Sales Tax Package In Doubt; Mid-April Floor Vote Planned For Budget
Majority Republicans in the House appear poised to shake up Governor Kasich’s $63.3 billion budget considerably in the coming weeks, with a proposed sales tax extension to services apparently on thin ice and an overhaul of the administration’s plan for Medicaid appearing likely if approval is forthcoming from the federal government.
House hearings this week revealed general unease with certain aspects of the governor’s plan to expand the sales tax to services and increase the oil and gas severance tax – part of a larger proposal to cut income taxes.
While many Republicans are supportive of the concept of shifting from an income-based to a consumption-based tax system, initial analyses of the package have uncovered problems and complications that lawmakers would be hard-pressed to solve in the relatively tight time frame allowed for processing the budget measure (HB59).
Some of those issues were discussed Thursday in a new sub-panel of the House Ways & Means Committee, which convened for the first time to focus on the tax provisions.
While Democrats have been more vocal in their overall opposition to the sales tax plan, many Republicans are also expressing doubts both publicly and privately – especially considering its scope.
In fact, a prominent House Republican had as many questions for Tax Commissioner Joe Testa than anyone else in the subcommittee Thursday: Rep. Ron Amstutz (R-Wooster) is the House Finance chairman and a former Ways & Means Committee chair.
Rep. Gary Scherer (R-Circleville) also had numerous questions about how the sales tax would apply to services among various types of affiliated entities and submitted a list to the Ohio Dept. of Taxation for follow up answers.
Rep. Peter Beck (R-Mason), chairman of the regular House Ways & Means Committee, said no decisions have been made regarding the sales tax components.
“We’re just looking at all the options at this point,” he said. “It’s a vital component of the entire budget process, so it would be hard to take out. But it’s not something that we can’t do and those options and considerations have to be considered.”
Commissioner Testa said the administration would continue to make its case for the governor’s goal of broadening the sales tax to cut income taxes on individuals and businesses, regardless of whether or not it remains in the budget.
“We understand that what we are proposing here is broad, we think it’s important for the future of the state,” he said in a recent interview.
“We will deal with it any way the legislature decides. If they decide to take separate action or separate pieces out, we’ve been there before,” he said, recalling the House chopped up the governor’s mid-biennium review proposal into several bills last year.
“If they feel that that’s a better way to drill down on issues because they are so complex, then I will be here and we’ll testify and give them the answers the best we can,” he said.
Mr. Testa said he welcomed lawmakers’ scrutiny, which could reveal details that might not have been fully vetted in the original proposal. “We want to work with the legislature. We understand this is a heavy lift with a lot of moving parts.”
Absent the expanded sales tax revenue, any personal income tax cut would likely be diminished but could still be sizeable based on revenue projections and other factors, officials say.
If Mr. Kasich’s sales tax plan does fall by the wayside in the near term it likely will not be declared permanently dead considering the GOP’s fondness for the consumption-based approach.
One Republican likened the circumstance to when former Gov. Bob Taft came up with a package of reforms early in the last decade. While they were initially rejected based on technical hurdles, time constraints and other factors, many ended up in law a few years later as part of the 2005 tax restructuring package.
More on OFCC Budget Testimony
Richard Hickman, executive director of the Ohio Facilities Construction Commission, detailed the proposed creation of the School Security Grant program while testifying on the group’s all funds budget (HB59) proposal of $405.6 million in fiscal year 2014 and $427.7 million in FY 2015.
The House Finance & Appropriations: Primary & Secondary Education Subcommittee also heard testimony on the budgets of the Board of Speech-Language Pathology and Audiology, Ohio School for the Deaf, Ohio State School for the Blind, Casino Control Commission and Lottery Commission.
The OFCC’s proposed grant program would allow the commission to reimburse schools for the purchase of one MARCS first responder communications unit and one door security system per building. The plan allocates $12 million in capital funding for the purchases.
Rep. Debbie Phillips (D-Athens) said she recently visited a third-grade special education class and the students’ questions were largely about how they would be kept safe. Last year’s shooting at Chardon High School and the recent Sandy Hook killings have brought the issue to the forefront. She asked about the adequacy of $12 million to put the safety systems in place for all schools.
Mr. Hickman said as a grant program, it is the decision of the district to apply for a grant and determine what they need for the protection of students.
“From district to district we would expect to see different approaches to their grant proposal,” he said, adding the attorney general is working through a committee to look more broadly at security issues.
Rep. Matt Lundy (D-Elyria) said he is trying to figure out who are the winners and losers through the grant funding given the funding couldn’t be stretched to every district in the state.
Mr. Hickman said the Ohio School Facilities Commission – a subset of OFCC also overseen by the director – thinks when the school construction program is completed it would rebuild about 2,200 buildings. There are a lot of buildings left that have yet to enter the program and many for which the commission is not sure what security they have in terms of controlling access to the buildings. The grant total was based on an estimate of how many buildings remain.
To the extent the funding is insufficient, he said he expects more money from the major construction program could be moved into that fund.
Mr. Lundy said he thinks districts don’t want to wait three years to improve its security measures when a new building is constructed.
Ms. Phillips asked if the state has a sense of the status of safety at schools. Director Hickman said as a construction agency, OFCC sees safety is a primary objective. The state has constructed almost 1,000 buildings with a vestibule at the entrance and a lockdown function and security cameras.
“We have had feedback from school districts on the security systems…we review these initiatives each year as we update our construction program and our requirements under that manual, so what we are doing is really confined to the structure of the school building,” Mr. Hickman said, adding the grant program allows districts that have not yet entered into the program to implement things that “make a lot of sense.”
