should receive a copy of the completed petition. The amendments also corrects the bill by removing several lines that were enacted into law subsequent to the bill's introduction and clarify that the streamlined process created by the bill only applies to energy efficiency projects and not those pertaining to renewable energy, specifically excluding clean and renewable energy-based energy efficiency technologies, products and activities from the definition of "energy efficiency improvement."

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SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries. No hearings are currently scheduled.

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SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21 and was referred to the House Agricultural and Rural Development Committee on November 16.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8 was continued.

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SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill, as introduced, would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  Several recent hearings have occurred in the Ways and Means Committee.  Testimony from proponents including the Associated General Contractors of Ohio has stated that the bill would bolster local economic development by incentivizing business expansion, new construction and renovations.   Interested parties including the County Commissioners Association of Ohio, the Ohio Township Association and the Ohio Municipal League have expressed overall support for the goals of the bill but have expressed concerns that the changes could have unintended consequences, affecting local jurisdictions’ ability to offer incentives tailored to their circumstances or inhibiting the ability to effectively use other tools such as tax increment financing.  Written opponent testimony was submitted by the Ohio Association of School Business Officials, Buckeye Association of School Administrators and Ohio School Boards Association. A substitute bill was accepted by the committee, with the primary change being that the increased tax value would now be triggered by the issuance of a certificate of occupancy, further delaying the new valuation. The bill was subsequently amended to cap the exemption period to ten years, at which point the value would be reassessed if development has not occurred.  The bill passed in the Senate May 4 and will move to the House.

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SB 264    TAX HOLIDAY (Bacon, K.) This bill would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes.  The bill was signed by the Governor May 6.

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SB 312    CAPITAL APPROPRIATIONS (Oelslager, S.)  The state enacts capital bills in even years and provides appropriations for the repair, reconstruction and construction of capital assets of state agencies, colleges, universities and school districts as well as funds for community projects of local or regional interest when available.  The $2.62 billion capital appropriations budget for fiscal years 2017-2018 generally includes $650 million for K-12 buildings through the Ohio School Facilities, $500 million for local infrastructure through the Public Works Commission, including $100 million for Clean Ohio, $100 million for health and human services facilities and $160 million for community projects. A full list of community projects to be funded is available at: http://obm.ohio.gov/Budget/capital/doc/fy-17-18/County_Report_FY17-18_Summary.pdf.  The bill also contains $428 million, or about $24 million more than two years ago, for higher education projects vetted ahead of time by representatives of two- and four-year institutions.  The bill was signed by the Governor May 17, 2016.

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SB 320   RENEWABLE ENERGY (Seitz, B.) This bill would extend by another three years the renewable energy mandates freeze put in place several years ago by Senate Bill 310. The bill as introduced would expand the definition of energy efficiency to include post-consumer recycled glass by mercantile customers, consumer reductions in water usage, and improvements in wastewater treatment. It would also expand the consumer base eligible for opting out of energy efficiency programs.  The bill contains language prohibiting any state agency from issuing certain guidelines on carbon dioxide emissions, electric dispatch protocols, natural gas utilization, or regulating the acquisition of renewable energy and more "without new and specific state statutory authority to do so.”  It was referred to the Senate Energy and Natural Resources Committee, where it had a first hearing May 11.

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SB 325   RENEWABLE ENERGY (Jordan, K.)  This bill would repeal the requirement that electric distribution utilities and electric services companies provide 12.5% of their retail power supplies from qualifying renewable energy resources by 2027,  repeal energy efficiency and peak demand reduction requirements for electric distribution utilities, and modify the topics included in the Energy Mandates Study Committee report.  It was referred to the Senate Energy and Natural Resources Committee.






May
2016 OEDA Legislative Update

May 4 brought with it a suspension of Governor John Kasich’s bid for the White House. In the meantime, the General Assembly and the Governor have actively moved forward with the State Capital bill and other legislation as outlined below.

Update on PUCO PPA Decisions: On March 31, the Public Utilities Commission of Ohio approved two power purchase agreement (PPA) proposals from FirstEnergy and American Electric Power, approving terms whereby the utilities would: 1. purchase the output for a term of years from their unregulated affiliates; 2. pay for all of the costs of operating the plants, plus a return on investment to the affiliate; 3. sell the output into the market and 4. recover the cost difference, if any, from ratepayers via a nonbypassable rider.   In late April,  the Federal Energy Regulatory Commission (FERC) halted enactment of the PPA provisions of the PUCO’s decision until the electric utilities can prove the plans won’t force all Ohio ratepayers to subsidize their plants, even those who have opted for other suppliers in Ohio's electric choice program.  In early May, the PUCO granted FirstEnergy's request for a rehearing of its subsidy request. The new FirstEnergy proposal would require ratepayers to pay a rider directly to the distribution utility, rather than to the generation affiliate, in an attempt to avoid FERC oversight.

In the meantime, the PUCO has begun accepting applications for a soon-to-be vacant commissioner spot when commissioner and current chairman Andre Porter steps down Friday.  Last week, Governor Kasich appointed Commissioner Asim Haque to serve as the board's new chairman.

Bills Being Tracked:  Updates to bills being tracked are noted below in red.

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.
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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, and 3 Senate hearings in the Ways and Means Committee have occurred, most recently 2/23/16.
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HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee and hearings occurred February 9 and 16th, 2016.
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HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .
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HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

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HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. A fourth hearing before the House Public Utilities Committee with final supportive testimony occurred May 6.
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HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.

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HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.

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SUBSTITUTE HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill as originally proposed would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   A substitute bill was introduced November 18 that would restore current law requiring the contracting parties to obtain signatures from the majority of property owners located within the JEDD; specify that petitions must be sent by certified mail with return receipt requested and that the property owner is not deemed to have signed the petition unless the owner signs to accept delivery of the notice; restores current law requiring JEDD income tax to be levied against both the income of persons living and working in the JEDD and the net profits of businesses operating there; add that a business owner or the contracting parties may appeal the ODSA Director’s decision to the Court of Common Pleas for the JEDD area, and restore current law requiring certification of the enterprise zone by DSA but also allow the affected school districts to waive the exclusion of retail facilities from prospective zones. The bill passed in the House February 10 and had its first hearing before the Senate Ways & Means Committee April 27.  A substitute bill was offered May 11, which would do the following: provide a definition for mixed use development; remove the DSA director from the business opt-out provision, directing such issues straight to common pleas court; provide a litmus test to determine whether or not a business can get out of JEDD based on whether they are not getting substantial economic value; require contracting JEDD parties to equally share the costs of circulating petitions to property and business owners and sending notice; specify that JEDD income tax revenue must first be used to carry out the economic development plan for the district and may only be used for other purposes after the requirements of said plan were fulfilled; expand new market tax credit eligibility to include low-income community businesses that derive 15% or more of revenue from real estate sales or rentals; and provide a property tax exemption for property owned and used by nonprofit corporations such as the Economic Community Development Institute in Columbus, if said entities are certified by the Federal Small Business Administration as an intermediary lender in the Federal Microloan Program.

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HB 190 WIND SETBACKS (Burkley, T and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee, and a hearing is scheduled for May 18.

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HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.

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HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring, K.) This bill would authorize municipalities to create downtown redevelopment districts and innovation districts and allow them to incentivize redevelopment with the proceeds from tax increment financing.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings, support grants and loans to technology-oriented and other businesses or finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years.  The bill was signed by the Governor May 6, 2016.

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HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27.

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HB 403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance, aid,  provide, or promote transportation, economic development,  housing, health care, recreation, education, government  operations, culture, research, or purposes or activities  authorized by Section 13 or 16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.

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HB 429  AUTO TECHNICIANS (Antani, N., Reineke, B.) This bill would make employers and employees of automotive technicians and motor vehicle technicians eligible to participate in the Incumbent Workforce Training Voucher Program. The bill was referred to the House Finance and Appropriations Committee, and hearings occurred January 27 and February 10.  The bill was reported out of Committee February 24.

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HB 454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February 10 and would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.

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HB 482 PROPERTY TAXES (Dever, J.) This bill was introduced March 3, 2016 and would clarify the calculation of the exempt value of improved (remodeled) property subject to a community reinvestment area (CRA) exemption, clarify the calculation of the exempt value of property subject to a brownfield remediation exemption, and authorize the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property.  As to the CRA clarification, the bill states that the CRA exemption would apply to a percentage of the increased assessed value of the property/structure. The first hearing occurred May 17.

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HB 491  TRADE ZONES (Anielski, M.) This bill would establish a five-year pilot program whereby taxpayers with facilities in this state with activated foreign trade zone status may claim a nonrefundable commercial activity tax credit equal to the amount redeployed by the taxpayer to job creation or other specified projects.  No hearings are currently scheduled.

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HB 506   JOBSOHIO (Johnson, G., Smith, K.)  This bill would allow the Auditor of State to conduct full audits of JobsOhio and would require all nonprofit economic development corporations (including CICs) that receive public funds to make annual disclosures related to both their public and private funds, and would require that JobsOhio submit a quarterly progress report to the Governor, the House and the Senate detailing all of its active projects. The bill was referred to the Government Accountability and Oversight Committee, and no hearings are currently scheduled.

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HB 523   MEDICAL MARIJUANA (Huffman, S.) The bill would authorize the use of marijuana for medical purposes and would establish the Medical Marijuana Control Commission under the Ohio Department of Health.  It would create requirements for tracking and monitoring of production and sale as well as requirements for doctors to maintain relationships with prescribed patients.  The bill does not require employers to accommodate employees’ use of medical marijuana and does not prohibit employers from refusing to hire, discharging or taking adverse employment actions due to an employee’s use of medical marijuana.  The bill also contains language considering that a person discharged from employment due to use of medical marijuana was discharged for just cause and is thus ineligible for unemployment benefits.  It also maintains a rebuttable presumption that an employee is ineligible for workers’ compensation if he or she was under the influence of medical marijuana and that was the proximate cause of injury.  The bill passed in the House May 10 and has had several hearings before the Senate Government Oversight & Reform Committee.

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HB  540  OIL AND GAS REVENUE  (Cera, J.)  This bill would redirect a portion of the state's oil and gas severance tax revenue to communities impacted by drilling.  The bill would allocate the first $20 million in revenue to the Ohio Department of Natural Resources and allocate the rest to Ohio communities in which that drilling occurs. The bill would allocate that excess revenue as follows: 70% to the Shale Region General Local Government Fund, 10% to the Shale Region Township Road Maintenance Fund, 10% to the Shale Region Firefighting/EMS Equipment Fund, 5% to the injection well infrastructure fund of each eligible injection well county, and 5% to the general fund of each municipal corporation or township general fund in those communities. The bill would not increase the severance tax itself. The bill was referred to the House Finance Committee, and no hearings are currently scheduled.

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HB 554   RENEWABLE ENERGY (Amstutz, R.)  This bill was introduced May 9 and is one of three bills that would revise the requirements for renewable energy, energy efficiency savings, and peak demand reduction and revise provisions governing which customers can opt out of related programs.  The bill would extend the freeze until at least 2027, based on a recommendation from the Energy Mandates Study Committee for an indefinite freeze.  It was referred to the House Public Utilities Committee, where it had a first hearing May 11.

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings are currently scheduled.

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SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.

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SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.

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SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings are currently scheduled.

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SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.
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SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.     

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SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A substitute bill was adopted April 12 by the Senate Energy and Natural Resources Committee that specifies the improvement projects in question must pertain to energy efficiency.  One addition to the bill is clarification over how condominium property owners can register their intent to belong to special improvement districts. Another addition pertains to the authorization of lake facility authorities. Another hearing occurred May 17.

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SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries. No hearings are currently scheduled.

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SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21 and was referred to the House Agricultural and Rural Development Committee on November 16.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8 was continued.

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SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill, as introduced, would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  Several recent hearings have occurred in the Ways and Means Committee.  Testimony from proponents including the Associated General Contractors of Ohio has stated that the bill would bolster local economic development by incentivizing business expansion, new construction and renovations.   Interested parties including the County Commissioners Association of Ohio, the Ohio Township Association and the Ohio Municipal League have expressed overall support for the goals of the bill but have expressed concerns that the changes could have unintended consequences, affecting local jurisdictions’ ability to offer incentives tailored to their circumstances or inhibiting the ability to effectively use other tools such as tax increment financing.  Written opponent testimony was submitted by the Ohio Association of School Business Officials, Buckeye Association of School Administrators and Ohio School Boards Association. A substitute bill was accepted by the committee, with the primary change being that the increased tax value would now be triggered by the issuance of a certificate of occupancy, further delaying the new valuation. The bill was subsequently amended to cap the exemption period to ten years, at which point the value would be reassessed if development has not occurred.  The bill passed in the Senate May 4 and will move to the House.

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SB 264    TAX HOLIDAY (Bacon, K.) This bill would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes.  The bill was signed by the Governor May 6.

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SB 312    CAPITAL APPROPRIATIONS (Oelslager, S.)  The state enacts capital bills in even years and provides appropriations for the repair, reconstruction and construction of capital assets of state agencies, colleges, universities and school districts as well as funds for community projects of local or regional interest when available.  The $2.62 billion capital appropriations budget for fiscal years 2017-2018 generally includes $650 million for K-12 buildings through the Ohio School Facilities, $500 million for local infrastructure through the Public Works Commission, including $100 million for Clean Ohio, $100 million for health and human services facilities and $160 million for community projects. A full list of community projects to be funded is available at: http://obm.ohio.gov/Budget/capital/doc/fy-17-18/County_Report_FY17-18_Summary.pdf.  The bill also contains $428 million, or about $24 million more than two years ago, for higher education projects vetted ahead of time by representatives of two- and four-year institutions.  The bill was signed by the Governor May 17, 2016.

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SB 320   RENEWABLE ENERGY (Seitz, B.) This bill would extend by another three years the renewable energy mandates freeze put in place several years ago by Senate Bill 310. The bill as introduced would expand the definition of energy efficiency to include post-consumer recycled glass by mercantile customers, consumer reductions in water usage, and improvements in wastewater treatment. It would also expand the consumer base eligible for opting out of energy efficiency programs.  The bill contains language prohibiting any state agency from issuing certain guidelines on carbon dioxide emissions, electric dispatch protocols, natural gas utilization, or regulating the acquisition of renewable energy and more "without new and specific state statutory authority to do so.”  It was referred to the Senate Energy and Natural Resources Committee, where it had a first hearing May 11.

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SB 325   RENEWABLE ENERGY (Jordan, K.)  This bill would repeal the requirement that electric distribution utilities and electric services companies provide 12.5% of their retail power supplies from qualifying renewable energy resources by 2027,  repeal energy efficiency and peak demand reduction requirements for electric distribution utilities, and modify the topics included in the Energy Mandates Study Committee report.  It was referred to the Senate Energy and Natural Resources Committee.

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SJR 3 INFRASTRUCTURE BONDS (Schiavoni, J.)  This joint resolution would enact Section 2t of Article VIII of the Ohio Constitution to authorize the issuance of general obligation bonds to fund sewer and water capital improvements.





April 2016 OEDA Legislative Update

Primary Election Results: There were no real surprises from Ohio’s March 15 Primary Election.  Governor John Kasich won the Ohio Republican primary race for president with 46 percent of the vote, beating out Donald Trump (36 percent), Ted Cruz (13 percent) and Marco Rubio (2 percent).  Ohio Senator Rob Portman (R) successfully won his primary bid with 82 percent of the vote and will be on the November ballot against former Ohio Governor Ted Strickland, who captured 65 percent of the vote against Cincinnati City Councilman P.G. Sittenfeld.  Former House Speaker John Boehner (R-West Chester) vacated his seat on October 31, 2015 and 17 candidates filed to fill his seat in Ohio’s 8th Congressional District. After a 15-way election for the special and primary, Warren Davison walked away the winner in both with 32 percent of the vote.

Two Republican judges ran for the Ohio Supreme Court seat being vacated by Justice Judith Ann Lanzinger, who will step down at the end of the year due to mandatory judicial retirement at age 70. Judge Pat Fischer, who serves on the 1st District Court of Appeals in Hamilton County and Judge Colleen O’Toole of the 11th District Court of Appeals faced off in the primary, with Judge Fischer winning with 54 percent of the vote.   Judge Fischer will face Judge John P. O’Donnell, a Democrat, in November. Judge O’Donnell is a Cuyahoga County Common Pleas Court judge and unsuccessfully ran for the Ohio Supreme Court in 2014 against Justice Judith French. 

Full results of the Primary Election are available at:  https://vote.ohio.gov/

The Governor also has signaled he intends to work with the House to introduce four separate Mid-Biennium Review (MBR) bills focusing on policy changes related to developmental disabilities; combining Ohio Department of Natural Resources’ Divisions of Watercraft and State Parks; the Environmental Protection Agency and Higher Education.

PUCO PPA Decisions: On March 31, the Public Utilities Commission of Ohio decided two power purchase agreement cases brought by FirstEnergy and American Electric Power.  The proposals were before the PUCO as part of stipulated settlements between the utilities, the PUCO staff and certain parties to the cases.  At the heart of the cases were proposals that the utilities will purchase the output for a term of years from their unregulated affiliates.  In exchange, the utilities would pay for all of the costs of operating the plants, plus a return on investment to the affiliate.  The utility would then sell the output into the market and recover the cost difference, if any, from ratepayers via a nonbypassable rider.  The PUCO approved the proposals with minimal changes.  Due to the highly controversial nature of the cases, the PPA provisions of the PUCO’s decision will certainly be challenged either by appeal to the Ohio Supreme Court by parties in the original case or through complaints filed with the Federal Energy Regulatory Commission (FERC).

Governor’s State of the State: On April 6, Governor Kasich gave his State of the State address in The Historic Peoples Bank Theater in the first permanent settlement in the Northwest Territory, Marietta.  The Governor introduced several new policy proposals, including new and accelerated tax cuts, encouragement for congressional redistricting, the expansion of education initiatives supporting training in “STEAM” (Science, Technology, Engineering, Arts and Math) and new approaches to fight the drug epidemic (installing higher standards for pharmacies and limiting prescription volumes).  More information will be provided on these initiatives as it becomes available.

Capital Bill:  On April 12, S.B. 310, the Capital Appropriations Bill was introduced.  The state enacts capital bills in even years and provides appropriations for the repair, reconstruction and construction of capital assets of state agencies, colleges, universities and school districts as well as funds for community projects of local or regional interest when available.  The $2.6 billion capital appropriations budget for fiscal years 2017-2018 generally includes $650 million for K-12 buildings through the Ohio School Facilities, $500 million for local infrastructure through the Public Works Commission, including $100 million for Clean Ohio, $100 million for health and human services facilities and $160 million for community projects. A full list of recommended community projects is available at: http://obm.ohio.gov/Budget/capital/doc/fy-17-18/County_Report_FY17-18_Summary.pdf.  The bill also contains $428 million, or about $24 million more than two years ago, for higher education projects vetted ahead of time by representatives of two- and four-year institutions.  The first hearing on the bill was April 12 in the Senate Finance Committee.  It is expected to clear both chambers of the legislature quickly and move to the Governor for signature without major changes.

Bills Being Tracked:  Updates to bills being tracked are noted below in red.

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.

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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, and 3 Senate hearings in the Ways and Means Committee have occurred, most recently 2/23/16 .

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HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee and hearings occurred February 9 and 16th, 2016.

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HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .

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HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

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HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings are currently scheduled.

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HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.

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HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.

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SUBSTITUTE HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   A substitute bill was introduced November 18 that would restore current law requiring the contracting parties to obtain signatures from the majority of property owners located within the JEDD; specify that petitions must be sent by certified mail with return receipt requested and that the property owner is not deemed to have signed the petition unless the owner signs to accept delivery of the notice; restores current law requiring JEDD income tax to be levied against both the income of persons living and working in the JEDD and the net profits of businesses operating there; add that a business owner or the contracting parties may appeal the ODSA Director’s decision to the Court of Common Pleas for the JEDD area, and restore current law requiring certification of the enterprise zone by DSA but also allow the affected school districts to waive the exclusion of retail facilities from prospective zones. The bill passed in the House February 10 and was referred to the Senate Ways & Means Committee February 23, 2106.  Representative Schuring said the bill streamlines the laws governing JEDDs, makes them easier to understand and use, allows JEDDs to be established for the purpose of economic redevelopment, allows residents who live in mixed-use buildings to be included, and permits the carve-out of properties in the district, among other things.

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HB 190 WIND SETBACKS (Burkley, T and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee, and no hearings are currently scheduled.

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HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.

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HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring, K.) This bill would authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years.  The bill passed in the House October 27 and moved to the Senate Ways and Means Committee, where several hearings have occurred.  The bill was amended April 5 to clarify language in the budget (HB 64) pertaining to the definition of construction projects and to provide a charitable use property tax exemption. On April 13, it was passed in the Senate and will head to the Governor for signature.

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HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27.

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HB 403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance, aid,  provide, or promote transportation, economic development,  housing, health care, recreation, education, government  operations, culture, research, or purposes or activities  authorized by Section 13 or 16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.

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HB 429  AUTO TECHNICIANS (Antani, N., Reineke, B.) This bill would make employers and employees of automotive technicians and motor vehicle technicians eligible to participate in the Incumbent Workforce Training Voucher Program. The bill was referred to the House Finance and Appropriations Committee, and hearings occurred January 27 and February 10.  The bill was reported out of Committee February 24.

