Legislative News

The General Assembly kicking off hearings on three different appropriations bills next week — the capital

appropriations bill, the capital reappropriations bill and the governor’s long-expected “Mid-biennium Budget Review,” fondly

referred to as the “MBR.” Those familiar with it say many issues will be folded into the MBR… such as

fracking and severance tax changes, some form of education reform based on the Cleveland model, and an income tax cut,

among others.

A group of higher education presidents on Wednesday submitted to the Kasich Administration their request for $350 million in capital funding requests, all of which were mutually agreed upon.

Gov. Kasich in December called together the Higher Education Capital Funding Collaborative made up of university and community college leaders and asked them to work together to develop their funding requests for this year’s capital bill.

In the past the higher education institutions have fought to get their projects funded without an eye to the needs of the state. Office of Budget and Management Director, TimKeen, said former capital bills considered projects based on square footage, age of the building and student growth. “They were set up really to allocate money amongst the universities, but that was it. It lacked a strategic system-wide view,” he said during a conference call with reporters.

Ohio State University President E. Gordon Gee, who led the collaborative, said in the past a university might get funding to cover a third of the cost of a project or no money at all. “It was bureaucratic, and this process was one in which the governor really said, hey look, let’s do away with the bureaucratic; let’s see if institutions cannot come up with a principled approach,” he said.  The result was a “substantially different” document than those put forth in the past, he said. 

For example, Stark State College’s energy industry training center might have garnered $1 million in the past, but in this approach the group recommended it receive the full $10 million to focus on developing a strong energy program for Ohio.

Wright State University had originally proposed a renovation project this year. Once the collaborative was formed, it came back with a different proposal pairing the school and private health care providers, President Gee said.

“I cannot overemphasize that by allowing the institutions to think in a more collaborative way even amongst themselves within the institution that we really have come up with a substantially different document,” he said.

The administration advised the seven-member panel that the state planned to invest $400 million to higher education projects under the forthcoming capital bill. About $50 million of that was set aside for statewide projects.

“All of the presidents of community colleges, technical colleges, university presidents, all have signed this document indicating their support for what we’re doing, which in an of itself is very heartening,” Mr. Gee said.

He said the proposal will “allow us to be very competitive and most importantly will allow us to certainly work in the interest of 11.6 million Ohioans.”

Ohio University President Roderick McDavis said he was pleased with the process.

”I thought this was a very fair process, a way to prioritize the needs of universities and community colleges across the state,” he said. “The committee has done that with a process that welcomed input from each public university and community college in Ohio.”

Lloyd Jacobs, president of the University of Toledo, said the approach dealt with what he perceives as the two pillars of sustainability: innovation and collaboration.

“The development of principles relating to use-inspired research, use-inspired workforce knowledge, public-private partnerships are exactly the recipe for what the renaissance of the Midwest, the renaissance of manufacturing needs to consist of,” he said.

Members of the commission developed recommendations for projects based on four focus areas: public-private partnerships, workforce development, interdisciplinary approaches and long-term maintenance, according to the report.

Under the former category, the group recommended a total state investment of $14.78 million into four projects that would also see a local investment of $31.59 million and a private-sector support of $49.32 million. The projects are:

• Wright State University’s Neuroscience Engineering Collaboration at $12 million in state funding.
• University of Toledo’s Anatomy Simulation Center at $2 million.
• Northeast Ohio Medical University Redizone’s Partnership Development at $650,000.
• NEOMED’s Simulation Center Partnership at $125,000.

Workforce development projects recommended for funding total $30.39 million in state support and include:

• Stark State College’s Energy Industry Training Center at $10 million.
• Zane State College’s Energy Training and Education Center at $6 million.
• Belmont Technical College’s Health Sciences Center at $6 million.
• Sinclair Community College’s Life & Health Sciences Education Center at $4 million.
• Northwest State Community College’s Advanced Manufacturing Training Center at $3.54 million.
• North Central State College’s Health Sciences Center Renovation at $850,000.

Projects for interdisciplinary collaboration and innovation in STEM fields include projects totaling $96.93 million. The collaborative’s recommendations are:

• OSU’s Chemical and Biomolecular Engineering and Chemistry building at $50 million.
• Miami University’s Kreger Hall renovations at $18.2 million.
• Cleveland State University’s Fenn College of Engineering at $12.73 million.
• Kent State University’s Cunningham Hall repairs at $5 million, Williams Hall repairs at $5 million, Smith Hall repairs at $1 million, and Multidisciplinary Research Labs at $5 million.