Rep. Ron Maag (R-Lebanon) asked how the expense for a MARCS system would be beneficial compared to established 911 access. Director Hickman said he has heard from schools that during an emergency it is not uncommon for phone lines to be jammed and for safety personnel to be able to reach the appropriate person in the school. The MARCS system would provide direct contact to law enforcement.
Mr. Maag said EMTs will not enter a building until it has been secured. He asked if the MARCs system would inform individuals waiting outside of when it is safe to enter. The director said once a first responder arrives there are other means of communication among them and people within the building.
Chairman Rep. Bill Hays (R-Harrison Twp.) asked how MARCS was selected for use, to which the director said a district can evaluate whether that system provides what it needs. If not, that would prompt further discussion between OFCC and the district. The grant does not require its installation.
The OFCC funding proposal, which reflects a 15.7% increase in the first year and another 5.4% increase in FY 15, would also pay for the OAKS Capital Improvements module, which is the state’s online construction management system currently available to all state agencies and state colleges and universities. The allocation would also allow for the system to be expanded to K-12 projects.
OFCC is also seeking a language change for the school energy conservation program that would align the program to be more like the state agency version by requiring the installer to provide energy guarantees.
“This will help ensure that districts actually receive the savings they were promised from the vendors who perform the work,” he said.
OFCC also seeks the ability to approve requests based on whether the project is consistent with any other state-assisted school facilities project in that district and to have districts under the oversight of a state fiscal or academic oversight commission seek approval from that commission before submitting a request, Mr. Hickman said.
The Executive Budget also proposed to transfer the functions of the Ohio Cultural Facilities Commission related to capital improvement to OFCC. The change would reduce overall costs and place authority and resources within a single commission.
Another change would remove the separate construction authority of the Department of Natural resources and align their practices with those of other state agencies. ODNR would have local administration authority for self-perform projects under $1.5 million, Mr. Hickman said. The agency would also have separate authority for work on dam projects and those funded through the waterway Safety Fund and wildlife funds.
Answering Rep. Gerald Stebelton (R-Lancaster), Mr. Hickman the governor’s change in how schools are funded could change the order in which schools are served by the Ohio School Facilities Commission if a district’s position on the equity list is altered.
Rep. Phillips asked how the phase out of the tangible personal property tax reimbursement payments to districts affects the equity list presently. Mr. Hickman said OSFC has moved through the list in such a way that those changes would not have as large of an impact as in the past. Most districts with TPP issues have been served but there are likely some that still feel their placement is hurt by that funding change.
OFCC Testifies at Budget Hearing
Commission Executive Director Richard Hickman said the biennial budget for the recently reformatted commission will enable the commission to continue supporting bond funding for K-12 school construction and the 100 jobs necessary to oversee projects. In addition, the budget includes funding to implement the OAKS Capital Improvement module, which is already used at state agencies and universities; changes the HB264 programs in the Energy Services Section to require energy-savings guarantees by vendors and ensure districts in fiscal or academic emergencies get the approval of their oversight commissions before agreeing to a project; bring capital improvement functions of the Ohio Cultural Facilities Commission under the facilities commission; and remove the Ohio Department of Natural Resources’ separate construction authority to align its construction practices with other agencies.
In addition, the budget would create a $12 million grant program from capital funds to school security, to provide school districts that apply with one MARCS radio one door security system per building.
Rep. Maag asked why having a MARCS radio would be superior to schools reaching first responders on the telephone. Hickman said phone lines often are jammed or busy during emergencies, but the radio would allow direct contact. In response to a question from Rep. Hayes about jurisdictions where safety forces use non-MARCS radios, Hickman noted that the initiative is a voluntary grant programs, so schools are able to decide for themselves to apply.
Rep. Phillips asked how the $12 million figure was determined, and how much knowledge the commission has about security needs. Hickman said the attorney general’s office is conducting a review of overall school security needs, but results aren’t available from that yet. He told Rep. Lundy he suspects the agency could come back with an additional funding request if the $12 million is insufficient to meet demand.
In response to another question from Lundy, Hickman said the commission has made several changes to how it acquires furniture for buildings to answer concerns that some bid specifications were being written in such a way that only one company, sometimes and out-of-state or overseas firm, qualified to submit bids.
Sustainability Bill Heard (HB 306)
The Ohio House State Government Committee took testimony November 27 on HB 306 which would require a building or structure constructed using state capital budget moneys to adhere to certain energy efficiency and building standards and to encourage the use of Ohio-produced products.
Rep. Connie Pillich D-(Montomery) said the bill would require public buildings constructed under the state capital budget to adhere to certain energy efficient building standards and encourage the use of Ohio bio-products. Capital requirements would also apply to the school facility trust fund.
“It’s basically a green bill,” Pillich said.
Rep. Terhar cited the required return on investment of “not more than 20 years” in the bill. “That’s a horrific return on investment,” he said. “I don’t think tax payers should suffer a return on investment at that level.” Pillich noted that a more recent analysis suggested green requirements would pay for themselves within 18 months.
Rep. Damschroder asked why, if green standards are such a good idea, they should be subject to exemption for public buildings smaller than 5,000 feet, as provided in the bill. The sponsor said “industry experts” had advised her it would be a reasonable cutoff, and that implementing the standards would not be cost-effective above that point.
“It behooves the people of Ohio to have some checks and balances on those people in power who are spending their money,” Pillich said. “If we’re going to spend tax dollars to build a building — and likely operate it — we ought to be smart with our money.”
Kasich vetoes some construction language in HB487
Governor John Kasich vetoed a number of provisions in the recently enacted Mid Biennium Review Bill, HB 487, among which were the following related to state construction:
– A requirement for the Ohio School Facilities Commission to develop rules under both Chap. 111.15 and Chap. 119 of the
Ohio Revised Code. Kasich’s veto message calls this “a duplicative administrative burden.”