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HB 454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February 10 and would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.

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HB 482 PROPERTY TAXES (Dever, J.) This bill was introduced March 3, 2016 and would clarify the calculation of the exempt value of improved (remodeled) property subject to a community reinvestment area (CRA) exemption, clarify the calculation of the exempt value of property subject to a brownfield remediation exemption, and authorize the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property.  As to the CRA clarification, the bill states that the CRA exemption would apply to a percentage of the increased assessed value of the property/structure.

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HB 491  TRADE ZONES (Anielski, M.) This bill would establish a five-year pilot program whereby taxpayers with facilities in this state with activated foreign trade zone status may claim a nonrefundable commercial activity tax credit equal to the amount redeployed by the taxpayer to job creation or other specified projects.  No hearings are currently scheduled.

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HB 506   JOBSOHIO (Johnson, G., Smith, K.)  This bill would allow the Auditor of State to conduct full audits of JobsOhio and would require all nonprofit economic development corporations (including CICs) that receive public funds to make annual disclosures related to both their public and private funds, and would require that JobsOhio submit a quarterly progress report to the Governor, the House and the Senate detailing all of its active projects.

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings are currently scheduled.

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SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.

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SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.

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SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings are currently scheduled.

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SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

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SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.     

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SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A second hearing on the bill occurred September 30 and a third hearing occurred October 7.  At the hearing, Executive Senior Associate Leigh Herington of the Northeast Ohio Public Energy Council (NOPEC) spoke as a proponent, saying the bill is more a change in process than policy.  He called the current system "cumbersome" and fraught with high administrative costs, which SB 185 would streamline.  No hearings are currently scheduled.

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SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries. No hearings are currently scheduled.

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SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21 and was referred to the House Agricultural and Rural Development Committee on November 16.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8 was continued.

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SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill, as introduced, would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  Several recent hearings have occurred in the Ways and Means Committee.  Testimony from proponents including the Associated General Contractors of Ohio has stated that the bill would bolster local economic development by incentivizing business expansion, new construction and renovations.   Interested parties including the County Commissioners Association of Ohio, the Ohio Township Association and the Ohio Municipal League have expressed overall support for the goals of the bill but have expressed concerns that the changes could have unintended consequences, affecting local jurisdictions’ ability to offer incentives tailored to their circumstances or inhibiting the ability to effectively use other tools such as tax increment financing.  Written opponent testimony was submitted by the Ohio Association of School Business Officials, Buckeye Association of School Administrators and Ohio School Boards Association. A substitute bill was accepted by the committee, with the primary change being that the increased tax value would now be triggered by the issuance of a certificate of occupancy, further delaying the new valuation. Another hearing is scheduled for April 20.

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SB 264    TAX HOLIDAY (Bacon, K.) To provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes.  The bill was assigned to the Senate Ways and Means Committee and was passed in the Senate February 23, 2016.

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SJR 3 INFRASTRUCTURE BONDS (Schiavoni, J.)  This joint resolution would enact Section 2t of Article VIII of the Ohio Constitution to authorize the issuance of general obligation bonds to fund sewer and water capital improvements.





March
2016 OEDA Legislative Update

Legislative activity this session has been light due to Ohio’s Primary Election March 15, 2016.   Ohio Secretary of State John Husted predicts this could be the biggest primary turnout in years.  Polls are open 6:30am to 7:30pm.  For more information, check the following websites:

When the Ohio Legislature returns after the Primary, legislators will focus on the state’s biennial Capital Budget, enacted in each even-numbered year.  The Capital Bill provides appropriations for the repair, reconstruction and construction of capital assets of state agencies, colleges, universities and school districts. In some years, including this year, funds may also be allocated for community projects of local or regional interest.  Requests must be bondable or connected to a state agency. Typically, state capital bill requests for community projects must be owned by the state of Ohio, connected to a state program such as the Ohio Facilities Construction Commission or have a joint use agreement with a state institutions such as a public college or university. Many arts, cultural, historical and economic development projects will be funded through the Ohio Facilities Construction Commission as designated by the Governor and legislators, often based upon local recommendations.

The Governor also has signaled he intends to work with the House to introduce four separate Mid-Biennium Review (MBR) bills focusing on policy changes related to developmental disabilities; combining Ohio Department of Natural Resources’ Divisions of Watercraft and State Parks; the Environmental Protection Agency and Higher Education.

Other News

In other news, three separate petitions regarding the legalization of medical marijuana have been submitted to the Ohio Attorney General for review.  If approved by the AG and the Ohio Ballot Board, petitioners would then try to collect enough valid signatures to place these measures on the November 2016 ballot, which could make the November General Election even more interesting.

For those members who support trails systems in your communities, the Ohio Department of Natural Resources (ODNR) is still accepting applications through April 1 for the Clean Ohio Trails Fund (COTF) and the Recreational Trails Program (RTP). The application deadline for both grants has traditionally been Feb. 1. However, in an effort to encourage more communities to pursue this opportunity, the 2016 application deadline for both trail grants has been changed to April 1.  More information can be found at:  http://realestate.ohiodnr.gov/outdoor-recreation-facility-grants

Bills Being Tracked:  Updates to bills being tracked are noted below in red.

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.
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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, and 3 Senate hearings in the Ways and Means Committee have occurred, most recently 2/23/16 .
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HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee and hearings occurred February 9 and 16th, 2016.
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HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled.
______________________________________________________________________________________________________

HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.
______________________________________________________________________________________________________

HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings are currently scheduled.
______________________________________________________________________________________________________

HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.
______________________________________________________________________________________________________

HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.
______________________________________________________________________________________________________

SUBSTITUTE HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   A substitute bill was introduced November 18 that would restore current law requiring the contracting parties to obtain signatures from the majority of property owners located within the JEDD; specify that petitions must be sent by certified mail with return receipt requested and that the property owner is not deemed to have signed the petition unless the owner signs to accept delivery of the notice; restores current law requiring JEDD income tax to be levied against both the income of persons living and working in the JEDD and the net profits of businesses operating there; add that a business owner or the contracting parties may appeal the ODSA Director’s decision to the Court of Common Pleas for the JEDD area, and restore current law requiring certification of the enterprise zone by DSA but also allow the affected school districts to waive the exclusion of retail facilities from prospective zones. The bill passed in the House February 10 and was referred to the Senate Ways & Means Committee February 23, 2106.  Representative Schuring said the bill streamlines the laws governing JEDDs, makes them easier to understand and use, allows JEDDs to be established for the purpose of economic redevelopment, allows residents who live in mixed-use buildings to be included, and permits the carve-out of properties in the district, among other things.
______________________________________________________________________________________________________

HB 190 WIND SETBACKS (Burkley, T and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee, and no hearings are currently scheduled.
______________________________________________________________________________________________________

HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.
______________________________________________________________________________________________________

HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring, K.) H.B. 665 was introduced in November 2014 in the 130th General Assembly and was re-introduced June 2 with slight modifications providing focus on innovation and technology.  It will authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years. The bill passed in the House October 27 and was referred in the Senate on November 10 to the Ways & Means Committee. Several hearings featuring proponent testimony have occurred but a vote to move the bill out of Committee scheduled for February 23 was continued.
______________________________________________________________________________________________________

HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27.
______________________________________________________________________________________________________

HB 403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance, aid,  provide, or promote transportation, economic development,  housing, health care, recreation, education, government  operations, culture, research, or purposes or activities  authorized by Section 13 or 16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.
______________________________________________________________________________________________________

HB 429  AUTO TECHNICIANS (Antani, N., Reineke, B.) This bill would make employers and employees of automotive technicians and motor vehicle technicians eligible to participate in the Incumbent Workforce Training Voucher Program. The bill was referred to the House Finance and Appropriations Committee, and hearings occurred January 27 and February 10.  The bill was reported out of Committee February 24.
______________________________________________________________________________________________________

HB 454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February 10 and would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.
______________________________________________________________________________________________________

HB 482 PROPERTY TAXES (Dever, J.) This bill was introduced March 3, 2016 and would clarify the calculation of the exempt value of improved (remodeled) property subject to a community reinvestment area (CRA) exemption, clarify the calculation of the exempt value of property subject to a brownfield remediation exemption, and authorize the filing of a complaint with the county auditor challenging the assessed value of fully or partially exempt property.  As to the CRA clarification, the bill states that the CRA exemption would apply to a percentage of the increased assessed value of the property/structure.

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings are currently scheduled.
______________________________________________________________________________________________________

SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.
______________________________________________________________________________________________________

SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings are currently scheduled.
______________________________________________________________________________________________________

SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings are currently scheduled.
______________________________________________________________________________________________________

SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.
______________________________________________________________________________________________________

SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.     
______________________________________________________________________________________________________

SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A second hearing on the bill occurred September 30 and a third hearing occurred October 7.  At the hearing, Executive Senior Associate Leigh Herington of the Northeast Ohio Public Energy Council (NOPEC) spoke as a proponent, saying the bill is more a change in process than policy.  He called the current system "cumbersome" and fraught with high administrative costs, which SB 185 would streamline.  No hearings are currently scheduled.
______________________________________________________________________________________________________

SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries. No hearings are currently scheduled.
______________________________________________________________________________________________________

SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21 and was referred to the House Agricultural and Rural Development Committee on November 16.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8 was continued.

 ______________________________________________________________________________________________________

SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill was introduced October 27 and would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  It was referred to the Ways & Means Committee November 10, and a committee hearing December 8 was continued.  A second hearing with proponent testimony occurred January 20. No hearings are currently scheduled.

 ______________________________________________________________________________________________________

SB 264    TAX HOLIDAY (Bacon, K.) To provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes.  The bill was assigned to the Senate Ways and Means Committee and was passed in the Senate February 23, 2016.

 ______________________________________________________________________________________________________

SJR 3 INFRASTRUCTURE BONDS (Schiavoni, J.)  This joint resolution would enact Section 2t of Article VIII of the Ohio Constitution to authorize the issuance of general obligation bonds to fund sewer and water capital improvements.





February
2016 OEDA Legislative Update

The Legislature has a shortened number of days in session this Spring due to Ohio’s upcoming Primary Election March 15, 2016.  They met for two weeks in February and have now adjourned until after the Primary. 

Bills Being Tracked:  Updates to bills being tracked are noted below in red.

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.

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HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, and a Senate hearing scheduled for October 7 was continued.

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HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee and a second hearing including Proponent’s testimony occurred February 9, 2016. Another hearing is scheduled for February 16.

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HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .

------------------------------------------------------------------------------------------------------------------------------------------------------------

HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

------------------------------------------------------------------------------------------------------------------------------------------------------------

HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings have yet been scheduled.

------------------------------------------------------------------------------------------------------------------------------------------------------------

HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee. The Committee heard sponsor testimony January 27.

------------------------------------------------------------------------------------------------------------------------------------------------------------

HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.

------------------------------------------------------------------------------------------------------------------------------------------------------------

SUBSTITUTE HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   A substitute bill was introduced November 18 that would restore current law requiring the contracting parties to obtain signatures from the majority of property owners located within the JEDD; specify that petitions must be sent by certified mail with return receipt requested and that the property owner is not deemed to have signed the petition unless the owner signs to accept delivery of the notice; restores current law requiring JEDD income tax to be levied against both the income of persons living and working in the JEDD and the net profits of businesses operating there; add that a business owner or the contracting parties may appeal the ODSA Director’s decision to the Court of Common Pleas for the JEDD area, and restore current law requiring certification of the enterprise zone by DSA but also allow the affected school districts to waive the exclusion of retail facilities from prospective zones. The bill passed in the House February 10 and will move to the Senate.  Representative Schuring said the bill streamlines the laws governing JEDDs, makes them easier to understand and use, allows JEDDs to be established for the purpose of economic redevelopment, allows residents who live in mixed-use buildings to be included, and permits the carve-out of properties in the district, among other things.

------------------------------------------------------------------------------------------------------------------------------------------------------------

HB 190 WIND SETBACKS (Burkley, T and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee, and one hearing has occurred.

------------------------------------------------------------------------------------------------------------------------------------------------------------

HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.

------------------------------------------------------------------------------------------------------------------------------------------------------------

HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring, K.) H.B. 665 was introduced in November 2014 in the 130th General Assembly and was re-introduced June 2 with slight modifications providing focus on innovation and technology.  It will authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years. The bill passed in the House October 27 and was referred in the Senate on November 10 to the Ways & Means Committee. A second hearing with proponent testimony occurred January 20.  Another Senate committee hearing is scheduled for February 17.

------------------------------------------------------------------------------------------------------------------------------------------------------------

HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27.

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SUBSTITUTE HB 340  INNOVATION COUNCIL (HB 64 Corrective Bill) (Introduced 9/29 by Amstutz, R.)   This bill will extend the operation of the Local Government Innovation Council until December 31, 2019, and declare an emergency. The bill passed in the House October 27 and was referred in the Senate November 10 to the Finance Committee.  On December 8, the Senate Finance Committee adopted substitute legislation that makes numerous corrections to the state budget bill (HB 64) adopted in June, includes increases of school district tangible personal property tax funding by $49. 9 million over fiscal years 2016 and 2017 and eliminates a regulatory fee charged to state-chartered banks and savings and loans. In place of the fee, it funds the Department of Commerce’s regulatory functions with a transfer of a total of $19.6 million from unclaimed funds.  A summary of the changes can be found at: http://www.gongwer-oh.com/public/130/hb340sum.pdf

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HB 403 CAPITAL IMPROVEMENTS (Dovilla, M.)  This bill was introduced in the House December 3, 2015 and relates to the financing of capital improvement projects in this state.  The bill would require that before a capital improvement  project located in this state that is designed to enhance, aid,  provide, or promote transportation, economic development,  housing, health care, recreation, education, government  operations, culture, research, or purposes or activities  authorized by Section 13 or 16 of Article VIII, Ohio  Constitution is financed by an out-of-state entity, that out-of-state entity must notify either the port authority with jurisdiction in the territory where the project is to be located, or if there is no applicable port authority, the county within which the  project will be located. Additionally, upon entering into a financing agreement, the out-of-state entity must provide written confirmation to the port authority or county, as applicable, that an agreement has been reached and that certain conditions have been met. On January 20, it was referred to the House Finance and Appropriations Committee.

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HB 429  AUTO TECHNICIANS (Antani, N., Reineke, B.) This bill would make employers and employees of automotive technicians and motor vehicle technicians eligible to participate in the Incumbent Workforce Training Voucher Program.

------------------------------------------------------------------------------------------------------------------------------------------------------------

HB 454  SALES TAX HOLIDAY (Patterson, J.) This bill was introduced February 10 and would provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes. S.B. 264 is a companion bill in the Senate.

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings have yet been scheduled.

------------------------------------------------------------------------------------------------------------------------------------------------------------

SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

------------------------------------------------------------------------------------------------------------------------------------------------------------

SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

------------------------------------------------------------------------------------------------------------------------------------------------------------

SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings have yet been scheduled.

------------------------------------------------------------------------------------------------------------------------------------------------------------

SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

------------------------------------------------------------------------------------------------------------------------------------------------------------

SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.     

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SB 160  HOTEL INTERMEDIARIES (Hughes, J., Patton, T.) This bill was introduced May 12 and would require hotel intermediaries to collect and remit applicable sales and use tax on the full amount paid for hotel lodging, to require hotel intermediaries to supply customers with itemized invoices, to specify that a hotel intermediary is presumed to have "substantial nexus" with Ohio if the intermediary arranges lodging at Ohio hotels, and to specify that hotels are not liable for the failure of a hotel intermediary to properly collect or remit applicable taxes.  No hearings have yet been scheduled.

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SB 198  MUNICIPAL TAXES (Jordan, K)  This bill was introduced July 20 and would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  No hearings have yet been scheduled.               

------------------------------------------------------------------------------------------------------------------------------------------------------------

SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A second hearing on the bill occurred September 30 and a third hearing occurred October 7.  At the hearing, Executive Senior Associate Leigh Herington of the Northeast Ohio Public Energy Council (NOPEC) spoke as a proponent, saying the bill is more a change in process than policy.  He called the current system "cumbersome" and fraught with high administrative costs, which SB 185 would streamline. 

 ------------------------------------------------------------------------------------------------------------------------------------------------------------

SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries.

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SB 208 BUSINESS TAX DEDUCTION (Beagle, B.) This bill was introduced September 3 to correct a drafting error in the state budget bill (HB 64).  It would make technical changes to the state income tax law, modify the requirements for receiving the joint filing credit, and provide that, for the 2015 taxable year, any taxable business income under $125,000 for married taxpayers filing separately or $250,000 for other taxpayers is subject to the graduated tax rates applicable to nonbusiness income, while business income in excess of those amounts remains subject to the existing 3% flat tax.  The bill passed in both the House and Senate October 27 and was signed by the Governor November 15.

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SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21 and was referred to the House Agricultural and Rural Development Committee on November 16.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8 was continued.

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SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill was introduced October 27 and would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  It was referred to the Ways & Means Committee November 10, and a committee hearing December 8 was continued.  A second hearing with proponent testimony occurred January 20.

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SJR 3 INFRASTRUCTURE BONDS (Schiavoni, J.)  This joint resolution would enact Section 2t of Article VIII of the Ohio Constitution to authorize the issuance of general obligation bonds to fund sewer and water capital improvements.

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SB 260 CAPITAL REAPPROPRIATIONS (Coley, B.) This bill continues funding for $1.48-billion in state projects that were included in the capital bill but are not yet completed. Included in the $1.5 million reappropriation for six ODNR projects is $1 million for Middletown River Center and $250,000 for Montgomery County Agricultural Facility improvements.  Reappropriations also include $2 million for the Akron Global Business Accelerator, $200,000 to fund Stranahan Theater and Great Hall in Toledo through the Facilities Construction Commission, and various other proposals. Eliminated from the bill were a $100,000 earmark from the Lucas County Marina, $100,000 for the Crown Point Conservation Easement and $69,000 for the Miami and Erie Canal repairs in Spencerville.  The first hearing in the House Finance and Appropriations Committee (sponsor testimony) was February 2.

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SB 264    TAX HOLIDAY (Bacon, K.) To provide for a permanent three-day sales tax "holiday" each August during which sales of back-to-school clothing and school supplies are exempt from sales and use taxes.  The bill has been assigned to the Senate Ways and Means Committee and a hearing is scheduled for February 17.
Referred to the Senate Ways & Means Committee.




January
2016 OEDA Legislative Update

What to Expect in 2016

On Wednesday, December 9, the Ohio legislature wrapped up its work for the year and recessed for the holiday season. Both the Senate and House will resume January 20.  Below is an over view of what to expect in 2016:

I.                  2016 Legislative Schedule

House and Senate committees will begin meeting the week of January 11, and both Chambers have session scheduled for January 20, 2016. The legislature will hold committee hearings and session through February and has several “if needed” dates scheduled into March. It is anticipated they will not use all the March dates – the 2016 primary election is March 15, 2016, and many members of the General Assembly face primary opponents in their bids for reelection.

After the March primary election,the General Assembly will return in April and May for additional session and committee days before recessing to return to their districts and focus on campaigning for the 2016 general election.

Following the general election in November, the General Assembly is likely to return quickly for lame duck session until the end of 2016. Because there will be a change in leadership in the Senate and lots of movement of members between chambers, the 2016 lame duck session should be very active.

II.               Upcoming Legislative Issues

The Democratic and Republican Caucuses in each chamber will lay out their visions for 2016 very soon. The following issues will continue to receive attention by the Legislature and Administration over the next year:


2020 Tax Policy Study Commission

The Ohio 2020 Tax Policy Study Committee will continue its work in 2016. The commission, created in the 2015budget bill, is charged with examining Ohio’s tax policy and structure and making recommendations to ensure Ohio’s competitiveness. The Commission’s specific issues will include a flat income tax, whether the historic rehabilitation tax credit should be changed to a grant program, and a review of various consumption tax, CAT and sales tax rates and structure.

In 2015, an informal working group presented recommendations to the commission on Ohio’s oil and gas industry and the severance tax. The group’s report recommended further study of the issue, noting that, while Ohio’s tax burden on the oil and gas industry is low compared to other states, the industry is currently struggling and an increased tax at this time would be detrimental.


Capital Bill

The Legislature commonly adopts Ohio’s biennial capital budget bill in even-numbered years and provides funds for the repair, reconstruction, and construction of capital assets. The bill authorizes appropriations to colleges and universities, school districts, and projects of local and regional interest – along with other specific priority projects of the Legislature and Administration. In 2014, Governor Kasich signed a $2.39 billion capital bill that allocated funds across the state.

The Office of Budget and Management has already started work compiling requests for funding for the 2016capital budget. A bill will likely be introduced very soon.


MBR and/or Budget Corrections Bill(s)

Since Governor Kasich took office, Ohio has supplemented its biennial budget process with an off-year mid-biennium budget review bill (“MBR”). In past years, this bill – or series of bills – has been a mix of policy and budget corrections items. This year,there likely will be an MBR but it may include more budget corrections and less policy, with Governor Kasich still busy as a presidential candidate and the legislature on a truncated spring schedule due to the primary and general elections.