The collaborative also recommended a lengthy list of long-term maintenance projects for a variety of institutions that total $207.9 million.

The administration might change the proposal before sending what Mr. Keen termed a “restrained capital bill” to the legislature, but officials said they are pleased with the process.

“We have not had a chance to review it fully, but I would say that we’re real pleased with the work product,” Director Keen said.

Gov. Kasich said this collaboration was the first step toward improving higher education in the state. “I have total confidence that it is a cultural change and a significant economic move forward for us.”

Republicans on the Senate & Public Utilities Committee this week warmed to the idea of repealing renewable energy requirements, but a new proposal to add waste heat technology to the standards appears to have more traction in the near term.

Sen. Bill Coley (R-Middletown) introduced a measure this week that would add cogeneration technology to the state’s renewable energy portfolio standards. And the House Public Utilities Committee has already scheduled a first hearing next week on a companion bill still to be introduced by  Rep. Margaret Conditt (R-Liberty Twp.)

Sen. Coley, a member of the Senate Energy Committee, said lawmakers face a tight timetable to pass the proposal (SB289) to ensure that Air Products and Chemicals, Inc.’s $300 million cogeneration project at AK Steel’s Middletown Works plant become a reality.

“For Air Products to qualify for some federal credits and stuff that they need, this thing’s got to be up and operational within about two years, and in order to do that we got to get this bill done in about a month,” he said in a recent interview.

Last year Gov. John Kasich said he believed technology that uses waste heat or gases from industrial processes to generate electricity should be added to the alternative energy portfolio standards, which require 12.5% of the electricity consumed in Ohio to come from renewable sources by 2025.

Sen. Coley said he believed the governor’s office was supportive of his measure, but the impetus for the bill came from Air Products and AK. He expects the governor to propose more far-reaching energy proposals in the near future.

Cogeneration already qualifies under Ohio’s “advanced energy” standards, which require 12.5% of the state’s power to come from high-tech sources like nuclear and low-emissions coal technology. However, defining cogeneration as renewable will make the power it produces eligible for renewable energy credits, which utilities can purchase to comply with the standards.

Wind and solar energy developers have opposed proposals to expand the renewable energy portfolio, saying it would displace demand for their truly green technology.

However, Sen. Coley said he hasn’t heard of any opposition from environmentalists and argued that cogeneration relies on the same principal as wind and solar by harnessing energy that already exists.

“We get energy coming down from the sun every day that we lay out panels to collect, we get energy in the form of wind that we put blades up to collect, and we’ve got energy pouring out of blast furnaces just being emptied out into the ether,” he said.

“It’s a renewable resource. Every time blast furnaces are running, the same as when the wind’s blowing, we can capture energy from it,” he said.

Furthermore, cogeneration doesn’t increase carbon dioxide emissions that lead to climate change and could even reduce the amount of other kinds of pollutants being released into the atmosphere, he said.

Sen. Coley noted Democratic Sen. Joe Schiavoni of Youngstown was a joint co-sponsor and said he expects the bill will move quickly with bipartisan support.

The Republican said he also likes a separate proposal (SB216) from Sen. Chris Jordan (R-Delaware) to eliminate renewable energy requirements entirely, but he acknowledged that it was less likely to get many votes from Democrats.

Less than four years ago the 127th Ohio General Assembly enacted an AIA-Ohio endorsed law setting energy standards for the state.  On February 1 hearings opened to a largely responsive Senate Energy and Public Utilities Committee on a proposal to undo the alternative energy requirements contained in SB221, which enacted the state’s current energy policy into law, by, as sponsor of SB216 Sen. Kris Jordan (R-Powell) said, “getting rid of solar and wind requirements.

He indicated in answer to questions from a number of committee members that “the last thing we need to do in Ohio is drive up the cost of energy for both our families and businesses.”  Jordan went on to say, “by mandating that 25 percent of our state’s energy come from advanced and renewable resources by 2025, the AEPS [Alternative Energy Portfolio Standard] does just that.”

He explained that the law requires “that 12.5 percent of all energy produced come from advanced sources, such as clean coal, advanced nuclear and combined cycle natural gas” — a requirement that is not phased although the 12.5 percent required to come from renewable sources such as wind and solar is phased in between 2009 and 2025.

“A study of this mandate by the Beacon Hill Institute showed that this portfolio standard would cost Ohioans $8.629 billion on their electric bills between 2016 and 2025, with nearly $1.5 billion of that cost coming in 2025 alone.” Jordan went on to say that will cost 10,000 jobs over the decade.