– Changes to the Ohio School Facilities Commission’s Expedited Local Partnership Program. “Under this provision, school
districts that have previously signed agreements with the School Facilities Commission under the Expedited Local
Partnership Program to lock in their local percentage shares of construction projects in exchange for faster consideration
and approval by the commission now would be able to unilaterally change their agreements and reduce their agreed-upon
percentage and therefore their costs,” Kasich wrote.
– Language on design-build and construction management contracts. Kasich said this change could “erode” construction
reforms instituted last year and also give the attorney general’s office new powers “incongruent with the attorney general’s
duties as prescribed by the Ohio Constitution and existing law.”
– Language on existing capital construction authority for the Department of Public Safety and Ohio State Highway Patrol.
Kasich said this item also undermines the intent of last year’s construction reforms by creating a different process for one
agency.
Ohio Residential Building Code Gets Energy Update
Ohio’s newly adopted residential building code will require new homes to be more energy-efficient, come with carbon-monoxide detectors and be tested for air leaks.
The code was adopted by the Ohio Department of Commerce’s Board of Building Standards after passing final procedural hurdles this month. It’s scheduled to take effect on Jan. 1.
The new rules are estimated to add between $1,100 and $1,200 to the cost of an 1,800-square-foot two-story home.
“Hopefully, the homeowner might notice these changes on their utility bills,” said Columbus homebuilder, CraigTuckerman, who served on the code’s advisory committee.
A 2009 U.S. Department of Energy study of a similar proposed code change in Boston found that homeowners could save about $230 a year in energy costs with the new guidelines
Tuckerman said many Ohio builders, especially custom builders, already meet or exceed most provisions of the new code.
Among other code requirements, carbon-monoxide detectors must be installed outside each bedroom in a home that uses gas or propane or includes an attached garage. Homes must meet an air-tightness standard that includes a blower-door test. And at least 75 percent of light bulbs in new homes must be high-efficiency, such as compact fluorescent bulbs.
While it won’t radically change the way homes are constructed, the code had sparked considerable debate since its introduction more than three years ago.
Environmental groups such as the Sierra Club favored the tougher energy requirements, while Ohio homebuilders argued the new code would excessively boost the cost of a new home.
The Ohio Home Builders Association opposed the initial proposal. But at the urging of builders, the code now includes a compromise provision to provide contractors two ways to meet the tougher energy requirements. They can either follow the International Code Council guidelines or follow an alternative set of guidelines designed by builders to achieve the same energy efficiency.
“I think they came up with a code that works,” Vincent Squillace, executive vice president of the Ohio Home Builders Association, told the newspaper. “We came up with an equivalent code that’s more strict but is about $2,000 cheaper per home to implement than the original code.”
Debbie Ohler, staff engineer for the Ohio Board of Building Standards, said the code also recognizes new materials and methods of construction. The board will administer the code.
“It’s definitely an improvement,” Ohler told the newspaper. “It also incorporates requirements that provide for safer homes, but at the same time, it incorporates more stringent energy requirements, which should save homeowners money.”
SAO/OSFC Merger Bill Goes to Conference Committee
As predicted, Sub. HB 487, the Governors Mid Biennium Review bill which contains the SAO/OSFC merger, passed the Ohio Senate yesterday by a vote of 25-8 and went to the Ohio House which, as expected, unanimously refused to concur in Senate amendments. The bill now goes to a Conference Committee composed of appointed House and Senate members who will resolve differences in the two versions of the bill.
The SAO/OSFC provisions are not in play.
Changes To OSFC Equity List Come Up Again As Part of MBRs
As the Senate prepares amendments for the main mid-biennium review, one proposal in flux would alter the amount and order in which schools are granted construction funding from the state.
The proposal, which was introduced as stand-alone legislation, HB 504, and has also been incorporated into the main MBR, HB 487, and the general tax MBR, HB 508, would eliminate consideration of tangible personal property in the calculation of Ohio School Facilities Commission projects.
It would also allow schools in the OSFC’s Expedited Local Partner Program an opportunity to choose between the lesser of the local share from the original signed project agreement or the current share calculated on the most recent equity list, according to the commission.
HB504 sponsor Rep. Matt Huffman (R-Lima) said his bill was incorporated into the main MBR in a form that would only affect a few districts. That language was originally meant to be amended out of the bill before it left the House, he said. The Senate is scheduled to caucus on HB487 amendments Tuesday and will likely decide the fate of the provision then.
Meanwhile, House Bill 508 includes a more comprehensive approach to the issue, he said, and is his preferred vehicle for the proposal. The language would also be protected from a line-item veto by the governor, which has been an issue in the past.
Similar language was passed by the legislature on two other occasions only to be line-item vetoed by former Gov. Ted Strickland and as recently as last year by Gov. John Kasich, HB 153).
An OSFC analysis shows the different bills would impact a different number of districts. House Bill 487 would decrease the local share for six districts, costing the state $74.9 million, while House Bill 504 would reduce it for 44 school systems, at a state cost of $271.7 million. Under House Bill 508, 208 districts would face an increased local share, 78 would remain unchanged and 44 would have a decreased share, creating a state impact of $42.1 million, according to OSFC.
“(The bill is) going to help locals versus the state, but it’s essentially a fairness thing. Let’s not use a fake number in calculating the true wealth of a local school district,” Rep. Huffman said.
Tom Ash, director of governmental relations for the Buckeye Association of School Administrators, said the language is needed to address the phase out and elimination of TPP taxes going to school districts. The Ohio School Boards Association and Ohio Association of School Business Officials also back the proposal.