Existing Legislation and Other Issues

Legislative leaders have said they intend to continue working on H.B. 394, which makes significant changes to Ohio’s unemployment compensation law. The bill was introduced by Representative Barbara Sears (R-Maumee) in November and has had four hearings in the House Insurance Committee. Proponents of the legislation have called the bill a“well-reasoned and balanced” approach that will stabilize Ohio’s unemployment compensation system, while opponents have said it creates unnecessary hardships and obstacles for those seeking benefits.

Governor Kasich has voiced his support for redistricting reform for US congressional seats. After the success this Fall of Ohio legislative redistricting reform (Issue 1 on the ballot),there have been calls to make changes to the congressional redistricting process.

Another result of the Fall 2015elections may be legislative consideration of medical marijuana. After the failure of Issue 3, legislative leaders indicated their willingness to further study the legalization of medical marijuana, which polls show most Ohioans support.

Both House Speaker Cliff Rosenberger (R-Clarksville) and Senate President Keith Faber (R-Celina) have also indicated they intend to engage in further work on college costs and efficiencies and look forward to the work of the new Joint Education Oversight Committee that will focus on education funding issues.

2016 promises to be a busy year, both in the General Assembly and at the polls.  With the Republican National Convention taking place in Cleveland July 18-21, all eyes will be on Ohio.  It will be interesting to see if, as the political  pundits say, “As Ohio goes, so goes the nation!”



December 2015 OEDA Legislative Update


The Legislature has been busy wrapping up 2016, focusing on corrections needed to last summer’s Budget Bill.  No further session dates are scheduled.  Enjoy the holidays!

Bills Being Tracked:  Updates to bills being tracked are noted below in red.

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.
_______________________________________________________________________________________________________

HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, and a Senate hearing scheduled for October 7 was continued.
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HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee 2/10 and no hearings are currently scheduled.
_______________________________________________________________________________________________________

HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .
_______________________________________________________________________________________________________

HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.
_______________________________________________________________________________________________________

HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings have yet been scheduled.
_______________________________________________________________________________________________________

HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee.
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HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.
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SUBSTITUTE HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   A substitute bill was introduced November 18 that would restore current law requiring the contracting parties to obtain signatures from the majority of property owners located within the JEDD; specify that petitions must be sent by certified mail with return receipt requested and that the property owner is not deemed to have signed the petition unless the owner signs to accept delivery of the notice; restores current law requiring JEDD income tax to be levied against both the income of persons living and working in the JEDD and the net profits of businesses operating there; add that a business owner or the contracting parties may appeal the ODSA Director’s decision to the Court of Common Pleas for the JEDD area, and restore current law requiring certification of the enterprise zone by DSA but also allow the affected school districts to waive the exclusion of retail facilities from prospective zones.
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HB 190 WIND SETBACKS (Burkley and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee, and one hearing has occurred.
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HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.
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HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring) H.B. 665 was introduced in November 2014 in the 130th General Assembly and was re-introduced June 2 with slight modifications providing focus on innovation and technology.  It will authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years. The bill passed in the House October 27 and was referred in the Senate on November 10 to the Ways & Means Committee.
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HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27.
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SUBSTITUTE HB 340  INNOVATION COUNCIL (HB 64 Corrective Bill) (Introduced 9/29 by Amstutz, R.)   This bill will extend the operation of the Local Government Innovation Council until December 31, 2019, and declare an emergency. The bill passed in the House October 27 and was referred in the Senate November 10 to the Finance Committee.  On December 8, the Senate Finance Committee adopted substitute legislation that makes numerous corrections to the state budget bill (HB 64) adopted in June, includes increases of school district tangible personal property tax funding by $49. 9 million over fiscal years 2016 and 2017 and eliminates a regulatory fee charged to state-chartered banks and savings and loans. In place of the fee, it funds the Department of Commerce’s regulatory functions with a transfer of a total of $19.6 million from unclaimed funds.  A summary of the changes can be found at: http://www.gongwer-oh.com/public/130/hb340sum.pdf

 

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings have yet been scheduled.
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SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.
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SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.
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SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings have yet been scheduled.
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SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.
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SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.     
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SB 160  HOTEL INTERMEDIARIES (Hughes, J., Patton, T.) This bill was introduced May 12 and would require hotel intermediaries to collect and remit applicable sales and use tax on the full amount paid for hotel lodging, to require hotel intermediaries to supply customers with itemized invoices, to specify that a hotel intermediary is presumed to have "substantial nexus" with Ohio if the intermediary arranges lodging at Ohio hotels, and to specify that hotels are not liable for the failure of a hotel intermediary to properly collect or remit applicable taxes.  No hearings have yet been scheduled.
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SB 198  MUNICIPAL TAXES (Jordan, K)  This bill was introduced July 20 and would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  No hearings have yet been scheduled.       
_______________________________________________________________________________________________________
   

SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A second hearing on the bill occurred September 30 and a third hearing occurred October 7.  At the hearing, Executive Senior Associate Leigh Herington of the Northeast Ohio Public Energy Council (NOPEC) spoke as a proponent, saying the bill is more a change in process than policy.  He called the current system "cumbersome" and fraught with high administrative costs, which SB 185 would streamline.
_______________________________________________________________________________________________________

SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries.
_______________________________________________________________________________________________________

SB 208 BUSINESS TAX DEDUCTION (Beagle, B.) This bill was introduced September 3 to correct a drafting error in the state budget bill (HB 64).  It would make technical changes to the state income tax law, modify the requirements for receiving the joint filing credit, and provide that, for the 2015 taxable year, any taxable business income under $125,000 for married taxpayers filing separately or $250,000 for other taxpayers is subject to the graduated tax rates applicable to nonbusiness income, while business income in excess of those amounts remains subject to the existing 3% flat tax.  The bill passed in both the House and Senate October 27 and was signed by the Governor November 15.
_______________________________________________________________________________________________________

SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21
and was referred to the House Agricultural and Rural Development Committee on November 16.  On December 1, the House Committee adopted a substitute bill that incorporates many of the provisions included in the companion bill (HB253) that cleared the committee in late October. A committee hearing December 8 was continued.
_______________________________________________________________________________________________________

SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill was introduced October 27 and would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  It was referred to the Ways & Means Committee November 10, and a committee hearing December 8 was continued.
_______________________________________________________________________________________________________

SJR 3 INFRASTRUCTURE BONDS (Schiavoni, J.)  This joint resolution would enact Section 2t of Article VIII of the Ohio Constitution to authorize the issuance of general obligation bonds to fund sewer and water capital improvements.




November 2015 OEDA Legislative Update


Election Overview:  Members of the General Assembly spent much of their time over the past month in their districts, educating constituents on the three statewide issues on the November ballot. Results on these issues were as follow:

Issue 1 proposed the creation of a new Ohio Redistricting Commission and new rules for drawing lines for General Assembly districts. The measure passed with strong support with 71 percent “yes” votes. Some proponents of the measure, including the League of Women Voters of Ohio, have considered the success of Issue 1 and are calling for a similar ballot initiative next year to reform congressional redistricting.

Issue 2, known as the “anti-monopoly” amendment, passed with 52 percent of the vote.  It will add language to the Ohio Constitution prohibiting an initiated constitutional amendment that would grant a monopoly, oligopoly or other commercial interest to any person or nonpublic entity. Issue 2 also contained language specifically targeting Issue 3, which is described in more detail below. Issue 2 stated that if, on the November 3 ballot, voters approve a proposed amendment conflicting with the anti-monopoly provisions in Issue 2 and creating a monopoly for the sale, distribution or other use of a federal Schedule 1 controlled substance, that amendment shall not take effect.

Issue 3, which was supported by a group called ResponsibleOhio, proposed to allow persons aged 21 or older to use marijuana for medical and recreational purposes. The proposal failed, garnering only 36 percent of the vote and losing in all 88 counties in the state. The amendment would have provided for ten site-specific locations for the commercial growth of marijuana and approximately 1,100 locations for the retail sales of marijuana throughout the state. Issue 3 would have also created the Marijuana Control Commission to regulate the industry.  Proponents of Issue 3 have already indicated their intention to try again with another ballot initiative in the future, and some legislators have started discussion about legislation to legalize medical marijuana.

Bills Being Tracked:  Updates to bills being tracked and new bills are noted below in red.

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.
____________________________________________________________________________________________________

HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office, which would be taxed with periodically reviewing all tax expenditures including economic development incentives outside of the budget process.  The bill passed in the House June 24, and a Senate hearing scheduled for October 7 was continued.
____________________________________________________________________________________________________

HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee 2/10 and no hearings are currently scheduled.
____________________________________________________________________________________________________

HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .
____________________________________________________________________________________________________

HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.
____________________________________________________________________________________________________

HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings have yet been scheduled.
____________________________________________________________________________________________________

HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee.
____________________________________________________________________________________________________

HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.
____________________________________________________________________________________________________

HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   It has been referred to the Economic and Workforce Development Committee and three hearings have occurred.
____________________________________________________________________________________________________

HB 190 WIND SETBACKS (Burkley and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee, and one hearing has occurred.
____________________________________________________________________________________________________

HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.
____________________________________________________________________________________________________

HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring) H.B. 665 was introduced in November 2014 in the 130th General Assembly and was re-introduced June 2 with slight modifications providing focus on innovation and technology.  It will authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years. The bill passed in the House October 27 and was referred in the Senate on November 10 to the Ways & Means Committee.
____________________________________________________________________________________________________

HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6.  SB 209 is a companion bill. The bill was reported out of committee by a favorable vote October 27.
____________________________________________________________________________________________________

HB 340  INNOVATION COUNCIL (Introduced 9/29 by Amstutz, R.)   This bill will extend the operation of the Local Government Innovation Council until December 31, 2019, and declare an emergency. The bill passed in the House October 27 and was referred in the Senate November 10 to the Finance Committee.


Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings have yet been scheduled.
____________________________________________________________________________________________________

SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.
____________________________________________________________________________________________________

SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.
____________________________________________________________________________________________________

SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings have yet been scheduled.
____________________________________________________________________________________________________

SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.
____________________________________________________________________________________________________

SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.      
____________________________________________________________________________________________________

SB 160  HOTEL INTERMEDIARIES (Hughes, J., Patton, T.) This bill was introduced May 12 and would require hotel intermediaries to collect and remit applicable sales and use tax on the full amount paid for hotel lodging, to require hotel intermediaries to supply customers with itemized invoices, to specify that a hotel intermediary is presumed to have "substantial nexus" with Ohio if the intermediary arranges lodging at Ohio hotels, and to specify that hotels are not liable for the failure of a hotel intermediary to properly collect or remit applicable taxes.  No hearings have yet been scheduled.
____________________________________________________________________________________________________

SB 198  MUNICIPAL TAXES (Jordan, K)  This bill was introduced July 20 and would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  No hearings have yet been scheduled.                
____________________________________________________________________________________________________

SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A second hearing on the bill occurred September 30 and a third hearing occurred October 7.  At the hearing, Executive Senior Associate Leigh Herington of the Northeast Ohio Public Energy Council (NOPEC) spoke as a proponent, saying the bill is more a change in process than policy.  He called the current system "cumbersome" and fraught with high administrative costs, which SB 185 would streamline. 
____________________________________________________________________________________________________

SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries.
____________________________________________________________________________________________________

SB 208 BUSINESS TAX DEDUCTION (Beagle, B.) This bill was introduced September 3 to correct a drafting error in the state budget bill (HB 64).  It would make technical changes to the state income tax law, modify the requirements for receiving the joint filing credit, and provide that, for the 2015 taxable year, any taxable business income under $125,000 for married taxpayers filing separately or $250,000 for other taxpayers is subject to the graduated tax rates applicable to nonbusiness income, while business income in excess of those amounts remains subject to the existing 3% flat tax.  The bill passed in both the House and Senate October 27 and will be sent to the Governor for signature.
____________________________________________________________________________________________________

SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.  The bill passed in the Senate October 21.
____________________________________________________________________________________________________

SB 235   PROPERTY TAXES (Beagle, B., Coley, B.) This bill was introduced October 27 and would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.  It was referred to the Ways & Means Committee November 10.
____________________________________________________________________________________________________

SJR 3 INFRASTRUCTURE BONDS (Schiavoni, J.)  This joint resolution would enact Section 2t of Article VIII of the Ohio Constitution to authorize the issuance of general obligation bonds to fund sewer and water capital improvements.




October 2015 OEDA Legislative Update


Fall Session: The Senate resumed session September 15, and the House resumed September 30. 

Oil-Gas Severance Review: A report from the ad hoc group of lawmakers reviewing the oil and gas severance tax was not released at the end of September as anticipated.  Instead the long-awaited report is expected to emerge within a few weeks once the House and Senate pull together final details.  Senate President Keith Faber stressed to reporters that the report will not entail specific legislative proposals but will address the current market climate and amount to a “concept document.” More concrete proposals could come out of the 2020 Tax Study Committee created in the biennial budget (HB 64 ). Sen. Faber’s appointments to that panel are Senators Scott Oelslager, Bob Peterson and Charleta B. Tavares.

Bills Being Tracked:  Updates to bills being tracked and new bills are noted below in red.

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.

______________________________________________________________________________________________________

HB 9 TAX EXPENDITURE REVIEW COMMITTEE (Boose, T) This bill would create a Tax Expenditure Review Committee for the purpose of periodically reviewing existing and proposed tax expenditures.  It was introduced last January but is seeing some activity this Fall.  At a hearing October 1 in the House Ways and Means Committee, sponsor Rep. Boose detailed the current state of tax expenditures in Ohio and urged support for the plan to periodically review them outside of the budget process.   The bill would create a bipartisan committee made up of seven individuals: three senators, three representatives, and one non-voting member from the Tax Commissioner's office.

______________________________________________________________________________________________________

HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee 2/10 and no hearings are currently scheduled.

______________________________________________________________________________________________________

HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .

______________________________________________________________________________________________________

HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

______________________________________________________________________________________________________

HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings have yet been scheduled.

______________________________________________________________________________________________________

HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee.

______________________________________________________________________________________________________

HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.

______________________________________________________________________________________________________

HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   It has been referred to the Economic and Workforce Development Committee and three hearings have occurred.

______________________________________________________________________________________________________

HB 190 WIND SETBACKS (Burkley and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee, and one hearing has occurred.

______________________________________________________________________________________________________

HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.

______________________________________________________________________________________________________

HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring) H.B. 665 was introduced in November 2014 in the 130th General Assembly and was re-introduced June 2 with slight modifications providing focus on innovation and technology.  It will authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years. The bill was referred to the House Government Accountability & Oversight Committee and a third hearing occurred October 6. A fourth hearing with a possible vote may occur October 20.

______________________________________________________________________________________________________

HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and a second hearing occurred October 6.  SB 209 is a companion bill.

______________________________________________________________________________________________________

HB 340  INNOVATION COUNCIL (Introduced 9/29 by Amstutz, R.)   This bill will extend the operation of the Local Government Innovation Council until December 31, 2019, and declare an emergency.


Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings have yet been scheduled.

______________________________________________________________________________________________________

SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

______________________________________________________________________________________________________

SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

______________________________________________________________________________________________________
SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings have yet been scheduled.

______________________________________________________________________________________________________

SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

______________________________________________________________________________________________________

SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.      

______________________________________________________________________________________________________

SB 160  HOTEL INTERMEDIARIES (Hughes, J., Patton, T.) This bill was introduced May 12 and would require hotel intermediaries to collect and remit applicable sales and use tax on the full amount paid for hotel lodging, to require hotel intermediaries to supply customers with itemized invoices, to specify that a hotel intermediary is presumed to have "substantial nexus" with Ohio if the intermediary arranges lodging at Ohio hotels, and to specify that hotels are not liable for the failure of a hotel intermediary to properly collect or remit applicable taxes.  No hearings have yet been scheduled.

______________________________________________________________________________________________________

SB 198  MUNICIPAL TAXES (Jordan, K)  This bill was introduced July 20 and would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  No hearings have yet been scheduled.      

______________________________________________________________________________________________________
          
SB 185 IMPROVEMENT DISTRICTS (Seitz, B.)  This bill would revise the law governing special improvement districts created for the purpose of developing and implementing plans for special energy improvement projects, also known as “Property Assessed Clean Energy” or “PACE” projects.  A second hearing on the bill occurred September 30 and a third hearing occurred October 7.  At the hearing, Executive Senior Associate Leigh Herington of the Northeast Ohio Public Energy Council (NOPEC) spoke as a proponent, saying the bill is more a change in process than policy.  He called the current system "cumbersome" and fraught with high administrative costs, which SB 185 would streamline.

______________________________________________________________________________________________________

SB 198 MUNICIPAL TAXES (Jordan, K.) This bill would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  The first hearing occurred September 30 with Sponsor Testimony.  Senator Jordan said his proposal would revise the municipal income tax system by eliminating the authority of municipalities to collect income taxes from workers who live outside of their borders.  He said current law allows Ohioans to be taxed in the municipality where they work and live, creating a situation where taxpayers may have no ability to participate in elections where are they taxed but do not live.  The sponsor said the bill also prohibits taxation of a sole proprietorship that does not reside within municipal boundaries.

______________________________________________________________________________________________________

SB 208 BUSINESS TAX DEDUCTION (Beagle, B.) This bill was introduced September 3 to correct a drafting error in the state budget bill (HB 64).  It would make technical changes to the state income tax law, modify the requirements for receiving the joint filing credit, and provide that, for the 2015 taxable year, any taxable business income under $125,000 for married taxpayers filing separately or $250,000 for other taxpayers is subject to the graduated tax rates applicable to nonbusiness income, while business income in excess of those amounts remains subject to the existing 3% flat tax.  A hearing occurred September 9 and the bill will be fast-tracked to enactment. A third hearing with possible vote will occur October 21.

______________________________________________________________________________________________________

SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.  In providing sponsor testimony October 1, Senator Hite spoke to the struggles that rural areas have seen in recent years in arguing for the need to provide an economic boost to the regions.

______________________________________________________________________________________________________

SJR 3 INFRASTRUCTURE BONDS (Schiavoni, J.)  This joint resolution would enact Section 2t of Article VIII of the Ohio Constitution to authorize the issuance of general obligation bonds to fund sewer and water capital improvements.







September 2015 OEDA Legislative Update



Session to Resume Next Week: Minimal legislative activity has occurred, as the Legislature has been in recess the last few months.  The Senate is scheduled to resume Session September 15.  The House has announced September 30 as its first Session date.  Updates to bills being tracked and new bills are noted below in red.

Bills Being Tracked:  Bills introduced in the 131st General Assembly and being tracked for OEDA include the following:

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.

_______________________________________________________________________________________________________

HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee 2/10 and no hearings are currently scheduled.

_______________________________________________________________________________________________________

HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled.

_______________________________________________________________________________________________________

HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

_______________________________________________________________________________________________________

HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings have yet been scheduled.

_______________________________________________________________________________________________________

HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee.

_______________________________________________________________________________________________________

HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.

_______________________________________________________________________________________________________

HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   It has been referred to the Economic and Workforce Development Committee and three hearings have occurred.

_______________________________________________________________________________________________________

HB 190 WIND SETBACKS (Burkley and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee, and one hearing has occurred.

_______________________________________________________________________________________________________

HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.

_______________________________________________________________________________________________________

HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring) H.B. 665 was introduced in November 2014 in the 130th General Assembly and was re-introduced June 2 with slight modifications providing focus on innovation and technology.  It will authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years. The bill was referred to the House Government Accountability & Oversight Committee and two hearings have occurred.  None are pending. 

_______________________________________________________________________________________________________

HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses.  It was referred to the Agriculture and Rural Development Committee, and one hearing has occurred.  None are pending.

 

 

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.      

_______________________________________________________________________________________________________

SB 160  HOTEL INTERMEDIARIES (Hughes, J., Patton, T.) This bill was introduced May 12 and would require hotel intermediaries to collect and remit applicable sales and use tax on the full amount paid for hotel lodging, to require hotel intermediaries to supply customers with itemized invoices, to specify that a hotel intermediary is presumed to have "substantial nexus" with Ohio if the intermediary arranges lodging at Ohio hotels, and to specify that hotels are not liable for the failure of a hotel intermediary to properly collect or remit applicable taxes.  No hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 198  MUNICIPAL TAXES (Jordan, K)  This bill was introduced July 20 and would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  No hearings have yet been scheduled.                

_______________________________________________________________________________________________________

SB 208 BUSINESS TAX DEDUCTION (Beagle, B.) This bill was introduced September 3 to correct a drafting error in the state budget bill (HB 64).  It would make technical changes to the state income tax law, modify the requirements for receiving the joint filing credit, and provide that, for the 2015 taxable year, any taxable business income under $125,000 for married taxpayers filing separately or $250,000 for other taxpayers is subject to the graduated tax rates applicable to nonbusiness income, while business income in excess of those amounts remains subject to the existing 3% flat tax.  A hearing occurred September 9 and the bill will be fast-tracked to enactment.

_______________________________________________________________________________________________________

SB 209 RURAL JOBS (Hite, C.) This bill would create the “Ohio Rural Jobs Act” which would authorize a nonrefundable tax credit to insurance companies that invest in rural business growth funds, which are certified to provide capital to rural businesses.

_______________________________________________________________________________________________________

SJR 3 INFRASTRUCTURE BONDS (Schiavoni, J.)  This joint resolution would enact Section 2t of Article VIII of the Ohio Constitution to authorize the issuance of general obligation bonds to fund sewer and water capital improvements.