“Competition is the fuel for efficiency and cost savings and I believe that SB221 needs to be revisited to ensure competitive energy pricing for our constituents. If renewable energy sources are bound to succeed, they will, and they will do so without an injection of taxpayer dollars or mandates.

“In my view, no resource or technology should be mandated and subsidized to survive.”

He added that, ” … no amount of well-intentioned taxpayer money can make the wind blow” nor is there necessarily a market for the energy, citing findings from the Massachusetts utility NSTAR which found that fewer than 1 percent of its customers chose to purchase their electricity from wind and solar sources — at “anywhere from 15 to 30 percent” additional cost.

Asked about the “green” jobs created since these requirements went into place, Jordan called into question a Brookings Institute study that placed the number at 100,000, telling the committee that by his reckoning only 2,000 were actually from renewable energy efforts.

“I’d rather keep the 10,000 jobs we would be losing if these standards stay place rather than subsidize 2,000 jobs.”

Sen. Bill Seitz (R-Cincinnati) commented that the 3 percent cost cap included in 127-SB221 has not turned out to be 3 percent because of the way it is interpreted.

Seitz also added that a benefit of repealing these standards now means it would be before companies enter into long-term contracts that “they will be on the hook for” if action is taken later. “It is important to relieve them of the mandates before they are locked into contracts they can’t get out of,” he added.

Also supporting the legislation was Sen. Tom Patton (R-Strongsville) who called Jordan “courageous” for taking the issue on. He referenced the four power plants First Energy has just announced it is shutting down, resulting in the loss of 400 jobs. (See The Hannah Report, 1/26/12.)

Sen. Shannon Jones (R-Springboro) asked if Jordan would be willing to look at the energy efficiency standards, with Jordan saying he would consider doing so. 

Some energy-related interests are watching for energy-policy changes in Gov. John Kasich’s upcoming mid-biennium budget review.

House Democrats unveiled their “priorities to strengthen the middle class” Jan. 31, in the meantime pillorying what they described as Republicans’ “extremist partisan agenda.”

Some of the proposals House Democrats touted during a Statehouse news conference resemble bills that members introduced last session to address issues such as foreclosure and economic development incentives, charter school accountability, and human trafficking.

Caucus members described an agenda including the following proposals:

• Increase funding for the new markets tax credit, the historic preservation tax credit and the film tax credit
• Create a health insurance exchange.
• Dedicate any surplus revenue to a Local Government Jobs Fund that would help fund local police and firefighters.
• Expand oversight of public funding for the new private non-profit JobsOhio entity..
• Require licensing for mortgage servicers, increase protections for renters, and enact other measures designed to address the foreclosure crisis.
• Require banks to provide a cash bond for the continued maintenance of a foreclosed property throughout its vacancy or buy the home back at sheriff’s sale.
• Revise election law to make it easier to vote.
• Prohibit employer discrimination against unemployed workers and the classification of full-time employees as contractors.
• Provide more oversight public funding to for-profit charter schools and will reduce the amount of money going to failing charters.
• Expand the Ohio Workforce Guarantee program and align it with JobsOhio.

Rep. Budish said all of the proposals would not cost the state any money or be self-funding, such as economic development incentives that would ultimately generate more tax revenue. “We have not raised costs in any way, shape or form,” he said.

The Ohio House Ways and Means Committee took testimony January 26 relative to HB 332 which would authorize a nonrefundable income tax credit for the purchase or construction of an accessible home or for the renovation of a home to improve its accessibility.

Testimony in support to HB332 was given by Elizabeth Thompson, a multiple sclerosis (MS) activist and ambassador for the Ohio Buckeye Chapter of the National MS Society; Sue Hetrick, public policy director for the Ability Center of Greater Toledo; and Paul Jarvis, public policy staff person for the Ohio Developmental Disabilities Council. Written testimony was submitted by Robert Doersam, vice chair of the Ohio Statewide Independent Living Council.

 Thompson described the access and mobility challenges she faces in her home which was built in 1964. She said her husband has been able to install a few modifications to help her navigate steps and narrow hallways and doorways.

Hetrick said, “Disability does not discriminate based on age, race or socio-economic status.” She called HB332 “a first step,” and said the goal should be for visitability standards to be mandatory, across-the-board for all new all single family residences.