“The OSFC formula takes a look at the district’s taxable wealth as the principal criteria in deciding how much the state and local shares of construction projects should be,” he said. “So therefore, these districts that have a lot of tangible personal property, their percentage of state and local money does not reflect the taxes that those districts will collect because they’re not going to collect on the tangible personal property values, which are part of the formula that put them where they are.”
The legislation would alter the position of some schools on the equity list that determines the order in which schools will be offered OSFC funding for construction projects. The language would also recalculate the ratio of state and local share for a small number of schools’ projects, Mr. Ash said.
“It will change the calculation for those districts that have more than 18% of their property values tied up in tangible personal property for which they will not collect taxes,” he said.
Rep. Huffman said the concept for the bill was brought to him by Bath Local Schools in his district, which has high personal property tax value because of the Ford Motor plant there.
“Back when we used to have personal property tax in the state of Ohio, a lot of school districts got a lot of money from that if they had a heavy industry … and because of that personal property tax, they got paid a lot of money, and when we started the school ranking system back in the ‘90s how much you got (from the state) depended on your local revenue,” Mr. Huffman said.
“The personal property tax went away in 2005, but the ranking as well as the percentage that the local districts paid were still stayed in place.”
Mr. Huffman said his vetoed attempt five years ago would have affected more districts’ position on the funding schedule than presently because many have had their projects funded in the interim.
“It would have affected a lot of districts; people jumping up and going back,” he said. “Well there’s less of that now because a lot of school districts have built, so even though some people may go up two or three, overall it’s good for the school districts because they’re going to be paying a less share, the districts that have this high phantom personal property tax number in it.”
OSFC Executive Director Rick Hickman said in a letter to legislators that the commission is concerned the legislative change would create winners and losers as it would move districts around on the equity list.
“Districts that we have been working with in planning stages to prepare them for a conditional offer of funding would be bumped out of our reach and replaced with districts that we have not yet begun any type of pre-planning phase,” he wrote.
Mr. Huffman said the whole concept of the ranking system is the creation of winners and losers.
“Somebody’s going to be ranked ahead of somebody else, and if we’re going to do it, let’s do it based on real data,” he said. “Before it was like, well, we’re going to rank everybody by how tall they are. The tall guy’s all the way in the back and a bunch of these guys are standing on two or three telephone directories, and let’s take the telephone directories away so that it’s actually everybody’s height.”
Mr. Ash also said the legislation would not have a huge effect on schools’ placement on the equity list especially because as some schools defer their projects, it is possible for those districts that are lower on the list to have their projects considered earlier than expected.
“The principal benefit is it corrects what was probably … an unintended consequence of tax reform in 2005 and, quite frankly, it’s one of those issue that you say, boy this doesn’t seem fair,” he said.
AIA Ohio President Jud Kline, FAIA, Testifies for AIA Architects to the Senate Finance Committee
Interested Party Testimony regarding Sub. HB 487
AIA Ohio (a component of the American Institute of Architects)
AIA Ohio President, Judson A. Kline, FAIA, LEED AP
May 9, 2012
Mr. Chairman and Members of the Finance Committee, my name is Judson A. Kline, FAIA, LEED AP, Senior Director of Herschman Architects in Cleveland, Ohio and president of AIA Ohio. I am appearing today as an interested party on behalf of AIA Ohio, the state component of the American Institute of Architects, the professional organization of architectural practice. AIA Ohio represents nearly 2,200 architects and design professionals who live and practice in Ohio.
We thank you for the opportunity to address the proposed merger of the State Architect’s Office (SAO) with the Ohio School Facilities Commission (OSFC) into the proposed Ohio Facilities Construction Commission (OFCC).
AIA Ohio recognizes the need for and supports the effort to create more efficiency in government. We understand the economic realities that are encouraging a variety of governmental consolidations and agree that construction efficiencies will assure that our state remains economically competitive and that our citizens receive the highest value built environment.
Our focus today is on the structure of the proposed OFCC.
For Ohio to maximize the benefits from the OFCC, we believe involving AIA architects at the highest level in the proposed organization is essential to achieving the intended results. Here are the reasons:
- AIA architects are specifically educated, trained and examined in building design, integration of building engineering systems, sustainability and health, safety and welfare requirements for buildings. We believe this expertise should be imbedded at the highest level of the OFCC in optimizing the outcomes in the design, construction and performance of Ohio’s public buildings.
- AIA architects are experienced in the processes and practices now being implemented as part of Ohio’s recent construction reform legislation. AIA architects should be engaged in the OFCC at the level where this understanding will ensure quality design services, fiduciary responsibility and the fullest potential project value when applying these new delivery methods.
- AIA architects, through contributing their knowledge and expertise in planning, developing and organizing processes and programs have played an important role in the design, management and construction of Ohio’s public and private architecture for decades. At an OFCC leadership level, AIA architects will have the standing to assure the most efficient use of resources and technologies for Ohio.
We understand that a formal OFCC organizational chart has yet to be determined. AIA Ohio would like to be involved in this reorganization process and have offered our input to Director Hickman. We hope to work with this General Assembly and the leadership of the proposed OFCC to help insure the creation of the most efficient, responsive and productive agency possible. As stewards of the built environment and leaders in Ohio’s design and construction industry, it would be a privilege to assist in this important effort.
We request that Sub. HB 487 includes AIA architects in occupying leadership positions within the OFCC where their unique and relevant talents can produce the desired outcomes for design and construction of public projects in Ohio.
On behalf of AIA Ohio, we thank you for allowing AIA architects an opportunity to provide input into this consolidation process.