August 2015 OEDA Legislative Update


Minimal legislative activity has occurred, as the Legislature has been in recess.  The Senate is scheduled to resume Session September 15.  The House has announced September 30 as its first Session date.  Updates to bills being tracked are noted below in red.

Bills Being Tracked:  Bills introduced in the 131st General Assembly and being tracked for OEDA include the following:

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.

­­­­­­­­­­­______________________________________________________________________________

HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee 2/10 and no hearings are currently scheduled.

­______________________________________________________________________________

HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .

______________________________________________________________________________

HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

______________________________________________________________________________

HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings have yet been scheduled.

______________________________________________________________________________

HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10 and was referred in the Senate to the Government Oversight & Reform Committee.

______________________________________________________________________________

HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  Several committee hearings have occurred but none are currently scheduled.

______________________________________________________________________________

HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   It has been referred to the Economic and Workforce Development Committee and three hearings have occurred.

______________________________________________________________________________

HB 190 WIND SETBACKS (Burkley and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee, and one hearing has occurred.

______________________________________________________________________________

HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.

______________________________________________________________________________

HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring) H.B. 665 was introduced in November 2014 in the 130th General Assembly and was re-introduced June 2 with slight modifications providing focus on innovation and technology.  It will authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years. The bill was referred to the House Government Accountability & Oversight Committee and two hearings have occurred.  None are pending. 

______________________________________________________________________________

HB 253 RURAL JOBS ACT (Retherford): This bill would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses It was referred to the Agriculture and Rural Development Committee, and one hearing has occurred.  None are pending.


Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings have yet been scheduled.

______________________________________________________________________________

SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

______________________________________________________________________________

SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

______________________________________________________________________________

SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings have yet been scheduled.

______________________________________________________________________________

SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

______________________________________________________________________________

SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.      

______________________________________________________________________________

SB 160  HOTEL INTERMEDIARIES (Hughes, J., Patton, T.) This bill was introduced May 12 and would require hotel intermediaries to collect and remit applicable sales and use tax on the full amount paid for hotel lodging, to require hotel intermediaries to supply customers with itemized invoices, to specify that a hotel intermediary is presumed to have "substantial nexus" with Ohio if the intermediary arranges lodging at Ohio hotels, and to specify that hotels are not liable for the failure of a hotel intermediary to properly collect or remit applicable taxes.  No hearings have yet been scheduled.

______________________________________________________________________________

SB 198  MUNICIPAL TAXES (Jordan, K)  This bill was introduced July 20 and would prohibit municipal corporations from levying an income tax on nonresidents' compensation for personal services or on net profits from a sole proprietorship owned by a nonresident.  No hearings have yet been scheduled.





July 2015 OEDA Legislative Update


2016-2017 Biennial Budget: The state’s main Biennial Operating Budget (HB 64) was signed by Governor John Kasich June 30 and will be effective in 90 days. The $71.2 billion budget included the extension of the Enterprise Zone Program until 2017, the deletion of most tax provisions included in the original bill, a net income tax cut of $1.9 billion over two years for individuals and small businesses, and a tax cut across all brackets by 6.3 percent.

The key changes affecting economic development are summarized below:

Ohio Development Services Provisions:

Historic Preservation Tax Credit Program: The final bill did not include changes proposed by the Senate that would have converted the program to a grant program.  However, this program will be studied by the 2020 Tax Policy Study Commission and a report with recommendations regarding a possible grant program will be due October 31, 2016.

JCTC and JRTC Changes: The final bill changes the method how the Tax Credit Authority (TCA) under DSA may award both Job Creation Tax Credits (JCTCs) and Job Retention Tax Credits (JRTCs). Currently, both credits are calculated as a percentage of the taxpayer's Ohio income tax withholdings, which could include nonresidents working in Ohio. The executive proposal revises the computation of JCTCs so that the amount of the credit equals an agreed-upon percentage of the taxpayer's Ohio employee payroll (taxable income paid to Ohio residents) minus baseline payroll (taxable income paid to Ohio residents during the 12 months preceding the agreement). For JRTCs, the amount of the credit would equal an agreed-upon percentage of the taxpayer's Ohio employee payroll, with the 75% cap removed.  Under current law, both credits are calculated as a percentage of the taxpayer's Ohio income tax withholdings (which could include nonresidents working in Ohio). The bill's change to the credit base would prevent a reduction in the credit amount due to declining Ohio income tax rates. Taxpayers who entered into agreements in 2014 and 2015 are eligible to request a modification.  For agreements approved on or before December 31, 2013, beginning in calendar year 2016 the TCA will annually compute a withholding adjustment factor equal to the percent by which Ohio income tax withholding rates have changed since June 29, 2013.

Abandoned Gas Station Cleanup Grant Program:  The bill includes the creation of the Abandoned Gas Station Cleanup Grant Program to provide $20.0 million in grants to cover cleanup and remediation costs of underground storage tanks (USTs) at vacant locations across the state. Grants under the new program may only be awarded to local governments and property owners of public lands in remediating these sites, in amounts up to $100,000 for a property assessment, and up to $500,000  for actual cleanup and remediation. 

Housing Trust Reserve Fund: Currently, portions of county recordation fees are sent to the state for deposit into the Low- and Moderate-Income Housing Trust Fund. Commonly known as the Housing Trust Fund (HTF), the fund receives the first $50.0 million annually, while revenue in excess of the annual cap goes to the GRF. The final bill requires that the annual revenue above $50.0 million go into the Housing Trust Reserve Fund, established in the bill and prohibits the Reserve Fund from attaining a cash balance of more than $15.0 million.  Once the Reserve Fund attains that cash balance, county recordation fee revenue that exceeds $50.0 million annually shall be deposited into the GRF.

Third Frontier Internship Program:  The final bill restores the program for Fiscal Years 2016-2017.

Incumbent Workforce Training Vouchers Program:  The Incumbent Workforce Training Voucher Program was rolled out in CY 2013 to reimburse Ohio employers' costs to train their existing workers. The initiative was funded by one-time revenue from casino license fees totaling $50.0 million. The program is appropriated $7.5 million in each fiscal year of the FY 2016-FY 2017 biennium under the executive proposal. Once distributed, this will exhaust the funding from the casino license revenue.

Enterprise Zone ProgramThe final bill extended this program through October, 2017.

Other Bills Being Tracked:  Bills introduced in the 131st General Assembly and being tracked for OEDA include the following:

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.

_______________________________________________________________________________________________________

HB 3  BUSINESS FEES (Derickson, T., Romanchuk, M.): The bill would reduce certain business filing fees charged and collected by the Secretary of State and would specify that Ohio-based companies are to have access to appropriate features of the OhioMeansJobs website. The bill was signed by the Governor June 25 and will be effective in 90 days.

_______________________________________________________________________________________________________

HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee 2/10 and no hearings are currently scheduled.

_______________________________________________________________________________________________________

HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .

_______________________________________________________________________________________________________

HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

_______________________________________________________________________________________________________

HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings have yet been scheduled.

_______________________________________________________________________________________________________

HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10.

_______________________________________________________________________________________________________

HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." The bill provides that the exact number of Ambassadors would vary depending on need, as influenced by the size and number of global economic regions identified by the Director of Development Services. The bill requires that two of the Ambassadors appointed by the Speaker be members of the House of Representatives and two of the Ambassadors appointed by the President be members of the Senate. All of the remaining Ambassadors must be members of the Association of Ohio Commodores.  Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  A hearing in the Ways & Means Committee is scheduled for May 20.

_______________________________________________________________________________________________________

HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   It has been referred to the Economic and Workforce Development Committee and three hearings have occurred.

_______________________________________________________________________________________________________

HB 190 WIND SETBACKS (Burkley and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee.

_______________________________________________________________________________________________________

HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.

_______________________________________________________________________________________________________

HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring) H.B. 665 was introduced in November 2014 in the 130th General Assembly and was re-introduced June 2 with slight modifications providing focus on innovation and technology.  It will authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years. The bill was referred to the House Government Accountability & Oversight Committee and hearings have begun. 

_______________________________________________________________________________________________________

HB 253 RURAL JOBS ACT (Retherford): This bill was just introduced in the House and would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses

 

 

Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

_______________________________________________________________________________________________________

SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.      

_______________________________________________________________________________________________________

SB 160  HOTEL INTERMEDIARIES (Hughes, J., Patton, T.) This bill was introduced May 12 and would require hotel intermediaries to collect and remit applicable sales and use tax on the full amount paid for hotel lodging, to require hotel intermediaries to supply customers with itemized invoices, to specify that a hotel intermediary is presumed to have "substantial nexus" with Ohio if the intermediary arranges lodging at Ohio hotels, and to specify that hotels are not liable for the failure of a hotel intermediary to properly collect or remit applicable taxes.




June 2015 OEDA Legislative Update

2016-2017 Biennial Budget: Progress continues on the state’s 2016-2017 Biennial Budget, which consists of 4 separate budget bills, the main Operating Budget (HB 64), the Transportation Budget (HB 53) and the budgets for the Bureau of Workers’ Compensation (HB 52) and the Industrial Commission (HB 51).  The Transportation Budget was signed by the Governor April 1 and will be effective in 90 days. Work continues on the other three bills.  On Tuesday, June 9, the Senate released its version of the state Operating Budget (Amended Substitute House Bill 64).  Provisions affecting economic development are summarized below.

Operating Budget (Amended Substitute HB 64):

The main operating budget provides funding for the biennial for the executive branch of Ohio government. On Monday April 20, the House Finance & Appropriations Committee approved an Omnibus Amendment, and the $71.5 billion budget passed out of the full House Wednesday April 22.  The Bill included the extension of the Enterprise Zone Program until 2017, the deletion of most tax provisions included in the original bill, the provision of $1 million for the Jobs for Ohio Graduates program, an increase in Connect Ohio funding by $1.9 million to provide broadband mapping, research and assistance, deletion of a proposed Tax Expenditure Review Committee and the continuation of allowing Historic Preservation Tax Credits to be applied against CAT taxes.

The Senate released its substitute budget bill June 9, and a floor vote is tentatively scheduled for June 17th.  A conference committee will then have a short window to recommend the final bill by the end of June.  Hundreds of changes were made by the Senate, but the key changes affecting economic development are summarized below:

Ohio Development Services Provisions:

Historic Preservation Tax Credit Program: While the House budget bill would extend the current program’s provision allowing credits to be applied against Ohio’s CAT, the Senate bill would end altogether the granting of new credits effective July 1, 2015.  Instead, the Senate bill would create the Historic Rehabilitation Grant Program within DSA beginning in fiscal year 2018.  The program would cover 25% of the costs of rehabilitating historic buildings, following similar requirements of the current program.

Lakes in Economic Distress Revolving Loan Fund Program: The Senate has proposed this new DSA program in response to the Buckeye Lake Dam issue. It has designated $1 million for the program and would require DSA to develop operating guidelines and eligibility requirements for businesses near lakes determined by the Director of Natural Resources to be in economic distress.

JCTC and JRTC Changes: The Senate bill adds a requirement that the Director of DSA publish an estimate of total state revenue foregone as a result of tax incentives awarded by the Tax Credit Authority, within 30 days of such award.  A key policy change proposed in the House budget is the method how the Tax Credit Authority (TCA) under DSA may award both Job Creation Tax Credits (JCTCs) and Job Retention Tax Credits (JRTCs). Currently, both credits are calculated as a percentage of the taxpayer's Ohio income tax withholdings, which could include nonresidents working in Ohio. The executive proposal revises the computation of JCTCs so that the amount of the credit equals an agreed-upon percentage of the taxpayer's Ohio employee payroll (taxable income paid to Ohio residents) minus baseline payroll (taxable income paid to Ohio residents during the 12 months preceding the agreement). For JRTCs, the amount of the credit would equal an agreed-upon percentage of the taxpayer's Ohio employee payroll.  Under current law, both credits are calculated as a percentage of the taxpayer's Ohio income tax withholdings (which could include nonresidents working in Ohio). The bill's change to the credit base would prevent a reduction in the credit amount due to declining Ohio income tax rates. The Senate maintains the proposals and also includes adjustments regarding computation of the credits based on the amount of employee payroll as well as the employer’s withholding requirements.

Abandoned Gas Station Cleanup Grant Program:  The Executive Budget bill proposed the creation of the Abandoned Gas Station Cleanup Grant Program to provide $20.0 million in grants to cover cleanup and remediation costs of underground storage tanks (USTs) at vacant locations across the state. Grants under the new program may only be awarded to local governments in remediating these sites, in amounts up to $500,000 for a property assessment, and up to $2.0 million for actual cleanup and remediation.  The proposed funding comes from a transfer of $20.0 million from the Clean Ohio Revitalization Fund. DSA arrived at this $20.0 million figure by identifying the amount of cash that was initially awarded in brownfield grants under the Clean Ohio Revitalization Program that ultimately went unspent. The Senate bill would expand the eligible applicants for assistance to include organizations that have entered into agreements with political subdivisions (such as land banks).  It also would decrease the property assessment grant cap to $100,000 and the cleanup/remediation grant cap to $500,000.

Housing Trust Reserve Fund: Currently, portions of county recordation fees are sent to the state for deposit into the Low- and Moderate-Income Housing Trust Fund. Commonly known as the Housing Trust Fund (HTF), the fund receives the first $50.0 million annually, while revenue in excess of the annual cap goes to the GRF. The Executive and House Budget Bills instead would require that the annual revenue above $50.0 million go into the Housing Trust Reserve Fund, established in the bill. However, the proposals also prohibit the Reserve Fund from attaining a cash balance of more than $15.0 million, and specify that once the Reserve Fund attains that cash balance, county recordation fee revenue that exceeds $50.0 million annually shall be deposited into the GRF. Finally, the bills allow the transfer of cash from the Reserve Fund to the HTF so that Fund 6460 receives the $50.0 million cap in that year, such that the amount transferred plus the revenue that the HTF received in that year does not exceed $50.0 million.  Creating a Housing Trust Reserve Fund provides fallback funding in the event that Fund 6460 receives less than $50.0 million in revenue in any year. The HTF could then continue to provide grant funding allocated annually to local governments, nonprofits, and community development corporations.    The Senate Bill proposes major changes, specifying that half of the trust-fund fees collected by county recorders would be retained by the counties “for the purpose of housing.” It requires that the county auditor, recorder and a county commissioner decide by majority vote how the funds will be spent.

Appalachia Assistance (Funds 195455 and 195501):  The Senate bill reverts to the provisions of the Executive Budget, combining funding for line item195501 into Fund 195455.

Third Frontier Program: Under the House budget bill, funding is not provided for the Third Frontier Internship Program.  The Senate bill restores the program for Fiscal Years 2016-2017.

Incumbent Workforce Training Vouchers Program:  The Incumbent Workforce Training Voucher Program was rolled out in CY 2013 to reimburse Ohio employers' costs to train their existing workers. The initiative was funded by one-time revenue from casino license fees totaling $50.0 million. The program is appropriated $7.5 million in each fiscal year of the FY 2016-FY 2017 biennium under the executive proposal. Once distributed, this will exhaust the funding from the casino license revenue. The Senate bill did not change these provisions.

Enterprise Zone Program: Both the Senate and House Budget Bills contain provisions extending this program through October, 2017.

Transportation Budget:

HB 53  provides for a $5 billion transportation budget and focuses on maintaining the current level of public transportation funding over the next 10 years. The legislation will help fund 1600 projects in Ohio, including expansions to 1-71 in Columbus and I-70 in Clark County, the second phase of Cleveland’s Opportunity Corridor, upgrades to the I-475/US 2- interchange in Lucas County, a new interchange at Cherry Valley Road in Newark and the Mill Creek Expressway in Cincinnati.   DSA  will receive $15.2 million annually in operating appropriations for the Roadwork Development Grant Program, consistent with program funding levels in the current biennium.  The legislation establishes a Transportation Improvement District (TID) program.

Other Bills Being Tracked:  Bills introduced in the 131st General Assembly and being tracked for OEDA include the following:

House Bills:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.

HB 3  BUSINESS FEES (Derickson, T., Romanchuk, M.): The bill would reduce certain business filing fees charged and collected by the Secretary of State and would specify that Ohio-based companies are to have access to appropriate features of the OhioMeansJobs website. It was passed in the House March 26 and passed in the Senate June 3.

HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee 2/10 and no hearings are currently scheduled.

HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .

HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings have yet been scheduled.

HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. The bill passed in the House June 10.

HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." The bill provides that the exact number of Ambassadors would vary depending on need, as influenced by the size and number of global economic regions identified by the Director of Development Services. The bill requires that two of the Ambassadors appointed by the Speaker be members of the House of Representatives and two of the Ambassadors appointed by the President be members of the Senate. All of the remaining Ambassadors must be members of the Association of Ohio Commodores.  Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  A hearing in the Ways & Means Committee is scheduled for May 20.

HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   It has been referred to the Economic and Workforce Development Committee and three hearings have occurred.

HB 190 WIND SETBACKS (Burkley and Tim Brown). The bill was introduced May 6 and would provide counties the alternative of agreeing to alternative setback requirements for wind turbines.  It would also extend by 5 years the current “payment in lieu of taxes” program for alternative energy projects which is slated to sunset after being extended twice for two-year increments. It has been referred to the House Public Utilities Committee.

HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.

HB 233 DOWNTOWN REDEVELOPMENT DISTRICTS  (Schuring) H.B. 665 was introduced in November 2014 in the 130th General Assembly and was re-introduced June 2 with slight modifications providing focus on innovation and technology.  It will authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements including internet connectivity within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years. The bill was referred to the House Government Accountability & Oversight Committee and hearings have begun. 

HB 253 RURAL JOBS ACT (Retherford): This bill was just introduced in the House and would authorize a nonrefundable tax credit for insurance companies that invest in rural business growth funds, which are certified to provide capital to rural and agricultural businesses


Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings have yet been scheduled.

SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings have yet been scheduled.

SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.      

SB 160  HOTEL INTERMEDIARIES (Hughes, J., Patton, T.) This bill was introduced May 12 and would require hotel intermediaries to collect and remit applicable sales and use tax on the full amount paid for hotel lodging, to require hotel intermediaries to supply customers with itemized invoices, to specify that a hotel intermediary is presumed to have "substantial nexus" with Ohio if the intermediary arranges lodging at Ohio hotels, and to specify that hotels are not liable for the failure of a hotel intermediary to properly collect or remit applicable taxes.




May 2015 OEDA Legislative Update

2016-2017 Biennial Budget: Progress continues on the state’s 2016-2017 Biennial Budget, which consists of 4 separate budget bills, the main Operating Budget (HB 64), the Transportation Budget (HB 53) and the budgets for the Bureau of Workers’ Compensation (HB 52) and the Industrial Commission (HB 51).  The Transportation Budget was signed by the Governor April 1 and will be effective in 90 days. Work continues on the other three bills.  Below is information on specific aspects of the Budget, including programs in the Development Services Agency.


Operating Budget (HB 64)
:

The main operating budget provides funding for the biennial for the executive branch of Ohio government. On Monday April 20, the House Finance & Appropriations Committee approved an Omnibus Amendment, and the $71.5 billion budget passed out of the full House Wednesday April 22.  The Bill included the extension of the Enterprise Zone Program until 2017, the deletion of most tax provisions included in the original bill, the provision of $1 million for the Jobs for Ohio Graduates program, an increase in Connect Ohio funding by $1.9 million to provide broadband mapping, research and assistance, deletion of a proposed Tax Expenditure Review Committee and the continuation of allowing Historic Preservation Tax Credits to be applied against CAT taxes.

The Senate began its work on the main operating budget as passed by the House in late April.  The bill was referred to committees on Finance, Medicaid and Ways & Means.  The Ways & Means Committee is reviewing the tax components and has heard extensive testimony from the business community supporting the House version of the bill.  The Senate Medicaid Committee is hearing Medicaid-related provisions. The Finance Committee is reviewing a number of issues and has overall responsibility of unifying all of the committees' efforts.  The Senate is unlikely to restore much of the tax increase provisions in the Administration’s original budget bill, although a smaller tobacco tax increase is a possibility and discussions continue on oil and gas severance taxes.  The Senate has indicated that it will build in an overall tax cut that is as robust as possible.


Ohio Development Services Provisions
:

As previously reported, the proposed budget for the Ohio Development Services Agency (DSA) shows an overall funding request of $1.25 billion in FY 2016 and $1.27 billion in FY 2017. Programmatic highlights are noted below:


JCTC and JRTC Changes
: A key policy change proposed in the budget sections pertaining to the Development Services Agency is the method how the Tax Credit Authority (TCA) under DSA may award both Job Creation Tax Credits (JCTCs) and Job Retention Tax Credits (JRTCs). Currently, both credits are calculated as a percentage of the taxpayer's Ohio income tax withholdings, which could include nonresidents working in Ohio. The executive proposal revises the computation of JCTCs so that the amount of the credit equals an agreed-upon percentage of the taxpayer's Ohio employee payroll (taxable income paid to Ohio residents) minus baseline payroll (taxable income paid to Ohio residents during the 12 months preceding the agreement). For JRTCs, the amount of the credit would equal an agreed-upon percentage of the taxpayer's Ohio employee payroll.  Under current law, both credits are calculated as a percentage of the taxpayer's Ohio income tax withholdings (which could include nonresidents working in Ohio). The bill's change to the credit base would prevent a reduction in the credit amount due to declining Ohio income tax rates. As originally proposed, the Budget Bill included a two year look-back period for this change.  The House version removed that two year cap, leading to concerns about potential cost to the state.