Jarvis said modifying existing homes is much more expensive than including visitability standards in the original design and construction. He said, “Indirectly, the tax credit offered for new home construction will bring awareness to many homeowners who may have never considered the potential need for accessibility in their own homes, or the impact a lack of access can have on their friends and loved ones.”

Doersam wrote, “[HB332] would provide a significant incentive to homebuilders to update and upgrade at least some of their floor plans, which should be a significant help to the many Ohioans who, like me, would like to age at home.”

With the administration planning an “austere” capital appropriations bill, Ohio’s colleges and universities have been asked to work together to propose projects rather than duke it out and see what gets funded.

Gov. John Kasich in December called on higher education institutions to collaborate and advocate for each other’s proposals. His guidance prompted the formation of a capital planning commission that is now working to meet a Feb. 15 deadline to offer recommendations.

“What we’ve asked them to do is to come to a consensus among themselves as to what they deem to be the important projects,” Kasich spokesman Rob Nichols said. “We think this is a far better way of doing it than simply seeing which university’s lobbyists can yell the loudest. We think it’s fair and maximizes resources in a time when we have to do that.”

The process is different from past capital bill approaches that relied on a formula.

“An amount of money was distributed to campuses according to formula, which means a campus was entitled to a certain amount of money based upon the age of its facilities and its enrollment and the amount of infrastructure that it had to maintain,” Inter-University Council of Ohio President Bruce Johnson said in a Friday interview. He said the new approach is more strategic.

Mr. Johnson is on the seven-member planning commission led by Ohio State University President E. Gordon Gee. Members, which include leaders from community colleges and universities, have been teleconferencing every week since mid-December.

Mr. Johnson that the group will evaluate each institution’s proposal and make recommendations to the college and university presidents as a group. He said choosing projects will be based on certain principals based on “how you describe a good project, so it would be strengthening learning environments, and campus safety and adding to the number of degrees” among other considerations.

“The various university presidents can look around and they know what are important projects and critical projects and the projects that must be attended to at a time when you’re just cash-strapped and finite resources,” Mr. Nichols said. “We feel that they’ll be able to advise us as to what’s necessary as opposed to the decisions coming from Broad and High (streets).”

Mr. Johnson said he would meet with leaders at 15 universities next week to hear their proposals.

“We will have a better understand of what they believe their best projects are for the capital bill and then we will be evaluating them and making a series of recommendations,” he said. “You can’t fund everybody’s project.”

Mr. Johnson said the Office of Budget and Management has given the committee a control number of $400 million, which is down from years past. Although the state did not do a capital bill in fiscal years 2011-12, higher education received $498.56 million in FY 2009-10 and $528.63 million in FY 2007-08, according to budget documents.

“The money is a little bit less, so we’ll be struggling with that,” Mr. Johnson said.

OBM has also advised that $50 million would likely be earmarked for statewide projects. Mr. Johnson said the OhioLINK library consortium would be an example of such a project.

“The reality is this capital bill’s going to be far more austere and constrained than in years past,” Mr. Nichols said. “Given the fact that we have limited resources, we want to maximize them as much as possible.”

Mr. Johnson said the proposal likely wouldn’t facilitate any campus expansions.

“We heard there was a strong preference (from the administration) for maintenance and renovation as opposed to new builds and we support that,” he said. “There’s not nearly enough money to continue to build out the campuses. It’s important that we maintain the structures that we currently have and renovate them so that they’re capable of delivering world-class education.”

Mr. Johnson said the new approach to providing a capital proposal is challenging but that all parties are up to it and it is progressing nicely.

“It’ll go really well until everyone sees the print outs of the recommendations,” he said, adding he is not sure how higher education presidents will react.

“The governor has challenged us to collaborate and to focus on those projects that are most important to the state and we’re trying to do that to the best of our ability while meeting the state’s obligation to provide education to all of our students,” he said.

Prior to Gov. Kasich’s request that institutions work together on their capital proposals, institutions submitted requests to the Board of Regents. Mr. Johnson said the final proposal would likely not resemble those submissions, which include:

 ·       Ohio State University: $78.1 million for two dozen projects that include repairs, upgrades and renovations.