Sales Tax Package In Doubt; Mid-April Floor Vote Planned For Budget
Majority Republicans in the House appear poised to shake up Governor Kasich’s $63.3 billion budget considerably in the coming weeks, with a proposed sales tax extension to services apparently on thin ice and an overhaul of the administration’s plan for Medicaid appearing likely if approval is forthcoming from the federal government.
House hearings this week revealed general unease with certain aspects of the governor’s plan to expand the sales tax to services and increase the oil and gas severance tax – part of a larger proposal to cut income taxes.
While many Republicans are supportive of the concept of shifting from an income-based to a consumption-based tax system, initial analyses of the package have uncovered problems and complications that lawmakers would be hard-pressed to solve in the relatively tight time frame allowed for processing the budget measure (HB59).
Some of those issues were discussed Thursday in a new sub-panel of the House Ways & Means Committee, which convened for the first time to focus on the tax provisions.
While Democrats have been more vocal in their overall opposition to the sales tax plan, many Republicans are also expressing doubts both publicly and privately – especially considering its scope.
In fact, a prominent House Republican had as many questions for Tax Commissioner Joe Testa than anyone else in the subcommittee Thursday: Rep. Ron Amstutz (R-Wooster) is the House Finance chairman and a former Ways & Means Committee chair.
Rep. Gary Scherer (R-Circleville) also had numerous questions about how the sales tax would apply to services among various types of affiliated entities and submitted a list to the Ohio Dept. of Taxation for follow up answers.
Rep. Peter Beck (R-Mason), chairman of the regular House Ways & Means Committee, said no decisions have been made regarding the sales tax components.
“We’re just looking at all the options at this point,” he said. “It’s a vital component of the entire budget process, so it would be hard to take out. But it’s not something that we can’t do and those options and considerations have to be considered.”
Commissioner Testa said the administration would continue to make its case for the governor’s goal of broadening the sales tax to cut income taxes on individuals and businesses, regardless of whether or not it remains in the budget.
“We understand that what we are proposing here is broad, we think it’s important for the future of the state,” he said in a recent interview.
“We will deal with it any way the legislature decides. If they decide to take separate action or separate pieces out, we’ve been there before,” he said, recalling the House chopped up the governor’s mid-biennium review proposal into several bills last year.
“If they feel that that’s a better way to drill down on issues because they are so complex, then I will be here and we’ll testify and give them the answers the best we can,” he said.
Mr. Testa said he welcomed lawmakers’ scrutiny, which could reveal details that might not have been fully vetted in the original proposal. “We want to work with the legislature. We understand this is a heavy lift with a lot of moving parts.”
Absent the expanded sales tax revenue, any personal income tax cut would likely be diminished but could still be sizeable based on revenue projections and other factors, officials say.
If Mr. Kasich’s sales tax plan does fall by the wayside in the near term it likely will not be declared permanently dead considering the GOP’s fondness for the consumption-based approach.
One Republican likened the circumstance to when former Gov. Bob Taft came up with a package of reforms early in the last decade. While they were initially rejected based on technical hurdles, time constraints and other factors, many ended up in law a few years later as part of the 2005 tax restructuring package.
More on OFCC Budget Testimony
Richard Hickman, executive director of the Ohio Facilities Construction Commission, detailed the proposed creation of the School Security Grant program while testifying on the group’s all funds budget (HB59) proposal of $405.6 million in fiscal year 2014 and $427.7 million in FY 2015.
The House Finance & Appropriations: Primary & Secondary Education Subcommittee also heard testimony on the budgets of the Board of Speech-Language Pathology and Audiology, Ohio School for the Deaf, Ohio State School for the Blind, Casino Control Commission and Lottery Commission.
The OFCC’s proposed grant program would allow the commission to reimburse schools for the purchase of one MARCS first responder communications unit and one door security system per building. The plan allocates $12 million in capital funding for the purchases.
Rep. Debbie Phillips (D-Athens) said she recently visited a third-grade special education class and the students’ questions were largely about how they would be kept safe. Last year’s shooting at Chardon High School and the recent Sandy Hook killings have brought the issue to the forefront. She asked about the adequacy of $12 million to put the safety systems in place for all schools.
Mr. Hickman said as a grant program, it is the decision of the district to apply for a grant and determine what they need for the protection of students.
“From district to district we would expect to see different approaches to their grant proposal,” he said, adding the attorney general is working through a committee to look more broadly at security issues.
Rep. Matt Lundy (D-Elyria) said he is trying to figure out who are the winners and losers through the grant funding given the funding couldn’t be stretched to every district in the state.
Mr. Hickman said the Ohio School Facilities Commission – a subset of OFCC also overseen by the director – thinks when the school construction program is completed it would rebuild about 2,200 buildings. There are a lot of buildings left that have yet to enter the program and many for which the commission is not sure what security they have in terms of controlling access to the buildings. The grant total was based on an estimate of how many buildings remain.
To the extent the funding is insufficient, he said he expects more money from the major construction program could be moved into that fund.
Mr. Lundy said he thinks districts don’t want to wait three years to improve its security measures when a new building is constructed.
Ms. Phillips asked if the state has a sense of the status of safety at schools. Director Hickman said as a construction agency, OFCC sees safety is a primary objective. The state has constructed almost 1,000 buildings with a vestibule at the entrance and a lockdown function and security cameras.
“We have had feedback from school districts on the security systems…we review these initiatives each year as we update our construction program and our requirements under that manual, so what we are doing is really confined to the structure of the school building,” Mr. Hickman said, adding the grant program allows districts that have not yet entered into the program to implement things that “make a lot of sense.”