Abandoned Gas Station Cleanup Grant Program:
Another policy change in the bill is the creation of the Abandoned Gas Station Cleanup Grant Program to provide $20.0 million in grants to cover cleanup and remediation costs of underground storage tanks (USTs) at vacant locations across the state. Grants under the new program may only be awarded to local governments in remediating these sites, in amounts up to $500,000 for a property assessment, and up to $2.0 million for actual cleanup and remediation.  The proposed funding comes from a transfer of $20.0 million from the Clean Ohio Revitalization Fund. DSA arrived at this $20.0 million figure by identifying the amount of cash that was initially awarded in brownfield grants under the Clean Ohio Revitalization Program that ultimately went unspent.


Housing Trust Reserve Fund:
A third policy change in the DSA budget relates to the Housing Trust Fund.  Currently, portions of county recordation fees are sent to the state for deposit into the Low- and Moderate-Income Housing Trust Fund. Commonly known as the Housing Trust Fund (HTF), the fund receives the first $50.0 million annually, while revenue in excess of the annual cap goes to the GRF. The Budget Bill instead requires that the annual revenue above $50.0 million go into the Housing Trust Reserve Fund, established in the bill. However, the proposal also prohibits the Reserve Fund from attaining a cash balance of more than $15.0 million, and specifies that once the Reserve Fund attains that cash balance, county recordation fee revenue that exceeds $50.0 million annually shall be deposited into the GRF. Finally, the bill allows the transfer of cash from the Reserve Fund to the HTF so that Fund 6460 receives the $50.0 million cap in that year, such that the amount transferred plus the revenue that the HTF received in that year does not exceed $50.0 million.  Creating a Housing Trust Reserve Fund provides fallback funding in the event that Fund 6460 receives less than $50.0 million in revenue in any year. The HTF could then continue to provide grant funding allocated annually to local governments, nonprofits, and community development corporations.


Appalachia Assistance (Fund 195455):
  GRF funding for this line item is $4.3 million in each fiscal year and provides economic and community development assistance to the 32 counties in Ohio's Appalachian region. The bill proposes that funding will be used for purposes previously appropriated under two GRF line items: 195501, Appalachian Local Development Districts, and 195535, Appalachia Assistance. The combined estimated FY 2015 spending under those two line items is approximately equal to the annual appropriations under this new line item.  This funding will be used for several purposes, supporting (1) administrative costs of planning and liaison activities for the Governor's Office of Appalachia, (2) financial assistance for projects in Ohio's Appalachian counties, (3) dues for memberships in the Appalachian Regional Commission, and (4) matching federal funds from the Appalachian Regional Commission, and (5) annual payments to the four Appalachian Local Development District offices located in Cambridge, Marietta, Waverly, and Youngstown.  The bill earmarks up to $135,000 in each fiscal year for three of these Local Development Districts: the Ohio Valley Regional Development Commission, the Ohio Mid-Eastern Government Association, and the Buckeye Hills – Hocking Valley Regional Development District. There is an earmark of $35,000 in each fiscal year for the fourth entity, the Eastgate Regional Council of Governments. These same earmarks were in place for the current biennium.


Third Frontier Program:
Funding under two line items (195687 and 195692) make up the grant and loan assistance under the Third Frontier Program,  funded by the proceeds of G.O. bonds issued by the Ohio Public Facilities Commission. The  budget proposes combined appropriations of $169.8 million to the two line items in each fiscal year of the upcoming FY 2016-FY 2017 biennium. This is $40.6 million (31.4%) more than annual appropriations of $129.2 million for TFP in the current biennium. With this increased funding, the Third Frontier Commission can award additional grants and loans, or award more funding per eligible project.  Funding is not provided for the Third Frontier Internship Program


Incumbent Workforce Training Vouchers Program
:  The Incumbent Workforce Training Voucher Program was rolled out in CY 2013 to reimburse Ohio employers' costs to train their existing workers. The initiative was funded by one-time revenue from casino license fees totaling $50.0 million. The program is appropriated $7.5 million in each fiscal year of the FY 2016-FY 2017 biennium under the executive proposal. Once distributed, this will exhaust the funding from the casino license revenue.


Transportation Budget:

HB 53  provides for a $5 billion transportation budget and focuses on maintaining the current level of public transportation funding over the next 10 years. The legislation will help fund 1600 projects in Ohio, including expansions to 1-71 in Columbus and I-70 in Clark County, the second phase of Cleveland’s Opportunity Corridor, upgrades to the I-475/US 2- interchange in Lucas County, a new interchange at Cherry Valley Road in Newark and the Mill Creek Expressway in Cincinnati.   DSA  will receive $15.2 million annually in operating appropriations for the Roadwork Development Grant Program, consistent with program funding levels in the current biennium.  The legislation establishes a Transportation Improvement District (TID) program.


Other Bills being Tracked
:  Bills introduced in the 131st General Assembly and being tracked for OEDA include the following:


House Bills
:                                  

HB 1  WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was re-referred to the House Finance and Appropriations Committee and no hearings are currently scheduled.


HB 3  BUSINESS FEES (Derickson, T., Romanchuk, M.): The bill would reduce certain business filing fees charged and collected by the Secretary of State and would specify that Ohio-based companies are to have access to appropriate features of the OhioMeansJobs website. It was passed in the House March 26 and was referred to the Senate State and Local Government Committee on April 21. No hearings are currently scheduled.


HB 12  TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee 2/10 and no hearings are currently scheduled.


HB 13 PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .


HB 65 TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.


HB 72 PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings have yet been scheduled.


HB 103 WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. A hearing in the Ways & Means Committee is scheduled for May 20.


HB 175 GLOBAL MARKET OPPORTUNITIES (Barnes, J.) The bill would establish the "Access to Global Market Opportunities for Ohio Manufactured Products Program" within the ODSA, to be composed of the "Ohio Global Leadership Initiative" and the "Global Initiative on International Relations" with a goal of creating new, untapped global markets for Ohio businesses and thereby promoting job creation.  Under the Global Leadership Initiative, the Director of Development Services would be required to designate "Ohio Business Consulates" to assist Ohio businesses in creating relationships, promoting their business, and conducting transactions in foreign markets. Consulates would not be employees or agents of the state but would be selected from among members of Ohio District Export Councils (DECs).  The Global Initiative on International Relations would consist of 20 or more individuals appointed by the President of the Senate and the Speaker of the House of Representatives to be "Ohio Ambassadors." The bill provides that the exact number of Ambassadors would vary depending on need, as influenced by the size and number of global economic regions identified by the Director of Development Services. The bill requires that two of the Ambassadors appointed by the Speaker be members of the House of Representatives and two of the Ambassadors appointed by the President be members of the Senate. All of the remaining Ambassadors must be members of the Association of Ohio Commodores.  Finally, the bill requires the Director of Development Services publish a booklet listing businesses in Ohio that could be suppliers to international markets, arranged according to each industry's industry classification.  A hearing in the Ways & Means Committee is scheduled for May 20.


HB 182 DEVELOPMENT ZONES (Schuring, K.) This bill was introduced April 30 and would revise the law governing the creation and operation of joint economic development districts (JEDDs) and enterprise zones.   The bill would do the following: 1. Insert some cleanup definitions and consolidate the JEDD statutes in ORC Section 715.72; 2.  Provide new authority to include “redevelopment” as a lawful JEDD purpose and to include residential property in a JEDD if it is part of a mixed-use facility; 3.  Clarify the ability to exclude specific parcels from a JEDD (i.e., not just through a map); 4.  Change property owner petition majority requirement to look for approval of owners majority of acreage, as opposed to owners of majority of properties (this is already a requirement for a R.C. 715.70 JEDD); 5.  Create a new process whereby a business can apply to and be exempted from the income tax of a JEDD if the Director of DSA determines that the business or its employees has not and will not derive a "material benefit" from the improvements and services specified in the economic development plan or that any such benefit is "negligible" in relation to the burden of the tax.  This provision arguably would apply to existing JEDDs; 6.  Clarify that JEDD income tax revenue may be used for the provision of utility services, and 7.  Amend the Enterprise Zone program by adding an alternative to obtaining approval by the Director of ODSA when a new zone is established.  The bill eliminates the involvement of DSA if the school board of each school district where the proposed enterprise zone would be located verifies that the applicable criteria for creating a zone are satisfied.   It has been referred to the Economic and Workforce Development Committee and a hearing is scheduled for May 20.


HB 203  STARTUP OHIO (Stinziano, M.) This bill was introduced May 12 and would establish the Startup Ohio initiative in which universities and partnering business may collaborate in tax-free areas near campuses in this state to create jobs, attract entrepreneurs, and spur academic enrichment.  It also directs the Director of Budget and Management to transfer $100 million to the Ohio Venture Capital Program Fund.


TO BE INTRODUCED (Schuring) H.B. 665 was introduced in November 2014 in the 130th General Assembly and will apparently be re-introduced next week.  It will authorize municipalities to create downtown redevelopment districts and allow them to incentivize redevelopment with the proceeds from tax increment financing, to encourage commercial and mixed-use downtown revitalization.  The bill would modify Ohio’s TIF statute by adding a new Section 5709.45 providing that municipalities could enact ordinances declaring that up to seventy percent of the improvements to parcels within their designated downtown redevelopment districts are exempt from taxation for up to 10 years.  Proceeds could then be used for municipal grant or loan programs to owners of historic buildings in the districts for building renovations.  Additionally, up to  20 percent of the exempted tax revenues could be used by the municipalities to make contributions to special improvement districts, community improvement corporations or nonprofits for use in promoting the downtown redevelopment district, recruiting businesses to locate there or to promote events and activities in the district.  If the actual exempted tax revenues exceed the amounts projected in the municipalities’ economic development plan for the districts, the excess may be used to assist in financing renovations of non-historic buildings or to finance public infrastructure improvements within the downtown redevelopment districts.  If school district approval is obtained, exemptions may be in place for up to 30 years.


Senate Bills:

SB 12  TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee. No hearings have yet been scheduled.


SB 18  TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.


SB 41  NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.


SB 45 LAKE ERIE DISTRICT (Eklund, J., Skindell, M.) This bill would authorize the creation of a special improvement district to facilitate Lake Erie shoreline improvement.  It was referred to the Energy and Natural Resources Committee on February 18 and no hearings have yet been scheduled.


SB 88 TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.


SB 109 TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.      


SB 160  HOTEL INTERMEDIARIES (Hughes, J., Patton, T.) This bill was introduced May 12 and would require hotel intermediaries to collect and remit applicable sales and use tax on the full amount paid for hotel lodging, to require hotel intermediaries to supply customers with itemized invoices, to specify that a hotel intermediary is presumed to have "substantial nexus" with Ohio if the intermediary arranges lodging at Ohio hotels, and to specify that hotels are not liable for the failure of a hotel intermediary to properly collect or remit applicable taxes. 




April 2015 OEDA Legislative Update

 
 
2016-2017 Biennial Budget: Progress continues on the state’s 2016-2017 Biennial Budget, which consists of 4 separate budget bills, the main Operating Budget (HB 64), the Transportation Budget (HB 53) and the budgets for the Bureau of Workers’ Compensation (HB 52) and the Industrial Commission (HB 51).  The Transportation Budget was signed by the Governor April 1 and will be effective in 90 days. Work continues on the other three bills.  Below is information on specific aspects of the Budget, including programs in the Development Services Agency.

Operating Budget (HB 64):

The main operating budget provides funding for the biennial for the executive branch of Ohio government. On Monday April 20, the House Finance & Appropriations Committee approved an Omnibus Amendment proposing a $71.5 billion budget for a full House vote Wednesday April 22.  Recent changes include the extension of the Enterprise Zone Program until 2017, the deletion of most tax provisions included in the original bill, the provision of $1 million for the Jobs for Ohio Graduates program, an increase in Connect Ohio funding by $1.9 million to provide broadband mapping, research and assistance, deletion of a proposed Tax Expenditure Review Committee and the continuation of allowing Historic Preservation Tax Credits to be applied against CAT taxes.

Separately, the Senate began its work on the main operating budget Tuesday, April 21.  Interestingly enough, the Senate is beginning with House Bill 64 as originally proposed by the Governor, focusing on FY 2015 numbers and law as a baseline for its budget proposals and asking stakeholders offering testimony on the two-year spending bill to justify any proposed appropriation increases.  Senate Finance Chair Scott Oelslager commented that committee members will still look at the House and Governor's proposals and facets of both may end up in the Senate's version of the budget.

Ohio Development Services Provisions:

As previously reported, the proposed budget for the Ohio Development Services Agency (DSA) shows an overall funding request of $1.25 billion in FY 2016 and $1.27 billion in FY 2017. The recommended FY 2016 amount is a 6.1% increase over estimated FY 2015 spending of $1.18 billion. The largest year-to-year appropriation change is in the Bond Research and Development Fund Group, where funding increases by approximately $40.6 million from FY 2015 to FY 2016 as a result of additional assistance expected to be awarded by the Third Frontier Commission for technology investments under the Third Frontier Program. Another significant deviation occurs in the Facilities Establishment Fund Group, which sees a rise of around 63.5% from FY 2015 to FY 2016 due to DSA anticipating the award of more loans to assist businesses involving relocation or expansion projects for the purchase of real estate or the acquisition of other capital assets. Although there is a slight decline in GRF funding between FY 2015 and FY 2016, the amount increases by 11.3% in FY 2017, approximately $15.0 million above the FY 2016 appropriations in that category. This is due to a climb in debt service payments on bonds that support the Third Frontier Program.

JCTC and JRTC Changes: A key policy change proposed in the budget sections pertaining to the Development Services Agency is the method how the Tax Credit Authority (TCA) under DSA may award both Job Creation Tax Credits (JCTCs) and Job Retention Tax Credits (JRTCs). Currently, both credits are calculated as a percentage of the taxpayer's Ohio income tax withholdings, which could include nonresidents working in Ohio. The executive proposal revises the computation of JCTCs so that the amount of the credit equals an agreed-upon percentage of the taxpayer's Ohio employee payroll (taxable income paid to Ohio residents) minus baseline payroll (taxable income paid to Ohio residents during the 12 months preceding the agreement). For JRTCs, the amount of the credit would equal an agreed-upon percentage of the taxpayer's Ohio employee payroll.  Under current law, both credits are calculated as a percentage of the taxpayer's Ohio income tax withholdings (which could include nonresidents working in Ohio). The bill's change to the credit base would prevent a reduction in the credit amount due to declining Ohio income tax rates.

Additionally, regarding JRTCs, in currently determining the amount of credit that businesses may receive, there is a cap of 75.0% on the percentage that the credit may be multiplied by the taxpayer's state income tax withholding. The bill would remove the 75.0% cap that limits JRTC tax expenditures in current law.  The Budget Bill also authorizes the TCA to require the taxpayer to refund all or a portion of a JCTC or JRTC if the taxpayer fails to substantially meet the job creation, payroll, or investment requirements included in the tax credit agreement, or if the taxpayer files for bankruptcy. In addition, the bill would reduce from 60 to 30 days the amount of time a taxpayer has to submit a copy of a JCTC or JRTC certificate after a request of the Tax Commissioner or the Superintendent of Insurance. Finally, the proposed budget bill authorizes the TCA, upon mutual agreement of the taxpayer and DSA, to revise JCTC agreements originally approved in 2014 or 2015 to conform with the bill's revisions to the credit. Otherwise, the bill's revisions to the Revised Code would only apply to JCTC and JRTC agreements entered into after the bill's 90-day effective date.

Abandoned Gas Station Cleanup Grant Program: Another policy change in the bill is the creation of the Abandoned Gas Station Cleanup Grant Program to provide $20.0 million in grants to cover cleanup and remediation costs of underground storage tanks (USTs) at vacant locations across the state. The abandoned gas stations must be classified as Class C release sites, where the responsible person for the release is determined to not be a viable person capable of undertaking or completing the required corrective actions. Grants under the new program may only be awarded to local governments in remediating these sites, in amounts up to $500,000 for a property assessment, and up to $2.0 million for actual cleanup and remediation.  The proposed funding comes from a transfer of $20.0 million from the Clean Ohio Revitalization Fund. DSA arrived at this $20.0 million figure by identifying the amount of cash that was initially awarded in brownfield grants under the Clean Ohio Revitalization Program that ultimately went unspent. Since the Abandoned Gas Station Cleanup Grant Program would use capital money, funding for the initiative is not reflected in the operating appropriations for DSA within the Governor's funding proposal. Rather, the funding would be provided by amending Section 235.10 of H.B. 497 of the 130th General Assembly, the capital budget bill for the FY 2015-FY 2016 biennium.   The Bureau of Underground Storage Tanks (BUSTR), within the State Fire Marshal's Office under the Department of Commerce, also has a role in this type of site remediation.   Additionally, new to FY 2015, the Bureau began accepting applications for the UST Revolving Loan Fund Program, to assist these entities in remediating Class C sites. The total available funding in FY 2015 is $3.0 million. The loans are interest-free and may last up to ten years. Applications for the first round of funding were due at the end of December 2014. The executive proposal includes funding of $1.5 million in each of FY 2016 and FY 2017 for additional loans under the program, which would essentially be used for the same purposes as the DSA grants that would be authorized in H.B. 64 under the Abandoned Gas Station Cleanup Grant Program, described above.

Housing Trust Reserve Fund: A third policy change in the DSA budget relates to the Housing Trust Fund.  Currently, portions of county recordation fees are sent to the state for deposit into the Low- and Moderate-Income Housing Trust Fund. Commonly known as the Housing Trust Fund (HTF), the fund receives the first $50.0 million annually, while revenue in excess of the annual cap goes to the GRF. The Budget Bill instead requires that the annual revenue above $50.0 million go into the Housing Trust Reserve Fund, established in the bill. However, the proposal also prohibits the Reserve Fund from attaining a cash balance of more than $15.0 million, and specifies that once the Reserve Fund attains that cash balance, county recordation fee revenue that exceeds $50.0 million annually shall be deposited into the GRF. Finally, the bill allows the transfer of cash from the Reserve Fund to the HTF so that Fund 6460 receives the $50.0 million cap in that year, such that the amount transferred plus the revenue that the HTF received in that year does not exceed $50.0 million.  Creating a Housing Trust Reserve Fund provides fallback funding in the event that Fund 6460 receives less than $50.0 million in revenue in any year. The HTF could then continue to provide grant funding allocated annually to local governments, nonprofits, and community development corporations. This provision would decrease revenue to the GRF in future fiscal years in the amount of up to $15.0 million, and potentially more if a transfer occurs from the Reserve Fund. Since FY 2010, the deposits into the fund exceeded the $50.0 million threshold only once. That was in FY 2013, when state receipts from recordation fees amounted to $53.7 million, with the excess $3.7 million deposited into the GRF.

Appalachia Assistance (Fund 195455):  GRF funding for this line item is $4.3 million in each fiscal year and provides economic and community development assistance to the 32 counties in Ohio's Appalachian region. The bill proposes that funding will be used for purposes previously appropriated under two GRF line items: 195501, Appalachian Local Development Districts, and 195535, Appalachia Assistance. The combined estimated FY 2015 spending under those two line items is approximately equal to the annual appropriations under this new line item.  This funding will be used for several purposes, supporting (1) administrative costs of planning and liaison activities for the Governor's Office of Appalachia, (2) financial assistance for projects in Ohio's Appalachian counties, (3) dues for memberships in the Appalachian Regional Commission, and (4) matching federal funds from the Appalachian Regional Commission, and (5) annual payments to the four Appalachian Local Development District offices located in Cambridge, Marietta, Waverly, and Youngstown.  The bill earmarks up to $135,000 in each fiscal year for three of these Local Development Districts: the Ohio Valley Regional Development Commission, the Ohio Mid-Eastern Government Association, and the Buckeye Hills – Hocking Valley Regional Development District. There is an earmark of $35,000 in each fiscal year for the fourth entity, the Eastgate Regional Council of Governments. These same earmarks were in place for the current biennium.

Third Frontier Program: Funding under two line items (195687 and 195692) make up the grant and loan assistance under the Third Frontier Program,  funded by the proceeds of G.O. bonds issued by the Ohio Public Facilities Commission. The  budget proposes combined appropriations of $169.8 million to the two line items in each fiscal year of the upcoming FY 2016-FY 2017 biennium. This is $40.6 million (31.4%) more than annual appropriations of $129.2 million for TFP in the current biennium. With this increased funding, the Third Frontier Commission can award additional grants and loans, or award more funding per eligible project.

Incumbent Workforce Training Vouchers Program:  The Incumbent Workforce Training Voucher Program was rolled out in CY 2013 to reimburse Ohio employers' costs to train their existing workers. The initiative was funded by one-time revenue from casino license fees totaling $50.0 million. The program is appropriated $7.5 million in each fiscal year of the FY 2016-FY 2017 biennium under the executive proposal. Once distributed, this will exhaust the funding from the casino license revenue.

Transportation Budget:

HB 53  provides for a $5 billion transportation budget and focuses on maintaining the current level of public transportation funding over the next 10 years. The legislation will help fund 1600 projects in Ohio, including expansions to 1-71 in Columbus and I-70 in Clark County, the second phase of Cleveland’s Opportunity Corridor, upgrades to the I-475/US 2- interchange in Lucas County, a new interchange at Cherry Valley Road in Newark and the Mill Creek Expressway in Cincinnati.   DSA  will receive $15.2 million annually in operating appropriations for the Roadwork Development Grant Program, consistent with program funding levels in the current biennium.  The legislation establishes a Transportation Improvement District (TID) program, which has been proposed in stand-alone bills previously.   The legislation provides that:

?         TIDs can be created by the board of county commissioners of any county and will be required to be governed by a board of trustees.
?         TIDs will have specified powers related to the financing, construction, maintenance, repair, and operation of transportation projects and could issue bonds, levy assessments, impose a motor vehicle license tax by a vote of the electors, and establish toll roads.
?         $3.5 million in fiscal years 2016 and 2017 will be made available for distribution by the Director of Transportation to TIDs that have facilitated funding for the cost of a project or projects in conjunction with and through other governmental agencies. A TID must submit requests for project funding to ODOT not later than September 1 in each fiscal year. ODOT must notify the TID if it has approved or disapproved the project funding request within 90 days after the day the request was submitted by the TID. The bill prohibits any funding provided to a TID to be used for the purposes of administrative costs or administrative staffing and requires the funding to be used to fund a specific project or projects within that TID's area. The total amount of a specific project's cost may not be fully funded by the amount of funds provided under the bill. The total amount of funding provided for each project is limited to 25% of total project costs not to exceed $250,000 per fiscal year. TIDs that are co-sponsoring a specific project may individually apply for up to $250,000 for that project, but not more than 25% of a project's total costs per biennium may be funded through moneys provided under the bill. Funding provided under the bill may be used for preliminary engineering, detailed design, right-of-way acquisition, and construction of the specific project and such other project costs that are defined under the law governing TIDs and approved by the Director. Upon receipt of a copy of an invoice for work performed on the specific project, the Director must reimburse a TID for the expenditures.
?         Any TID that is requesting funds under the bill must register with the Director. The Director must register a TID only if the TID has a specific, eligible project. The Director may cancel the registration of a TID that is not eligible to receive funds under the bill.  In addition, the Director must not register a TID and must cancel the registration of a currently registered TID unless at least one of the following applies: (1) The TID, by a resolution or resolutions, designated a project or program of projects and facilitated, including in conjunction with and through other governmental agencies, funding for costs of a project or program of projects in an aggregate amount of not less than $10 million within the eight-year period commencing January 1, 2005; (2) The TID, by a resolution or resolutions, designated a project or program of projects and facilitated, including in conjunction with and through other governmental agencies, funding for costs of a project or program of projects in an aggregate amount of not less than $15 million from the commencement date of the project or program of projects, or (3) The TID has designated, by a resolution or resolutions, a project or program of projects that has estimated aggregate costs in excess of $10 million and the county engineer of the county in which the TID is located has attested by a sworn affidavit that the costs of the project or program of projects exceeds $10 million and that the TID is facilitating a portion of funding for that project or program of projects

Other Bills being Tracked:  Bills introduced in the 131st General Assembly and being tracked for OEDA include the following:

House Bills:                                  

HB 1 

WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. The bill was recently re-referred to the House Finance and Appropriations Committee.

HB 3 

BUSINESS FEES (Derickson, T., Romanchuk, M.): The bill would reduce certain business filing fees charged and collected by the Secretary of State and would specify that Ohio-based companies are to have access to appropriate features of the OhioMeansJobs website. It was passed in the House March 26 and was referred to the Senate State and Local Government Committee on April 21.

HB 12 

TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee 2/10 and no hearings are currently scheduled.

HB 13

PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and no hearings are currently scheduled .

HB 65

TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

HB 72

PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system. No hearings have yet been scheduled.

HB 103

WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week. No hearings are scheduled.

Senate Bills:

SB 12 

TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. The bill was referred to the Ways and Means Committee.

SB 18 

TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

SB 41 

NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. The bill was referred to the Ways and Means Committee.  No hearings have yet been scheduled.

SB 88

TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

SB 109

TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.



 
March 2015 OEDA Legislative Update


2016-2017 Biennial Budget
: 2015 brought with it the introduction of the state’s 2016-2017 Biennial Budget, which consists of 4 separate budget bills, the main Operating Budget (HB 64), the Transportation Budget (HB 53) and the budgets for the Bureau of Workers’ Compensation (HB 52) and the Industrial Commission (HB 51).  Below is information on specific aspects of the Budget, including programs in the Development Services Agency.

Operating Budget (HB 64):

HB 64 was introduced February 12 and is sponsored by Representative Ryan Smith.  It provides funding for the biennial for the executive branch of Ohio government. One key difference noted this year is that the House does not seem inclined to split topics in the budget into separate bills.  Rather, it appears the House will maintain the contents of HB 64 in one large bill.  Hearings have commenced in several subcommittees, including that on Higher Education, Health & Human Services and Ways and Means (tax provisions).  Hearings have included invited testimony only, with hearings last week on CAT and sales taxes, hearings on March 3 on severance tax and March 4 on tobacco taxes.  Open testimony occurred the week of March 9, designed to start to finalize the bill in the House.  Amendments to the bill are due March 27.  Legislators will be out on spring break the week of March 30, and a vote on HB 64 in the House is scheduled for April 22.

As it appears Speaker Rosenberger has taken Medicaid off the table as a legislative topic, work in the House will focus mainly on tax issues (sales, severance, sales and tobacco).

Ohio Development Services Provisions:

Analysis of the proposed budget for the Ohio Development Services Agency (DSA) shows an overall funding request of $1.25 billion in FY 2016 and $1.27 billion in FY 2017. The recommended FY 2016 amount is a 6.1% increase over estimated FY 2015 spending of $1.18 billion. The largest year-to-year appropriation change is in the Bond Research and Development Fund Group, where funding increases by approximately $40.6 million from FY 2015 to FY 2016 as a result of additional assistance expected to be awarded by the Third Frontier Commission for technology investments under the Third Frontier Program. Another significant deviation occurs in the Facilities Establishment Fund Group, which sees a rise of around 63.5% from FY 2015 to FY 2016 due to DSA anticipating the award of more loans to assist businesses involving relocation or expansion projects for the purchase of real estate or the acquisition of other capital assets. Although there is a slight decline in GRF funding between FY 2015 and FY 2016, the amount increases by 11.3% in FY 2017, approximately $15.0 million above the FY 2016 appropriations in that category. This is due to a climb in debt service payments on bonds that support the Third Frontier Program.

JCTC and JRTC Changes: A key policy change proposed in the budget sections pertaining to the Development Services Agency is the method how the Tax Credit Authority (TCA) under DSA may award both Job Creation Tax Credits (JCTCs) and Job Retention Tax Credits (JRTCs). Currently, both credits are calculated as a percentage of the taxpayer's Ohio income tax withholdings, which could include nonresidents working in Ohio. The executive proposal revises the computation of JCTCs so that the amount of the credit equals an agreed-upon percentage of the taxpayer's Ohio employee payroll (taxable income paid to Ohio residents) minus baseline payroll (taxable income paid to Ohio residents during the 12 months preceding the agreement). For JRTCs, the amount of the credit would equal an agreed-upon percentage of the taxpayer's Ohio employee payroll.  Under current law, both credits are calculated as a percentage of the taxpayer's Ohio income tax withholdings (which could include nonresidents working in Ohio). The bill's change to the credit base would prevent a reduction in the credit amount due to declining Ohio income tax rates.

Additionally, regarding JRTCs, in currently determining the amount of credit that businesses may receive, there is a cap of 75.0% on the percentage that the credit may be multiplied by the taxpayer's state income tax withholding. The bill would remove the 75.0% cap that limits JRTC tax expenditures in current law.  The Budget Bill also authorizes the TCA to require the taxpayer to refund all or a portion of a JCTC or JRTC if the taxpayer fails to substantially meet the job creation, payroll, or investment requirements included in the tax credit agreement, or if the taxpayer files for bankruptcy. In addition, the bill would reduce from 60 to 30 days the amount of time a taxpayer has to submit a copy of a JCTC or JRTC certificate after a request of the Tax Commissioner or the Superintendent of Insurance. Finally, the proposed budget bill authorizes the TCA, upon mutual agreement of the taxpayer and DSA, to revise JCTC agreements originally approved in 2014 or 2015 to conform with the bill's revisions to the credit. Otherwise, the bill's revisions to the Revised Code would only apply to JCTC and JRTC agreements entered into after the bill's 90-day effective date.

Abandoned Gas Station Cleanup Grant Program: Another policy change in the bill is the creation of the Abandoned Gas Station Cleanup Grant Program to provide $20.0 million in grants to cover cleanup and remediation costs of underground storage tanks (USTs) at vacant locations across the state. The abandoned gas stations must be classified as Class C release sites, where the responsible person for the release is determined to not be a viable person capable of undertaking or completing the required corrective actions. Grants under the new program may only be awarded to local governments in remediating these sites, in amounts up to $500,000 for a property assessment, and up to $2.0 million for actual cleanup and remediation.  The proposed funding comes from a transfer of $20.0 million from the Clean Ohio Revitalization Fund. DSA arrived at this $20.0 million figure by identifying the amount of cash that was initially awarded in brownfield grants under the Clean Ohio Revitalization Program that ultimately went unspent. Since the Abandoned Gas Station Cleanup Grant Program would use capital money, funding for the initiative is not reflected in the operating appropriations for DSA within the Governor's funding proposal. Rather, the funding would be provided by amending Section 235.10 of H.B. 497 of the 130th General Assembly, the capital budget bill for the FY 2015-FY 2016 biennium.   The Bureau of Underground Storage Tanks (BUSTR), within the State Fire Marshal's Office under the Department of Commerce, also has a role in this type of site remediation.   Additionally, new to FY 2015, the Bureau began accepting applications for the UST Revolving Loan Fund Program, to assist these entities in remediating Class C sites. The total available funding in FY 2015 is $3.0 million. The loans are interest-free and may last up to ten years. Applications for the first round of funding were due at the end of December 2014. The executive proposal includes funding of $1.5 million in each of FY 2016 and FY 2017 for additional loans under the program, which would essentially be used for the same purposes as the DSA grants that would be authorized in H.B. 64 under the Abandoned Gas Station Cleanup Grant Program, described above.

Housing Trust Reserve Fund: A third policy change in the DSA budget relates to the Housing Trust Fund.  Currently, portions of county recordation fees are sent to the state for deposit into the Low- and Moderate-Income Housing Trust Fund. Commonly known as the Housing Trust Fund (HTF), the fund receives the first $50.0 million annually, while revenue in excess of the annual cap goes to the GRF. The Budget Bill instead requires that the annual revenue above $50.0 million go into the Housing Trust Reserve Fund, established in the bill. However, the proposal also prohibits the Reserve Fund from attaining a cash balance of more than $15.0 million, and specifies that once the Reserve Fund attains that cash balance, county recordation fee revenue that exceeds $50.0 million annually shall be deposited into the GRF. Finally, the bill allows the transfer of cash from the Reserve Fund to the HTF so that Fund 6460 receives the $50.0 million cap in that year, such that the amount transferred plus the revenue that the HTF received in that year does not exceed $50.0 million.  Creating a Housing Trust Reserve Fund provides fallback funding in the event that Fund 6460 receives less than $50.0 million in revenue in any year. The HTF could then continue to provide grant funding allocated annually to local governments, nonprofits, and community development corporations. This provision would decrease revenue to the GRF in future fiscal years in the amount of up to $15.0 million, and potentially more if a transfer occurs from the Reserve Fund. Since FY 2010, the deposits into the fund exceeded the $50.0 million threshold only once. That was in FY 2013, when state receipts from recordation fees amounted to $53.7 million, with the excess $3.7 million deposited into the GRF.

Appalachia Assistance (Fund 195455):  GRF funding for this line item is $4.3 million in each fiscal year and provides economic and community development assistance to the 32 counties in Ohio's Appalachian region. The bill proposes that funding will be used for purposes previously appropriated under two GRF line items: 195501, Appalachian Local Development Districts, and 195535, Appalachia Assistance. The combined estimated FY 2015 spending under those two line items is approximately equal to the annual appropriations under this new line item.  This funding will be used for several purposes, supporting (1) administrative costs of planning and liaison activities for the Governor's Office of Appalachia, (2) financial assistance for projects in Ohio's Appalachian counties, (3) dues for memberships in the Appalachian Regional Commission, and (4) matching federal funds from the Appalachian Regional Commission, and (5) annual payments to the four Appalachian Local Development District offices located in Cambridge, Marietta, Waverly, and Youngstown.  The bill earmarks up to $135,000 in each fiscal year for three of these Local Development Districts: the Ohio Valley Regional Development Commission, the Ohio Mid-Eastern Government Association, and the Buckeye Hills – Hocking Valley Regional Development District. There is an earmark of $35,000 in each fiscal year for the fourth entity, the Eastgate Regional Council of Governments. These same earmarks were in place for the current biennium.

Third Frontier Program: Funding under two line items (195687 and 195692) make up the grant and loan assistance under the Third Frontier Program,  funded by the proceeds of G.O. bonds issued by the Ohio Public Facilities Commission. The  budget proposes combined appropriations of $169.8 million to the two line items in each fiscal year of the upcoming FY 2016-FY 2017 biennium. This is $40.6 million (31.4%) more than annual appropriations of $129.2 million for TFP in the current biennium. With this increased funding, the Third Frontier Commission can award additional grants and loans, or award more funding per eligible project.

Incumbent Workforce Training Vouchers Program:  The Incumbent Workforce Training Voucher Program was rolled out in CY 2013 to reimburse Ohio employers' costs to train their existing workers. The initiative was funded by one-time revenue from casino license fees totaling $50.0 million. The program is appropriated $7.5 million in each fiscal year of the FY 2016-FY 2017 biennium under the executive proposal. Once distributed, this will exhaust the funding from the casino license revenue.

Transportation Budget:

HB 53 was introduced February 10, provides for a $5.9 billion transportation budget and focuses on maintaining the current level of public transportation funding over the next 10 years. A proposed policy change to incorporate the Ohio Rail Development Commission into a new Division of Freight within the Department of Transportation was removed in committee. DSA  would receive $15.2 million annually in operating appropriations for the Roadwork Development Grant Program in the bill, consistent with program funding levels in the current biennium.  The bill would also establish a Transportation Improvement District (TID) program, which has been proposed in stand-alone bills previously.   As proposed, the bill would provide that:

  • ·         TIDs could be created by the board of county commissioners of any county and would be required to be governed by a board of trustees.
  • ·         TIDs would have specified powers related to the financing, construction, maintenance, repair, and operation of transportation projects and could issue bonds, levy assessments, impose a motor vehicle license tax by a vote of the electors, and establish toll roads.
  • ·         The bill requires $3.5 million in fiscal years 2016 and 2017 to be made available for distribution by the Director of Transportation to TIDs that have facilitated funding for the cost of a project or projects in conjunction with and through other governmental agencies. A TID must submit requests for project funding to ODOT not later than September 1 in each fiscal year. ODOT must notify the TID if it has approved or disapproved the project funding request within 90 days after the day the request was submitted by the TID. The bill prohibits any funding provided to a TID to be used for the purposes of administrative costs or administrative staffing and requires the funding to be used to fund a specific project or projects within that TID's area. The total amount of a specific project's cost may not be fully funded by the amount of funds provided under the bill. The total amount of funding provided for each project is limited to 25% of total project costs not to exceed $250,000 per fiscal year. TIDs that are co-sponsoring a specific project may individually apply for up to $250,000 for that project, but not more than 25% of a project's total costs per biennium may be funded through moneys provided under the bill. Funding provided under the bill may be used for preliminary engineering, detailed design, right-of-way acquisition, and construction of the specific project and such other project costs that are defined under the law governing TIDs and approved by the Director. Upon receipt of a copy of an invoice for work performed on the specific project, the Director must reimburse a TID for the expenditures.
  • ·         Any TID that is requesting funds under the bill must register with the Director. The Director must register a TID only if the TID has a specific, eligible project. The Director may cancel the registration of a TID that is not eligible to receive funds under the bill.  In addition, the Director must not register a TID and must cancel the registration of a currently registered TID unless at least one of the following applies: (1) The TID, by a resolution or resolutions, designated a project or program of projects and facilitated, including in conjunction with and through other governmental agencies, funding for costs of a project or program of projects in an aggregate amount of not less than $10 million within the eight-year period commencing January 1, 2005; (2) The TID, by a resolution or resolutions, designated a project or program of projects and facilitated, including in conjunction with and through other governmental agencies, funding for costs of a project or program of projects in an aggregate amount of not less than $15 million from the commencement date of the project or program of projects, or (3) The TID has designated, by a resolution or resolutions, a project or program of projects that has estimated aggregate costs in excess of $10 million and the county engineer of the county in which the TID is located has attested by a sworn affidavit that the costs of the project or program of projects exceeds $10 million and that the TID is facilitating a portion of funding for that project or program of projects.

HB 53 passed in the House on 3/3, and on 3/10 was referred to the Senate Transportation, Commerce and Labor Committee.

Other Bills being Tracked:  New bills introduced in the 131st General Assembly and being tracked for OEDA include the following:

House Bills:                                  

HB 1 

WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. Hearings have occurred in the Economic and Workforce Development Committee, with none further scheduled.

HB 3 

BUSINESS FEES (Derickson, T., Romanchuk, M.): The bill would reduce certain business filing fees charged and collected by the Secretary of State and would specify that Ohio-based companies are to have access to appropriate features of the OhioMeansJobs website. It has been referred to the Economic and Workforce Development Committee, where the fourth hearing will occur this Wednesday 3/18.

HB 12 

TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response. The bill was referred to the Ways & Means Committee 2/10 and the first hearing (sponsor testimony) is scheduled for Tuesday March 17.

HB 13

PUBLIC SAFETY REVENUES (Butler, J., Burkley, T.) The bill would require reimbursement of police and fire levy revenue foregone because of the creation of a tax increment financing incentive district. The bill was referred to the Ways & Means Committee, and the first hearing (sponsor testimony) is scheduled for Tuesday March 17.

HB 65

TAX EXPENDITURES (Driehaus, D) The bill would provide for the periodic appraisal of the effectiveness of tax expenditures. The bill has been referred to the Ways and Means Committees, but no hearings have yet been scheduled.

HB 72

PORT AUTHORITIES (Conditt, M) The bill would rename special improvement districts created for special improvement projects as "energy special improvement districts, would permit port authorities to create an energy special improvement district, would enact laws governing energy special improvement districts, recreating or recodifying many of the laws from current law and governing the districts renamed by the bill and from continuing law governing special improvement districts in general. It would also expand what qualifies as an energy special improvement project.  The bill permits a special energy improvement project to include a waste heat recovery project, a hydroelectric project, a water efficiency project, a combined heat and power project, a fuel source conversion project, a cogeneration project, or a biodigestor project. Under continuing law, other qualifying projects are solar photovoltaic projects, solar thermal energy projects, geothermal projects, customer-generated energy projects, and energy efficiency improvements. A fuel source conversion project is defined as a project undertaken by a property owner, rural cooperative, or political subdivision of this state to convert an existing fossil fuel-based technology, product, or system to a more efficient technology, product, or system, including conversion to a natural gas or electricity-based technology, product, or system.

HB 103

WOMENS’ ENTREPRENEURSHIP (Pelanda, D and Kunze, S) The bill would designate the second week of March as Ohio Women’s Week for Policy and Entrepreneurship, would create the Ohio Women’s Policy and Entrepreneurship Committee, and would require the state, in collaboration with the private sector, to conduct a two-day competition and forum each even-numbered year during the designated week.

Senate Bills:

SB 12 

TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period. No hearings have yet been scheduled.

SB 18 

TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves. No hearings have yet been scheduled.

SB 41 

NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates.  No hearings have yet been scheduled.

SB 88

TAX CREDITS (Tavares, C.)  This bill would create a tax credit for the employment of individuals who have been convicted of criminal offenses. The Bill was referred to the Senate Ways & Means Committee, and no hearings have yet been scheduled.

SB 109

TOWNSHIP IMPACT FEES (Tavares, C.)  The bill would allow townships to levy impact fees on new development to finance capital improvements necessitated by that development, if the township has implemented a land use plan and a capital facilities plan for the area to be developed that estimates the costs of necessary upgrades and improvements.  The bill was referred on 3/4 to the Senate State and Local Government Committee, and no hearings have yet been scheduled.     






  February 2015 OEDA Legislative Update



In the coming weeks, we will provide information on specific aspects of the Budget, including the programs in the Development Services Agency, changes to Job Creation Tax Credit calculations, and other development related details.

2016-2017 Biennial Budget: 2015 brings with it the introduction of the state’s 2016-2017 Biennial Budget, which will consist of 4 separate budget bills.  Two have been released (Operating Budget and Transportation Budget), while two are pending (Bureau of Workers’ Compensation and the Industrial Commission).  In the coming weeks, we will provide information on specific aspects of the Budget, including the programs in the Development Services Agency, changes to Job Creation Tax Credit calculations, and other development related details.