Rep. Ron Maag (R-Lebanon) asked how the expense for a MARCS system would be beneficial compared to established 911 access. Director Hickman said he has heard from schools that during an emergency it is not uncommon for phone lines to be jammed and for safety personnel to be able to reach the appropriate person in the school. The MARCS system would provide direct contact to law enforcement.
Mr. Maag said EMTs will not enter a building until it has been secured. He asked if the MARCs system would inform individuals waiting outside of when it is safe to enter. The director said once a first responder arrives there are other means of communication among them and people within the building.
Chairman Rep. Bill Hays (R-Harrison Twp.) asked how MARCS was selected for use, to which the director said a district can evaluate whether that system provides what it needs. If not, that would prompt further discussion between OFCC and the district. The grant does not require its installation.
The OFCC funding proposal, which reflects a 15.7% increase in the first year and another 5.4% increase in FY 15, would also pay for the OAKS Capital Improvements module, which is the state’s online construction management system currently available to all state agencies and state colleges and universities. The allocation would also allow for the system to be expanded to K-12 projects.
OFCC is also seeking a language change for the school energy conservation program that would align the program to be more like the state agency version by requiring the installer to provide energy guarantees.
“This will help ensure that districts actually receive the savings they were promised from the vendors who perform the work,” he said.
OFCC also seeks the ability to approve requests based on whether the project is consistent with any other state-assisted school facilities project in that district and to have districts under the oversight of a state fiscal or academic oversight commission seek approval from that commission before submitting a request, Mr. Hickman said.
The Executive Budget also proposed to transfer the functions of the Ohio Cultural Facilities Commission related to capital improvement to OFCC. The change would reduce overall costs and place authority and resources within a single commission.
Another change would remove the separate construction authority of the Department of Natural resources and align their practices with those of other state agencies. ODNR would have local administration authority for self-perform projects under $1.5 million, Mr. Hickman said. The agency would also have separate authority for work on dam projects and those funded through the waterway Safety Fund and wildlife funds.
Answering Rep. Gerald Stebelton (R-Lancaster), Mr. Hickman the governor’s change in how schools are funded could change the order in which schools are served by the Ohio School Facilities Commission if a district’s position on the equity list is altered.
Rep. Phillips asked how the phase out of the tangible personal property tax reimbursement payments to districts affects the equity list presently. Mr. Hickman said OSFC has moved through the list in such a way that those changes would not have as large of an impact as in the past. Most districts with TPP issues have been served but there are likely some that still feel their placement is hurt by that funding change.
OFCC Testifies at Budget Hearing
Commission Executive Director Richard Hickman said the biennial budget for the recently reformatted commission will enable the commission to continue supporting bond funding for K-12 school construction and the 100 jobs necessary to oversee projects. In addition, the budget includes funding to implement the OAKS Capital Improvement module, which is already used at state agencies and universities; changes the HB264 programs in the Energy Services Section to require energy-savings guarantees by vendors and ensure districts in fiscal or academic emergencies get the approval of their oversight commissions before agreeing to a project; bring capital improvement functions of the Ohio Cultural Facilities Commission under the facilities commission; and remove the Ohio Department of Natural Resources’ separate construction authority to align its construction practices with other agencies.
In addition, the budget would create a $12 million grant program from capital funds to school security, to provide school districts that apply with one MARCS radio one door security system per building.
Rep. Maag asked why having a MARCS radio would be superior to schools reaching first responders on the telephone. Hickman said phone lines often are jammed or busy during emergencies, but the radio would allow direct contact. In response to a question from Rep. Hayes about jurisdictions where safety forces use non-MARCS radios, Hickman noted that the initiative is a voluntary grant programs, so schools are able to decide for themselves to apply.
Rep. Phillips asked how the $12 million figure was determined, and how much knowledge the commission has about security needs. Hickman said the attorney general’s office is conducting a review of overall school security needs, but results aren’t available from that yet. He told Rep. Lundy he suspects the agency could come back with an additional funding request if the $12 million is insufficient to meet demand.
In response to another question from Lundy, Hickman said the commission has made several changes to how it acquires furniture for buildings to answer concerns that some bid specifications were being written in such a way that only one company, sometimes and out-of-state or overseas firm, qualified to submit bids.
Sustainability Bill Heard (HB 306)
The Ohio House State Government Committee took testimony November 27 on HB 306 which would require a building or structure constructed using state capital budget moneys to adhere to certain energy efficiency and building standards and to encourage the use of Ohio-produced products.
Rep. Connie Pillich D-(Montomery) said the bill would require public buildings constructed under the state capital budget to adhere to certain energy efficient building standards and encourage the use of Ohio bio-products. Capital requirements would also apply to the school facility trust fund.
“It’s basically a green bill,” Pillich said.
Rep. Terhar cited the required return on investment of “not more than 20 years” in the bill. “That’s a horrific return on investment,” he said. “I don’t think tax payers should suffer a return on investment at that level.” Pillich noted that a more recent analysis suggested green requirements would pay for themselves within 18 months.
Rep. Damschroder asked why, if green standards are such a good idea, they should be subject to exemption for public buildings smaller than 5,000 feet, as provided in the bill. The sponsor said “industry experts” had advised her it would be a reasonable cutoff, and that implementing the standards would not be cost-effective above that point.
“It behooves the people of Ohio to have some checks and balances on those people in power who are spending their money,” Pillich said. “If we’re going to spend tax dollars to build a building — and likely operate it — we ought to be smart with our money.”
Kasich vetoes some construction language in HB487
Governor John Kasich vetoed a number of provisions in the recently enacted Mid Biennium Review Bill, HB 487, among which were the following related to state construction:
– A requirement for the Ohio School Facilities Commission to develop rules under both Chap. 111.15 and Chap. 119 of the
Ohio Revised Code. Kasich’s veto message calls this “a duplicative administrative burden.”