Operating Budget:

Governor Kasich released a preview of his Executive (Operating) Budget February 2, advising that it will pursue 4 transformational policies to expand opportunities for Ohioans: 1. Ensuring that students are ready for college and careers; 2. Helping more students get degrees; 3. Cutting and reforming taxes, and 4. Helping Ohioans move up and out of poverty and into jobs.  The Governor’s Budget Overview can be found at: http://www.blueprint.ohio.gov/doc/factsheets/GeneralBudgetOverview.pdf.   Details about the Governor’s budget recommendations in his  “Blueprint for A New Ohio” can be found at: http://www.blueprint.ohio.gov/doc/budget/State_of_Ohio_Budget_Recommendations_FY-16-17.pdf

The bill itself, HB 64 was introduced February 12 and is sponsored by Representative Ryan Smith.  It provides funding for the biennial for the executive branch of Ohio government and thus contains policy changes in every agency.  Initial review of the sections pertaining to the Development Services Agency indicate no major proposed policy changes. General revenue funding for fiscal year 2016 will be $132.9 million, a 0.8% decrease from fiscal year 2015.  General revenue funding for fiscal year 2017 is $147.9 million, an 11.3% increase from fiscal year 2016. While the amounts budgeted for the Facilities Establishment Fund, in which 166 loan and bond funds are maintained, has decreased in recent years, the budget bill proposes a significant increase in fiscal year 2016.

Tax reform is a major focus of the Operating Budget, and the bill would provide an overall estimated tax cut of $523 million over two years.  It calls for further reductions in the personal income tax rate, expansion of the small business deduction, revisions to the minimum commercial activity tax for businesses with less than $2 million in annual receipts, and increased personal exemptions for lower and middle income taxpayers. The reductions would be paid for in part by increases in the sales, cigarette and commercial activity tax rates, as well as a revamping of Ohio’s severance tax on oil and natural gas. Major proposed tax changes include:

Personal Income Tax

Current law contains a deduction for one-half of the first $250,000 for an individual’s net business income; this deduction applies to sole proprietors as well as to the owners of pass-through entities such as partnerships, S corporations, and limited liability companies. The budget proposes to exclude the first $2 million in net business income entirely from the tax and to apply the existing deduction to any remaining income. Personal income tax rates will be reduced 15 percent during the first year of the budget, with an additional 8 percent reduction for the second year. The top personal income tax rate would be reduced from the current 5.33 percent to 4.1 percent over the two years. The personal exemption for taxpayers earning less than $40,000 annually would be increased from $2,200 to $4,000 for 2015. For those earning between $40,000 and $80,000 annually, the exemption would increase from $1,950 to $2,850.The plan also proposes to make some deductions and credits, such as the retirement income credit, the social security deduction, the $50 senior credit and the lump sum senior credit means-tested. Those items would be eliminated for taxpayers with annual income in excess of $100,000.

Commercial Activity Tax

The minimum tax for taxpayers with less than $2 million in annual taxable gross receipts would be reduced from $800 to $150. The rate of the tax would increase from 0.26 percent of annual taxable gross receipts to 0.32 percent of such receipts, an increase of roughly 23 percent.

Sales Tax

The state sales tax rate will be increased from 5.75 percent to 6.25 percent. In addition, the tax base will be broadened by expanding it to a number of services. These include cable TV subscriptions, parking, lobbying, public relations, market research/opinion polling, management consulting, travel packages, and debt collection services. It is unclear whether this expansion is limited to personal purchases or will additionally apply to purchases by businesses. Ohio currently reduces the price paid for a new car or boat by the value of any car or boat traded in. This reduction will be cut in half. Finally, the vendor discount, intended to reimburse vendors for the cost of collecting, reporting, and remitting the sales tax, will be capped at $1,000 monthly.

Severance Tax

Currently, the severance tax is a volume-based tax, imposed on oil and gas at a rate of $.20 per barrel and $.03 per million cubic feet, respectively. Under the proposal, small, traditional producers would not be taxed at all. For larger producers using fracking wells, the tax would be imposed at a rate of 6.5 percent of the price of the oil or gas sold at the wellhead or 4.5 percent of the price paid downstream from the wellhead.

After providing for regulatory needs, 20 percent of the increased tax revenue would be earmarked for local jurisdictions to reimburse them for costs associated with the new drilling activities.

Transportation Budget:

HB 53 was introduced February 10 and provides for a $5.9 billion transportation budget.  It focuses on maintaining the current level of public transportation funding over the next 10 years and has been referred to the House Finance & Appropriations Committee for hearings.  One of the recommended policy changes is to incorporate the Ohio Rail Development Commission into a new Division of Freight.

Other Bills being Tracked:  New bills introduced in the 131st General Assembly and being tracked for OEDA include the following:

House Bills:

HB 1 

WORKFORCE GRANTS (Schuring, K., Manning, N.):  The bill would create the Workforce Grant Program to award grants to eligible students who are pursuing a degree or certification that is required to be employed in a job considered to be one of the most in demand jobs in Ohio.  It would do the following : cap each grant awarded to an eligible student at $5,000 per year, and set guidelines for grant distribution, require the Chancellor of the Ohio Board of Regents to adopt rules for operating the Program and for distributing information about the Program to Ohio high school and first year college students, appropriate $100,000,000 in fiscal year 2017 for the Program and require the Chancellor to use $500,000 of that appropriation to coordinate a statewide effort to promote workforce grant programs, and authorize a refundable income tax credit equal to 25% of the eligible student loan payments made by individuals who were awarded a workforce grant and are employed in an "in-demand" job. Hearings have begun in the Economic and Workforce Development Committee.

HB 3 

BUSINESS FEES (Derickson, T., Romanchuk, M.): The bill would reduce certain business filing fees charged and collected by the Secretary of State and would specify that Ohio-based companies are to have access to appropriate features of the OhioMeansJobs website. It has been referred to the Economic and Workforce Development Committee.

HB 12 

TIF CREATION (Butler, J., Burkley, T.): This bill, similar to last session’s H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs) would establish a procedure by which political subdivisions proposing a tax increment financing (TIF) incentive district are required to provide notice to the record owner of each parcel within the proposed incentive district before creating the district, and would permit such owners, under specific conditions, to exclude their parcels from the incentive district by submitting a written response.

Senate Bills:

SB 12 

TAX CREDITS (Hottinger, J.): This bill would grant an income tax credit to individuals who earn degrees in science, technology, engineering, or math-based fields of study.  A $5,000 credit would be allowed for those earning associates degrees, $20,000 for bachelors and $30,000 for either masters or doctorates, over a 10 year period.

SB 18 

TAX CREDITS (Gentile, L.): This bill would authorize a refundable income tax credit for employers that hire one or more qualified veterans or members of the National Guard or reserves.

SB 41 

NEW MARKETS TAX CREDIT (Beagle, B., Tavares, C.) This bill would modify the qualifications for the New Markets Tax Credit and the schedule for receiving the credit. Among other changes, the definition of "Applicable percentage" would change to five percent for each of the first three  credit allowance dates and six percent for the four following credit allowance dates. 







January 2015 OEDA Legislative Update


The 131st General Assembly began its two year session January 5. The House Majority is led by Speaker Cliff Rosenberger, Speaker Pro Tempore Ron Amstutz, Majority Floor Leader Barbara Sears, Assistant Majority Floor Leader Jim Buchy, Majority Whip Mike Dovilla and Assistant Majority Whip Dorothy Pelanda.  House Minority Leader is Fred Strahorn, Assistant Minority Leader is Nicholas Celebrezze, Minority Whip is Kevin Boyce and Assistant Minority Whip is Nickie Antonio.

Speaker Rosenberg announced he will focus long-term on education, workforce development, Medicaid reform and tort reform in the medical industry.  House committees and their leaders were announced, with the House Economic & Workforce Development Committee now chaired by Rep. Nan Baker (Westlake), and its Vice Chair now Rep. Mark Romanchuk (Ontario).   Ryan Smith from Bidwell will chair the House Finance & Appropriations Committee, with Kirk Schuring of Canton as his Co-Chair.  Rep. Terry Boose of Norwalk will chair the Transportation & Infrastructure Committee, with Doug Green of Mt. Orab as the Vice-Chair.

The Senate returned with Keith Faber (Celina) again as its President.  President Pro Tempore is Chris Widener, Majority Floor Leader is Tom Patton and Majority Whip is Larry Obhof.  Minority Leader is Joe Schiavoni, Assistant Minority Leader is Charleta Tavares, Minority Whip is Edna Brown and Assistant Minority Whip is Lou Gentile.  Senate committee assignments and legislative priorities will be announced next week.

In legislative news, the Economic Gardening Technical Assistance Program was added at the last minute to a lame duck sales tax holiday measure in HB 243.  The Ohio Development Services Agency will administer the program and has one year to implement it.  It will be a two year pilot program to aid middle-range businesses with between 6 and 99 employees and annual revenues of between $750,000 and $25 million.  Eligible companies must also have been located in Ohio for the last two years and have recorded increases in gross revenue and full-time employees during 3 of the last 5 years.  State assistance will include aid in the areas of market research, marketing, and the creation of connections with trade associations, academic institutions, business advocacy groups, mentoring programs and other entities that can improve the likelihood of success. The program will be modeled on similar programs in Florida, Michigan and Indiana.




December 2014 OEDA Legislative Update



With the legislative year coming to a close,  the House plans to be in session one more day on Wednesday December 17.  While the Senate did not adjourn sine die, it is unlikely the upper chamber will return this year, thus ending the 130th General Assembly.   When the new year starts, the Governor is expected to push forcefully for a severance tax increase, which will likely play out in the FY 2016-2017 biennial budget to be introduced on or about February 2 during the 131st General Assembly. 

Leading the House Majority in the next General Assembly will be Speaker Rep. Cliff Rosenberger (R-Clarksville), assisted by Rep. Ron Amstutz (R-Wooster) as speaker pro tem; Rep. Barbara Sears (R-Maumee), majority leader; Rep. Jim Buchy (R-Greenville), assistant majority floor leader; Rep. Mike Dovilla (R-Berea), majority whip, and Rep. Dorothy Pelanda (R-Marysville), assistant majority whip.  Leading the House Minority will be Rep. Fred Strahorn (Dayton), supported by Rep. Nicholas J. Celebrezze (Parma) as assistant minority leader; Rep. Kevin Boyce (Columbus), as minority whip; and Rep. Nickie J. Antonio of Lakewood as assistant minority whip. 

The Senate Majority will once again be led by Senate President Keith Faber (Celina), and Sen. Chris Widener (Springfield) will again serve as president pro tempore; Tom Patton (Strongsville), as majority floor leader; and Sen. Larry Obhof (Medina), as majority whip.  Leading the Senate Minority once again will be Joe Schiavoni (Boardman) as Senate minority leader; Sen. Charleta B. Tavares (Columbus), assistant minority leader; Sen. Edna Brown (Toledo), minority whip; and Sen. Lou Gentile (Steubenville), assistant minority whip.

Year-end updates to the bills listed below are shown in bold:

H.B. 5: The bill, which would bring some uniformity to municipal income tax systems, passed in the Senate December 3 and in the House December 9.  It was then sent to the Governor for signature, which is expected.  The final bill will require all municipal corporations levying an income tax to comply with a uniform annual tax return filing schedule, and it would establish a uniform tax base applicable to all municipal corporations levying an income tax (with a few exceptions) by further defining the forms of income that municipal corporations must tax and the forms that they may not tax.  It would also require all municipal corporations to allow businesses to deduct new net operating losses and to allow a five-year carry-forward of such losses, reducing the requirement for five years for certain municipal corporations and permit pre-existing losses to continue to be carried forward if current ordinances allow. Under the bill, net operating losses incurred in years beginning after December 31, 2016, may be carried forward up to five years. However, during the five years from 2018-2022, only 50% of the eligible NOL may be claimed and there is no additional time beyond the five year limitation to use the remaining portion of the NOL. NOLs recognized under existing laws may continue to be used as under existing law and are not subject to the 50% reduction.

H.B. 198: On May 21, the Ohio House of Representatives passed House Bill 198, and it was introduced in the Senate May 28 and referred to the Ways and Means Committee.  The bill would create an opt-out procedure for owners of property that are outside a designated “overlay” of an incentive-district TIF.  Depending on the type of the TIF, the overlay will be specified by the municipality, township, or county.  The overlay will be not more than 300 acres, and it must be either square or rectangular, with longer sides that are not more than twice as long as the shorter sides.  Owners of property outside the overlay, or only partially within the overlay, will have the right to opt out of the TIF through a written request to the applicable governmental entity.  The sponsor of the bill has stated publicly that he hopes House Bill 198 will ensure that TIFs include only those properties that will most directly benefit from TIF-funded improvements.  On December 2, a Committee hearing in the Senate was continued.

H.B. 319:   The bill would permits a natural gas company to file an application with the PUCO for approval of an infrastructure development rider to recover infrastructure development costs for all approved general and SiteOhio Economic Development Projects.  The rider would be capped at not more than $2 from any single Ohio customer each calendar year for a general EDP and not more than $1 from any single Ohio customer each calendar year for a SiteOhio EDP.  The bill passed in the House December 4, unanimously passed in the Ohio Senate December 11 and has been sent to the Governor for signature, which is expected.

H.B. 375:   (Severance Tax) On May 14, the Ohio House of Representatives’ Ways and Means Committee approved a new version of the severance tax proposal.  The latest version, Sub. H.B. 375-II, reduces by 40% the severance tax on gas produced through conventional wells.  It also creates a new, 2.5% tax on oil and gas produced through horizontal wells.  Among other changes, Sub. H.B. 375-II establishes a local government public reimbursement fund that will direct a portion of severance tax receipts to local communities that are at the epicenter of shale development in Ohio. 

H.B. 494: House Bill 494 was passed in the House May 28, was amended by the Senate December 10  and must go back to the House for concurrence next week before final approval.   It would authorize the creation of Regional Transportation Improvement Projects (“RTIPs”), a new vehicle to promote economic development and infrastructure improvement.  Under House Bill 494, any two or more counties could join together to create an RTIP to finance and implement transportation improvements.  Eligible projects would include, among other things, the “construction, repair, maintenance, or expansion of streets, highways, parking facilities, rail tracks” and “traffic signs, markers, lights, and signals.”  RTIPs could finance these projects by issuing securities backed by certain revenue pledges of the state, the participating counties, and political subdivisions within the counties.  They also could seek voter approval for a motor vehicle license tax to finance authorized transportation improvements.   This new authority differs from Transportation Improvement Districts (“TIDs”), which Ohio law already authorizes, in a number of respects.  Most importantly, whereas TIDs are formed within one county, RTIPs may be formed by multiple counties.  This difference may prove valuable to communities undertaking larger projects or seeking additional financing capacity.  TIDs are subject to an express exemption from Ohio’s prevailing wage laws, but the current version of House Bill 494 does not contain language providing a similar exception for RTIPs.  Also, TIDs are authorized to specially assess properties benefitting from infrastructure improvements, but they cannot impose a license tax like an RTIP might.  Finally, TIDs must obtain approval of political subdivisions outside TID territory before making infrastructure improvements; RTIPs, by contrast, would not need any such approval for projects involving streets or highways connecting to the interstate system.

H.B. 538: On December 2, the House Agricultural and Natural Resources Committee deferred a hearing on this bill.  This legislation would require JobsOhio assistance for brownfield projects to be at least 85% grant-based.  The legislation as currently drafted includes no other detail.  JobsOhio is not subject to any similar restriction under current law.

H.B. 575: This bill was passed in the House June 4, and a committee hearing in the Senate was continued December 10.  It would create within the Development Services Agency the Ohio economic council on women consisting of the following members: (1) Three members of the Senate; (2) Three members of the House of Representatives; (3) Four members jointly appointed by the President of the Senate and the Speaker of the House of Representatives who have knowledge of and experience regarding the economic concerns of women; (4) One member appointed by the Governor who is recommended by the advisory committee on women veterans; (5) Two members, appointed by the Governor from nominations submitted by the Ohio Board of Regents, and (6) Two members appointed by the Governor, who may be selected from lists of qualified persons submitted by interested local, civic, and business groups involved in the advancement of women.  The council would examine the economic concerns and needs of women in Ohio and, to address these concerns and needs, it would conduct research, hold hearings, develop recommendations and policy, educate the public, and engage in activities for the benefit of women. 

S.B. 243This catchall bill was amended and passed in the House December 9, and the Senate concurred with the House changes on December 11.  It would provide a three-day sales tax holiday in August 2015 during which sales of back-to-school clothing, school supplies, and school instructional materials are exempt from sales and use taxes.  Miscellaneous other provisions were included, including measures to temporarily allow computer data centers more time to make the required capital investment for purposes of qualifying for a sales and use tax exemption for computer data center equipment purchases, to adjust the administration and modify the tax of the financial institution tax,  to change the requirements for qualifying for a tax exemption for historic structures used for charitable and public purposes, to establish the Economic Gardening Technical Assistance Pilot Program, to add the Governor or the Governor's designee to the Ohio Business Gateway Steering Committee, and to make appropriations.




November 2014 OEDA Legislative Update



This month’s Legislative Update focuses on the results from the November 4, 2014 General Election and what to expect during the Lame Duck legislative session.  Turnout on November 4 was very low, about 40%, with some media outlets reporting that it may have been the lowest of any midterm election since tracking began by the Ohio Secretary of State.  The results were no surprise, with the Republican Party retaining the top 5 statewide offices as well as control of both the Ohio House and Senate.  Two Ohio Supreme Court seats were on the ballot, with incumbents Sharon Kennedy (R) defeating challenger Tom Letson 73% to 27% and Judi French (R) beating John O’Donnell with a margin of 56% to 44%.  In perhaps the biggest upset of the day, Representative Chris Redfern (D-Catawba Island) lost his seat to challenger Steven Kraus by a 51% to 49% margin,  announcing his resignation as Ohio Democratic Party Chair late in the evening.   As to the approximately 160  school issues on the ballot, 96% of renewal levies passed, 46% of construction levies passed, 34% of new money levies passed and 30% of additional operating levies passed.  Regarding the 38 municipal income tax issues on the ballot, 86% of renewal levies passed, 43% of tax increases passed, and 1 replacement levy failed.  In the upcoming Lame Duck, 15 session days have been set, beginning November 12 and ending December 18.  The House will elect a new Speaker, with Cliff Rosenberger (R-Clarksville) still the likely choice, although support for Jim Butler (R-Oakwood) may have grown.  Legislative priorities could be Am. H.B. 5 (municipal income tax standardization), H. B. 319 (LEAD Program allowing natural gas companies to recover economic development infrastructure investments through riders on customers’ bills), workforce development and lingering pieces of the original MBR.  For more detailed results from November 4th’s statewide and legislative races, see the 2014 General Election Update.





October 2014 OEDA Legislative Update

 

General Assembly: The Ohio General Assembly was back in session briefly in September.  The House met seven days, with the Senate assembling for five.  Minimal activity occurred but we continue to track the following bills:

Am. Sub. H.B.5
: The bill, which remains pending in the Senate, would standardize the timing of municipal tax returns and the tax base for municipalities (i.e., what may be taxed).  It also would require municipal corporations to (i) allow businesses to deduct new net operating losses and allow a five-year carry-forward of such losses; and (ii) permit pre-existing losses to continue to be carried forward if current ordinances allow.  Many meetings of interested parties occurred over the summer, and it appears likely that a compromise bill will be pursued in the Senate during the Lame Duck session.

Opponents and proponents of the bill have lined up and are still likely to change.

Current supporters of a municipal tax reform bill, in some form, include the following:
 
  • Ohio Society of CPAs
  • Ohio Chamber of Commerce
  • NFIB/Ohio
  • Ohio Council of Retail Merchants
  • Ohio Manufacturers’ Association
  • Ohio Association of REALTORS
  • Ohio Contractors Association
  • Associated General Contractors of Ohio
  • Associated Builders and Contractors of Ohio
  • Ohio Trucking Association
  • Ohio Newspaper Association
  • Ohio Cable Telecommunications Association
  • Ohio Oil and Gas Association
  • Ohio Restaurant Association
  • Ohio Insurance Institute
  • Ohio Home Builders Association
  • The Ohio Nursery & Landscape Association
  • National Electrical Contractors Association – Central Ohio, Greater      Cleveland, and North Central Ohio Chapters
  • Ohio Automobile Dealers Association
  • Ohio Produce Growers & Marketers Association
  • Ohio State Bar Association
  • Ohio State Medical Association
  • Greater Ohio Policy Center
  • Columbus Chamber of Commerce
  • COSE
  • Cincinnati USA Regional Chamber of Commerce
  • Dayton Area Chamber of Commerce
  • Columbus Chamber of Commerce
  • Messer Construction
  • Horizon Business Solutions
  • C&N Contractors
  • B&B Franchising LLC
  • EnviroControl Systems LLC
  • Houston Plumbing & Heating Inc.
  • Precision Paving
  • Claggett & Sons
  • Mayr & Associates Inc
  • Palmer-Donovin Mfg Co
  • HCR ManorCare

Interested parties (not taking a position) currently include:

  • Liberty Township
  • Council on State Taxation
  • One Ohio Now
  • Tax Foundation
  • Buckeye Institute
  • Ohio Township Association

Current Opponents include:

  • City of Troy
  • Northeast Ohio Mayors & City Managers Association
  • First Suburbs Consortium of Dayton Ohio
  • City of Brunswick
  • City of Heath OH
  • Summers Rubber
  • Cuyahoga County Mayors & City Managers Association
  • City of Westerville
  • Village of Evendale
  • City of Sharonville
  • City of Trotwood
  • City of Columbus
  • City of Troy
  • City of Bowling Green
  • City of Athens
  • City of Norton
  • Mid-Ohio Regional Planning Commission (MORPC)
  • Monroe City Council
  • City of Marysville
  • City of Kettering
  • City of Upper Arlington
  • City of Shaker Heights
  • City of Sidney
  • Although the Ohio Municipal League is not a “named” opponent, it strongly opposes current provisions of the bill.  See position paper at:  http://www.omlohio.org/130th%20General%20Assembly/HB5/subHB5issuepositions%207%201.pdf

 

H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs): No activity; remains pending in Senate Ways & Means Committee.

H.B. 319 (permitting natural gas companies to seek a rider to generate revenue for use in economic development projects): No activity; remains pending in House Public Utilities Committee. 

Am. Sub. H.B. 375 (creating a 2.5% severance tax on oil and gas produced through horizontal wells based on receipts from first sale rather than the existing volume-based tax, reducing severance tax by 40% on gas extracted through conventional wells and allocating a portion of severance tax revenues to local communities at epicenter of shale development): No activity; remains pending in Senate Ways & Means Committee.  See 9/29/14 Columbus Dispatch editorial about taking the matter to the ballot at:  http://www.dispatch.com/content/stories/editorials/2014/09/29/severance-tax-ballot-issue.html

Am. H.B. 494 (creating Regional Transportation Improvement Projects or RTIPs, to allow multiple counties to enter into a cooperative agreement to finance and implement transportation improvement projects which could be financed by securities backed by revenue pledges): No activity, still pending in the Senate Ways & Means Committee.

H.B. 538 (requiring if JobsOhio provides financial assistance for the cleanup and remediation of brownfields, at least 85% of the assistance must be in the form of grants): No Activity, remains pending in the House Agricultural and Natural Resources Committee.

Am. Sub. H.B. 575 (creating the Ohio Economic Council on Women, requiring a biennial report of economic concerns and needs of women in Ohio): No activity, pending in the Senate Economic Development and Regulatory Reform Committee

S.B. 134 (restricting out-of-state local governments seeking to finance Ohio public improvements): No activity; remains pending in Senate Finance Committee. 

Items of Note:

New Community Authorities (also known as Community Development Authorities):
In 2010, pursuant to H.B. 313, the Ohio General Assembly established a pilot program putting into place statutes relating to New Community Authorities (“NCAs”), which are also known as Community Development Authorities.  These provisions were extended in 2012 pursuant to House Bill 225 of the 129th General Assembly, but they only apply to NCAs created prior to March 22, 2015.  Examples of some of the provisions include:

  • Measures allowing NCAs to levy a community development charge based on business profits or gross receipts;
  • Language allowing the developer to satisfy the requirement that the developer own or control the property within the NCA through leases of 40 years or more;
  • Authorizations that NCAs can provide services to visitors, employees and employers within the NCA in addition to residents of the NCA; and
  • Provisions providing that NCAs may be dissolved using an alternative method specified by resolution of the organizational board of commissioners.

If more information is desired regarding NCAs and the pilot provisions set to expire, please contact the OEDA at OEDA@assnoffices.com.

November Elections:
Polls indicate that of the statewide races, only those for the Ohio Supreme Court (Judi French v. John O’Donnell and Sharon Kennedy v. Tom Letson) and the race for State Treasurer (Josh Mandel v. Connie Pillich) remain close.

Speaker Race:
With Representative Dave Hall being one of the latest to add support, Representative Cliff Rosenberger remains the clear favorite to be elected Speaker during the lame duck session.  Rosenberger, a 33-year-old Air Force veteran from Clarksville, is in his second term as state representative. He served as national political events coordinator for Mitt Romney’s 2012 presidential campaign and special assistant to former U.S. Interior Secretary Dirk Kempthorne, according to his legislative biography.






September 2014 OEDA Legislative Update

The Ohio General Assembly remains quiet on economic development matters, and we may not see any significant activity until after the November elections.  The Ohio House and Ohio Senate recently cancelled “if needed” session dates initially scheduled for late September and early October 2014.  Senate President Faber and Speaker Batchelder in separate statements indicated they do not expect the legislature to resume activities until November 12.

However, with the news that Amazon’s data center affiliate, Vadata Inc., may build a major new data center in Central Ohio, the State is beginning to utilize the provisions of two recent bills that have received little public attention.  The Data Center Tax Exemption, the program used to lure Vadata Inc., was created pursuant to the biennial budget bill that passed in 2011 (H.B. 153, 129th General Assembly) and was substantially expanded in the biennial budget bill that passed in 2013 (H.B. 59, 130th General Assembly).

The Data Center Tax Exemption program provides a sales and use tax exemption for the rapidly-growing data center industry.  According to a July 2013 report by CBRE, five states have no sales tax, 11 states have no sales tax applicable to equipment, and 17 additional states have similar exemption programs for data centers.  More information from the CBRE report is available at this link.

Pursuant to the program, the Tax Credit Authority may exempt up to 100% of sales and use taxes that are otherwise applicable to building and construction materials used in major data center projects. The incentive applies to materials necessary for storage, use or other consumption of computer data center equipment, including equipment cooling systems, equipment needed to provide electricity for the project, and building and construction materials incorporated in a major data center project.

Eligible projects must involve capital investment of more than $100 million in computer data equipment during the initial three years.  In addition, eligible projects must attain at least $1.5 million in annual payroll by the third full year of the exemption.  The term of the exemption is set by the Tax Credit Authority.  The applicant must stay at the project site through the term of the exemption.

The applicant may be either a business that provides electronic information services or a business that leases the project site for that purpose.  The award is not available for electronic publishers.  Ohio law permits multiple businesses at the same project site to combine to meet these requirements, and additional businesses at the same project site may be added to the exemption after the award date.  The award recipient may cancel the Data Center Tax Exemption without penalty during the first 18 months, provided that it has not claimed an exemption.

Businesses seeking the Data Center Tax Exemption must submit an application to the Tax Credit Authority.  The Tax Credit Authority then must consult with the Office of Budget and Management, the Tax Commissioner, and the Director of the Development Services Agency to analyze the economic impact of the proposed exemption.  Additionally, the Tax Credit Authority must determine that the applicant is economically sound and that it is able to complete the project.  It also must conclude that the applicant intends to maintain operations at the project site through the term of the agreement and that the exemption is a “major factor” in the decision to undertake the project.

DSA annual reports indicate that the Tax Credit Authority did not award a Data Center Tax Exemption in calendar year 2012 or calendar year 2013.  In early 2014, however, the Tax Credit Authority provided a 15-year, 100% Data Center Tax Exemption to ByteGrid Holdings LLC for a project in Cleveland that will create 20 jobs.  In addition, in August 2014, the Tax Credit Authority approved a 15-year, 100% Data Center Tax Exemption for Vadata Inc., the data center development unit of Amazon. 




August 2014 OEDA Legislative Update

The Ohio General Assembly remains on summer break.  We expect much of legislators’ attention in the short-term to be focused on the November elections as well as on jockeying to become the new Speaker of the Ohio House, replacing term-limited Rep. William G. Batchelder.

In addition, it appears increasingly likely that we will see activity this fall on the topic of uniform municipal taxation.  This issue stalled after the House passed H.B. 5 in November 2013.  H.B. 5, which remains pending in the Senate, would standardize the timing of municipal tax returns and the tax base for municipalities (i.e., what may be taxed).  It also would require municipal corporations to (i) allow businesses to deduct new net operating losses and allow a five-year carry-forward of such losses; and (ii) permit pre-existing losses to continue to be carried forward if current ordinances allow.  It is not clear which elements of uniformity might gain traction.  Public reports indicate, however, that we may see compromise on this issue in the coming months.

CICs: As we reflect on the fury of legislative activity in recent months, one item that has escaped public attention – but that will have a major effect on economic development in Ohio – is a provision in H.B. 483 relating to community improvement corporations, or “CICs”.

CICs are nonprofit entities formed by local communities to lead their economic development efforts.  As many communities across Ohio can attest, CICs are a valuable tool to engage businesses and local governments in promoting growth.  They have flexible powers, including the ability to purchase and lease real property from the subdivisions that form them (without public sale requirements).

Earlier this year, however, the Ohio Attorney General issued an opinion interpreting Ohio Revised Code Chapter 1724 to provide authority for CICs to lease and purchase only “lands or interests in lands,” and not other real property.  In other words, the opinion concluded, CICs could not lease or purchase any improved structures that might constitute real property.  Opinions of the Ohio Attorney General are not binding legal authority, but they are often considered the most authoritative resource in circumstances where the Ohio Revised Code is not clear.    

Buried in the recent Mid-Biennium Review, however, was a provision expressly providing this authority.  As a result of H.B. 483, CICs have clear authority to purchase and lease not only land, but any real property or improvement to real property.  We expect this legislative development to prove very useful for many communities across Ohio.    

TIFs and Police and Fire Levies
: Another important economic development bill that has escaped public attention is H.B. 217, which was introduced June 19, 2013 and remains pending in the House Ways and Means Committee.  H.B. 217 would add fire and police levies to the list of levies that are effectively exempt under law from certain incentive-district TIFs.  The beneficiaries of these levies are required to be reimbursed for any property tax revenue losses that occur as a result of the TIF.  We will be keeping a close eye on H.B. 217 when the Ohio General Assembly reconvenes.




June 2014 OEDA Legislative Update


The Ohio General Assembly is now on summer break after a very busy session that was filled with important economic development legislation.  Significant recent developments include the following:

MBR: The Mid-Biennium Review legislation, or MBR, included several provisions of interest.  Introduced originally as H.B. 472 and subsequently divided into numerous bills for legislative consideration, parts of the MBR were signed by the Governor into law June 16. Highlights include a provision that will permit municipalities to offer job-creation and job-retention tax credits regardless of whether the State of Ohio offers a similar credit.   There were also several new workforce development initiatives approved, which will: 1. require the Governor's Office of Workforce Transformation to establish criteria to evaluate the performance of state and local workforce programs and post an online "dashboard" to display information about them, and 2.  Require the Office of Workforce Transformation, working with the Board of Regents, the state and the Ohio Department of Job and Family Services to submit a unified plan for adult basic literacy, career-technical education and workforce development programs to the federal government by the end of 2014. The bills will also permit the Ohio Development Services Agency (“DSA”) to reduce the amount, percentage, or term of a research and development tax credit in the event of borrower default.  Finally, the bills provide new authority for DSA to access Ohio Department of Taxation information for the purposes of reviewing compliance by recipients tax credits, grants, and loans provided by DSA.

S.B. 310: The bill to scale back Ohio’s renewable and advanced energy requirements was signed by Governor Kasich  June 13.  S.B. 310 significantly revises energy efficiency requirements for utility companies serving Ohio customers.  Among other things, S.B. 310 establishes a two-year delay in the implementation of the state’s new energy efficiency and renewable energy benchmarks.  The benchmarks require gradual increases in renewable and solar energy use by electric distribution utilities and electric service companies.  This provision appears to be a compromise measure allowing for time to study the benchmarks without completely eliminating them, as some legislators have proposed.  Additionally, the bill reduces a number of other energy requirements in existing law, including those requiring utilities to pursue advanced energy measures and to purchase at least one half of their renewable energy from facilities in Ohio.

H.B. 289: On June 5, 2014, Governor Kasich signed the JEDZ bill into law.  As a result, no new JEDZs may be created after December 31, 2014.  Additionally, any JEDZs created or substantially amended between June 5 and December 31, 2014 will be subject to an extended approval process and an independent review by a newly-created JEDZ review council with authority to prevent the JEDZ from being created or amended, as the case may be.  The bill also renames existing, municipal-only JEDZs “municipal utility districts,” or “MUDs.”

Other Updates:

H.B. 198 (enabling owners of real property outside of a 300-acre “overlay” to opt out of incentive district TIFs): No activity; remains pending in Senate Ways & Means Committee.

H.B. 319 (permitting natural gas companies to seek a rider to generate revenue for use in economic development projects): No activity; remains pending in House Public Utilities Committee.

S.B. 134 (restricting out-of-state local governments seeking to finance Ohio public improvements): No activity; remains pending in Senate Finance Committee.

Legal Update:

This month also included a major decision out of the Supreme Court of Ohio, which on June 10, 2014 ruled in favor of JobsOhio in the final major challenge to its statutory creation.  Rejecting a challenge by ProgressOhio.org, Inc., Michael J. Skindell and Dennis E. Murray, Jr., the Court held that the plaintiffs lacked standing to raise their claims.  Standing is a threshold requirement for legal action.  Without any direct personal stake in the outcome of the case, the Court explained, the plaintiffs did not have standing and could not proceed.  The Court did not reach the merits of the plaintiffs’ claims, which involved legislation providing for the creation and operation of JobsOhio.



May 2014 OEDA Legislative Update

           

Issue 1:  On May 6, voters statewide passed Issue 1 by a 65-35 margin.  This measure gives the state authority to issue up to $1.875 billion in debt during the next ten years for the purposes of the State Capital Improvement Program.  The program enables the state and local communities to collaboratively address local infrastructure needs.  Eligible uses of the debt include roads and bridges, waste water treatment systems, water supply systems, solid waste disposal facilities, storm water and sanitary collection, storage, and treatment facilities.  Proponents of Issue 1 argued during the campaign that these projects will create 35,000 new jobs during the next ten years, all without raising taxes.

Energy Standards: The Ohio General Assembly returned to work quickly after the election.  On May 7, the Ohio Senate passed major legislation relating to energy efficiency.  Sub. S.B. 130 significantly revises energy efficiency requirements for utility companies serving Ohio customers.  Perhaps the most noteworthy provision of Sub. S.B. 310 establishes a two-year delay in the implementation of the state’s new energy efficiency and renewable energy benchmarks.  The benchmarks require gradual increases in renewable and solar energy use by electric distribution utilities and electric service companies.  This provision appears to be a compromise measure allowing for time to study the benchmarks without completely eliminating them, as some legislators have proposed.  Sub. S.B. 310 also reduces a number of other energy requirements in existing law, including those requiring utilities to pursue advanced energy measures and to purchase at least one half of their renewable energy from facilities in Ohio.

Am. Sub. S.B. 1 (130th General Assembly): Effective October 11, 2013, this bill created the OhioMeansJobs Workforce Development Revolving Loan Program, which will be funded on July 1, 2014 with $25 million from casino license fees. The Chancellor of the Ohio Board of Regents must administer the Program and award Program funds to an “institution”, which then must use those funds to award loans to individuals participating in a workforce training program administered by the institution and approved by the Chancellor.  Individuals can receive up to $10,000, and preference will be given to workforce training programs in which the institution partners with a business to repay all or part of the program participant’s loan or partners with a business that also provides funding for the program. Institutions cannot receive more than $100,000 per year for each approved program.  Loans to individuals are interest-free until the earlier of six months after completion of the program or the date they cease to reside in Ohio. After the interest-free period, interest will be 4% or less and repayment must be made within seven years or less.  “Institutions” include: state institutions of higher education; private career schools holding a certificate of registration from the State Board of Career Colleges and Schools (for profit private institutions or “proprietary school”); private for profit institutions (such as DeVry University) exempt from regulation by the State Board of Career Colleges and Schools as prescribed under continuing law;  private, nonprofit institutions that hold a certificate of authorization from the Ohio Board of Regents (private universities); career-technical centers, joint vocational school districts, comprehensive career-technical centers, or compact career-technical centers offering adult training.

Brent Spence Bridge: Two companion bills have been introduced to authorize tolls to be charged on the new Brent Spence Bridge near Cincinnati.  The bridge, which carries Interstates 71 and 75 over the Ohio River, does not currently have a toll.  H.B. 533, introduced on May 6, 2014, and S.B. 335, introduced on May 7, 2014, provide new authority for public-private partnerships managing transportation facilities and authorize tolls for the substantial reconstruction or replacement of existing, toll-free roadways.

H.B. 538: On May 15, House Bill 538 was introduced.  This new legislation would require JobsOhio assistance for brownfield projects to be at least 85% grant-based.  The legislation as currently drafted includes no other detail.  JobsOhio is not subject to any similar restriction under current law.

Sub. H.B. 289: The JEDZ bill continues to evolve.  The author of Sub. H.B. 289 has announced that he will introduce a third version of the bill.  This version would rename JEDZs “municipal utility districts,” or “MUDs.”  Existing JEDZs/MUDs would not otherwise be affected by the latest version of the bill, so the provisions in the legislation barring the renewal, expansion, or amendment of JEDZ agreements apparently will be stricken.  As with prior versions, however, the third version of Sub. H.B. 289 is expected to bar the creation of new JEDZs/MUDs after the end of 2014.  More details and the new version of the bill are expected to be available during the week of May 19.

H.B. 319: This bill, which would permit natural gas companies to seek a rider to generate revenue for use in economic development projects, remains pending in the House, where it was introduced on October 29, 2013.  H.B. 319 has been assigned to the House Public Utilities Committee.

S.B. 134: S.B. 134 would place new restrictions on the ability of other states and out-of-state local governments to finance Ohio public improvements.  This bill, which was introduced on May 15, 2013, is pending before the Senate Finance Committee. 






April 2014 OEDA Legislative Update

            The 130th Ohio General Assembly continues to be extremely active in the economic development space.  The General Assembly is now on break with no session dates scheduled until after the May 6 primary election.  The Ohio Senate, however, will return for committee meetings during the final week of April to begin work on Governor Kasich’s Mid-Biennium Review (the “MBR”). The MBR contains two new economic development provisions, each of which won House approval on April 9:

 

  • The MBR creates a substantial new historic tax credit for one “catalytic project” per biennium.  The bill defines a catalytic project as the rehabilitation of an historic building to include at least 2500 square feet for economic development purposes.  With this designation, a project can claim a tax credit equal to 25%, for a total of up to $5 million per year or $25 million over the life of the project.     
  • The MBR also permits payments in lieu of taxation (“PILOTs”) generated by TIF projects to be used for gas or electric service facilities owned by nongovernmental entities, to the extent necessary to promote economic development.

Additionally, the MBR will include three measures requiring the State to make its workforce training programs more efficient and effective.  The MBR as proposed will require the State to streamline training plans that workforce programs must submit, to standardize objective measurements for each program, and to create a public inventory of available programs.  Once these measures take effect, the Governor’s Office of Workforce Transformation will be charged with quickly implementing the improvements in the coming months.

Proposed changes to the State income and severance taxes continue to generate significant public attention.  The House Ways & Means Committee is now considering House Bill 375, sponsored by Representative Matt Huffman (R-Lima), which proposes a 2.25% severance tax rate for horizontal drillingundefinedlower than the 2.75% rate proposed by the Governor.  House Bill 375 is expected to be the vehicle for any severance tax changes by the legislature, but the House leadership has suggested that any such changes may not occur until the lame duck session at the end of the year.


In addition to the MBR and the severance tax legislation, the General Assembly is actively considering two important economic development bills that would change how major economic development projects are structured in Ohio: 

  •  Sub. House Bill 198 would introduce strict new requirements on incentive-district TIFs.  New TIF districts would need to be square or rectangular.  Any one side of a rectangular TIF could not be more than twice as long as the other.  Most parcels, of course, are not square or rectangular.  If Sub. House Bill 198 passes, therefore, TIFs typically would include portions of parcels.  The bill further provides that any owner of property partially included in the incentive-district TIF can opt out of the TIF.  Such an opt out, however, could result in the TIF no longer being square or rectangular, thereby preventing the TIF from taking effect as proposed.  Sub. House Bill 198 was reported out of the State and Local Government Committee on April 2.
  •  Sub. House Bill 289 would place new restrictions on existing JEDZs and phase out the authority to create new JEDZs at the end of 2014.  Rep. Kirk Schuring (R-Canton), the lead sponsor of the bill, has indicated that he will introduce a third version of this legislation in the coming weeks.  As currently drafted, however, Sub. House Bill 289 would prevent existing JEDZs from being renewed when their contract terms expire.  In addition, existing and new JEDZs would be required to direct at least half of their income tax revenue to the services, facilities, and improvements specified in the JEDZ economic development plan.  Any existing JEDZs that are substantially amendedundefineddefined to include, among other things, additions of territory or increases in the JEDZ income tax rateundefinedwould be subject to a new review council, chaired by the county auditor and with membership largely controlled by the owners of businesses in the JEDZ.  This review council would determine whether the JEDZ is serving the purposes outlined in its economic development plan and benefitting property owners in the JEDZ.  It would report publicly on its findings.  The bill also authorizes owners of businesses or properties in a JEDZ to file a legal action unwinding the JEDZ in the event that the review council should find that the JEDZ is not complying with the economic development plan or benefitting the property owners.  Sub. House Bill 289 passed the House on February 26, and is now pending in the Senate.

 

        Two other important legislative items appear to be at a standstill.  House Bill 319, which would permit natural gas companies to seek a rider to pay for infrastructure costs incurred in connection with economic development projects, was introduced in the House on October 29, 2013, and remains in the Public Utilities Committee with no activity.  Likewise, Senate Bill 134, a bill introduced May 15, 2013 that would limit the ability of out-of-state entities to finance Ohio projects without participation of an Ohio local government, has seen no activity in the Finance Committee.  These items are likely to remain on the backburner while the General Assembly focuses its economic development efforts on the MBR and the TIF and JEDZ bills.

  
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