– Changes to the Ohio School Facilities Commission’s Expedited Local Partnership Program. “Under this provision, school
districts that have previously signed agreements with the School Facilities Commission under the Expedited Local
Partnership Program to lock in their local percentage shares of construction projects in exchange for faster consideration
and approval by the commission now would be able to unilaterally change their agreements and reduce their agreed-upon
percentage and therefore their costs,” Kasich wrote.
– Language on design-build and construction management contracts. Kasich said this change could “erode” construction
reforms instituted last year and also give the attorney general’s office new powers “incongruent with the attorney general’s
duties as prescribed by the Ohio Constitution and existing law.”
– Language on existing capital construction authority for the Department of Public Safety and Ohio State Highway Patrol.
Kasich said this item also undermines the intent of last year’s construction reforms by creating a different process for one
agency.
Ohio Residential Building Code Gets Energy Update
Ohio’s newly adopted residential building code will require new homes to be more energy-efficient, come with carbon-monoxide detectors and be tested for air leaks.
The code was adopted by the Ohio Department of Commerce’s Board of Building Standards after passing final procedural hurdles this month. It’s scheduled to take effect on Jan. 1.
The new rules are estimated to add between $1,100 and $1,200 to the cost of an 1,800-square-foot two-story home.
“Hopefully, the homeowner might notice these changes on their utility bills,” said Columbus homebuilder, CraigTuckerman, who served on the code’s advisory committee.
A 2009 U.S. Department of Energy study of a similar proposed code change in Boston found that homeowners could save about $230 a year in energy costs with the new guidelines
Tuckerman said many Ohio builders, especially custom builders, already meet or exceed most provisions of the new code.
Among other code requirements, carbon-monoxide detectors must be installed outside each bedroom in a home that uses gas or propane or includes an attached garage. Homes must meet an air-tightness standard that includes a blower-door test. And at least 75 percent of light bulbs in new homes must be high-efficiency, such as compact fluorescent bulbs.
While it won’t radically change the way homes are constructed, the code had sparked considerable debate since its introduction more than three years ago.
Environmental groups such as the Sierra Club favored the tougher energy requirements, while Ohio homebuilders argued the new code would excessively boost the cost of a new home.
The Ohio Home Builders Association opposed the initial proposal. But at the urging of builders, the code now includes a compromise provision to provide contractors two ways to meet the tougher energy requirements. They can either follow the International Code Council guidelines or follow an alternative set of guidelines designed by builders to achieve the same energy efficiency.
“I think they came up with a code that works,” Vincent Squillace, executive vice president of the Ohio Home Builders Association, told the newspaper. “We came up with an equivalent code that’s more strict but is about $2,000 cheaper per home to implement than the original code.”
Debbie Ohler, staff engineer for the Ohio Board of Building Standards, said the code also recognizes new materials and methods of construction. The board will administer the code.
“It’s definitely an improvement,” Ohler told the newspaper. “It also incorporates requirements that provide for safer homes, but at the same time, it incorporates more stringent energy requirements, which should save homeowners money.”
SAO/OSFC Merger Bill Goes to Conference Committee
As predicted, Sub. HB 487, the Governors Mid Biennium Review bill which contains the SAO/OSFC merger, passed the Ohio Senate yesterday by a vote of 25-8 and went to the Ohio House which, as expected, unanimously refused to concur in Senate amendments. The bill now goes to a Conference Committee composed of appointed House and Senate members who will resolve differences in the two versions of the bill.
The SAO/OSFC provisions are not in play.
Changes To OSFC Equity List Come Up Again As Part of MBRs
As the Senate prepares amendments for the main mid-biennium review, one proposal in flux would alter the amount and order in which schools are granted construction funding from the state.
The proposal, which was introduced as stand-alone legislation, HB 504, and has also been incorporated into the main MBR, HB 487, and the general tax MBR, HB 508, would eliminate consideration of tangible personal property in the calculation of Ohio School Facilities Commission projects.
It would also allow schools in the OSFC’s Expedited Local Partner Program an opportunity to choose between the lesser of the local share from the original signed project agreement or the current share calculated on the most recent equity list, according to the commission.
HB504 sponsor Rep. Matt Huffman (R-Lima) said his bill was incorporated into the main MBR in a form that would only affect a few districts. That language was originally meant to be amended out of the bill before it left the House, he said. The Senate is scheduled to caucus on HB487 amendments Tuesday and will likely decide the fate of the provision then.
Meanwhile, House Bill 508 includes a more comprehensive approach to the issue, he said, and is his preferred vehicle for the proposal. The language would also be protected from a line-item veto by the governor, which has been an issue in the past.
Similar language was passed by the legislature on two other occasions only to be line-item vetoed by former Gov. Ted Strickland and as recently as last year by Gov. John Kasich, HB 153).
An OSFC analysis shows the different bills would impact a different number of districts. House Bill 487 would decrease the local share for six districts, costing the state $74.9 million, while House Bill 504 would reduce it for 44 school systems, at a state cost of $271.7 million. Under House Bill 508, 208 districts would face an increased local share, 78 would remain unchanged and 44 would have a decreased share, creating a state impact of $42.1 million, according to OSFC.
“(The bill is) going to help locals versus the state, but it’s essentially a fairness thing. Let’s not use a fake number in calculating the true wealth of a local school district,” Rep. Huffman said.
Tom Ash, director of governmental relations for the Buckeye Association of School Administrators, said the language is needed to address the phase out and elimination of TPP taxes going to school districts. The Ohio School Boards Association and Ohio Association of School Business Officials also back the proposal.
“The OSFC formula takes a look at the district’s taxable wealth as the principal criteria in deciding how much the state and local shares of construction projects should be,” he said. “So therefore, these districts that have a lot of tangible personal property, their percentage of state and local money does not reflect the taxes that those districts will collect because they’re not going to collect on the tangible personal property values, which are part of the formula that put them where they are.”
The legislation would alter the position of some schools on the equity list that determines the order in which schools will be offered OSFC funding for construction projects. The language would also recalculate the ratio of state and local share for a small number of schools’ projects, Mr. Ash said.
“It will change the calculation for those districts that have more than 18% of their property values tied up in tangible personal property for which they will not collect taxes,” he said.
Rep. Huffman said the concept for the bill was brought to him by Bath Local Schools in his district, which has high personal property tax value because of the Ford Motor plant there.
“Back when we used to have personal property tax in the state of Ohio, a lot of school districts got a lot of money from that if they had a heavy industry … and because of that personal property tax, they got paid a lot of money, and when we started the school ranking system back in the ‘90s how much you got (from the state) depended on your local revenue,” Mr. Huffman said.
“The personal property tax went away in 2005, but the ranking as well as the percentage that the local districts paid were still stayed in place.”
Mr. Huffman said his vetoed attempt five years ago would have affected more districts’ position on the funding schedule than presently because many have had their projects funded in the interim.
“It would have affected a lot of districts; people jumping up and going back,” he said. “Well there’s less of that now because a lot of school districts have built, so even though some people may go up two or three, overall it’s good for the school districts because they’re going to be paying a less share, the districts that have this high phantom personal property tax number in it.”
OSFC Executive Director Rick Hickman said in a letter to legislators that the commission is concerned the legislative change would create winners and losers as it would move districts around on the equity list.
“Districts that we have been working with in planning stages to prepare them for a conditional offer of funding would be bumped out of our reach and replaced with districts that we have not yet begun any type of pre-planning phase,” he wrote.
Mr. Huffman said the whole concept of the ranking system is the creation of winners and losers.
“Somebody’s going to be ranked ahead of somebody else, and if we’re going to do it, let’s do it based on real data,” he said. “Before it was like, well, we’re going to rank everybody by how tall they are. The tall guy’s all the way in the back and a bunch of these guys are standing on two or three telephone directories, and let’s take the telephone directories away so that it’s actually everybody’s height.”
Mr. Ash also said the legislation would not have a huge effect on schools’ placement on the equity list especially because as some schools defer their projects, it is possible for those districts that are lower on the list to have their projects considered earlier than expected.
“The principal benefit is it corrects what was probably … an unintended consequence of tax reform in 2005 and, quite frankly, it’s one of those issue that you say, boy this doesn’t seem fair,” he said.
AIA Ohio President Jud Kline, FAIA, Testifies for AIA Architects to the Senate Finance Committee
Interested Party Testimony regarding Sub. HB 487
AIA Ohio (a component of the American Institute of Architects)
AIA Ohio President, Judson A. Kline, FAIA, LEED AP
May 9, 2012
Mr. Chairman and Members of the Finance Committee, my name is Judson A. Kline, FAIA, LEED AP, Senior Director of Herschman Architects in Cleveland, Ohio and president of AIA Ohio. I am appearing today as an interested party on behalf of AIA Ohio, the state component of the American Institute of Architects, the professional organization of architectural practice. AIA Ohio represents nearly 2,200 architects and design professionals who live and practice in Ohio.
We thank you for the opportunity to address the proposed merger of the State Architect’s Office (SAO) with the Ohio School Facilities Commission (OSFC) into the proposed Ohio Facilities Construction Commission (OFCC).
AIA Ohio recognizes the need for and supports the effort to create more efficiency in government. We understand the economic realities that are encouraging a variety of governmental consolidations and agree that construction efficiencies will assure that our state remains economically competitive and that our citizens receive the highest value built environment.
Our focus today is on the structure of the proposed OFCC.
For Ohio to maximize the benefits from the OFCC, we believe involving AIA architects at the highest level in the proposed organization is essential to achieving the intended results. Here are the reasons:
- AIA architects are specifically educated, trained and examined in building design, integration of building engineering systems, sustainability and health, safety and welfare requirements for buildings. We believe this expertise should be imbedded at the highest level of the OFCC in optimizing the outcomes in the design, construction and performance of Ohio’s public buildings.
- AIA architects are experienced in the processes and practices now being implemented as part of Ohio’s recent construction reform legislation. AIA architects should be engaged in the OFCC at the level where this understanding will ensure quality design services, fiduciary responsibility and the fullest potential project value when applying these new delivery methods.
- AIA architects, through contributing their knowledge and expertise in planning, developing and organizing processes and programs have played an important role in the design, management and construction of Ohio’s public and private architecture for decades. At an OFCC leadership level, AIA architects will have the standing to assure the most efficient use of resources and technologies for Ohio.
We understand that a formal OFCC organizational chart has yet to be determined. AIA Ohio would like to be involved in this reorganization process and have offered our input to Director Hickman. We hope to work with this General Assembly and the leadership of the proposed OFCC to help insure the creation of the most efficient, responsive and productive agency possible. As stewards of the built environment and leaders in Ohio’s design and construction industry, it would be a privilege to assist in this important effort.
We request that Sub. HB 487 includes AIA architects in occupying leadership positions within the OFCC where their unique and relevant talents can produce the desired outcomes for design and construction of public projects in Ohio.
On behalf of AIA Ohio, we thank you for allowing AIA architects an opportunity to provide input into this consolidation process.