• Ohio University: $24.79 million for the main campus’ basic renovations and instructional and data processing.
• University of Toledo: $20.75 million for nine projects including renovations and project designs.
• Kent State University: $19.08 million for 12 projects including roof work, replacements and renovations in addition to basic renovations.
• University of Akron: $13.8 million for major renovations at its main campus through its academic facilities enhancement initiative.
• Bowling Green State University: $12.48 million for academic buildings rehabilitation.
• Cleveland State University: $12.3 million for seven projects including repairs and planning study.
• Stark State University: $10.98 million for four projects including basic renovations and a parking lot project.
• Wright State University: $9.85 million for four renovation projects at the Dayton Campus and $461,750 for two renovations at Lake Campus.
• Youngstown State University: $8 million for four upgrade or renovation projects.
• Southern State Community College: $5.88 million for four projects including renovations.
• Shawnee State Community College: $1.64 million for plaza concrete renovation.
• Rio Grande Community College: $6.75 million for four renovation and remediation projects.

Two noted economics professors at separate Ohio universities expressed different levels of concern about the use of tax deductions, exemptions and credits – also known as tax expenditures – to attract capital investment and jobs to the state. One was openly opposed to them on the grounds that they violate the tax principle of economic neutrality and result in government picking winners & losers rather than a functioning, free market. The other viewed tax expenditures as just another way to accomplish and fund a legislatively approved purpose without having to go through the state budget’s appropriation process.

In testimony before the Senate Ways & Means & Economic Development Committee, Professor Richard Vedder of Ohio University first outlined the attributes of a good tax – those being simplicity/uniformity, fairness/equity, transparency, and economic neutrality. He then said tax expenditures are deviations from uniformity and simplicity involving de facto substitution of varying effective rates of taxation in an administratively costly manner. He believes the benefits of tax expenditures are somewhat over-stated and their continued existence impedes economic growth because their relationship to lowering overall tax rates is not understood by the public.

On the other hand, Professor Ned Hill of Cleveland State University recognized it is the nature of the beast that tax expenditures will accumulate in any state’s tax code as economic development deals are struck. Most of his concerns were related to the state’s ability to verify the actual impact of the tax expenditure – for example, does it generate other tax revenues to indirectly pay for itself? Should the tax expenditure be treated as a state investment and, if so, how should the return-on-investment be measured? 

The House Ways and Means Committee took testimony January 18 with respect to HB 332 which would authorize a nonrefundable income tax credit for the purchase or construction of an accessible home or for the renovation of a home to improve its accessibility.  

Reps. Stinziano and Grossman told the committee that HB332 “provides up to a $2,500 non-refundable income tax credit for a taxpayer that purchases or constructs a new residence or a contractor that incurs costs in constructing a new home that includes accessibility and visitability features. In addition, the bill would also provide up to a $1,000 non-refundable income tax credit for the costs incurred to modify an existing home.  The tax credit would have an annual cap of $300,000.

Stinziano noted that “home modification investments are essential to promote independent living because older Americans tend to occupy homes that were constructed in earlier decades when physical accessibility was not a priority.” 

Grossman added that the accessibility features have been found “to reduce the incidence of falls among older adults.” She said a study from Hawaii indicates “that every $1 in home safety modifications results in $3 in direct medical costs saved” as a result of the preventive aspects of the modifications. 

There were a number of questions about just how this would work and who would be eligible with Stinziano telling Rep. McCain that it is available only to disabled individuals, not to those making the changes in anticipation of aging. The sponsors were asked how that is different from the new home provisions. Stinziano said he would go back to the Virginia law, upon which the bill is based, to see how that is handled.

Stinziano did say they are attempting to keep the budget “realistic” but that they are open to finding the right model. 

The General Assembly kicking off hearings on three different appropriations bills next week — the capital

appropriations bill, the capital reappropriations bill and the governor’s long-expected “Mid-biennium Budget Review,” fondly

referred to as the “MBR.” Those familiar with it say many issues will be folded into the MBR… such as

fracking and severance tax changes, some form of education reform based on the Cleveland model, and an income tax cut,

among others.

A group of higher education presidents on Wednesday submitted to the Kasich Administration their request for $350 million in capital funding requests, all of which were mutually agreed upon.

Gov. Kasich in December called together the Higher Education Capital Funding Collaborative made up of university and community college leaders and asked them to work together to develop their funding requests for this year’s capital bill.

In the past the higher education institutions have fought to get their projects funded without an eye to the needs of the state. Office of Budget and Management Director, TimKeen, said former capital bills considered projects based on square footage, age of the building and student growth. “They were set up really to allocate money amongst the universities, but that was it. It lacked a strategic system-wide view,” he said during a conference call with reporters.

Ohio State University President E. Gordon Gee, who led the collaborative, said in the past a university might get funding to cover a third of the cost of a project or no money at all. “It was bureaucratic, and this process was one in which the governor really said, hey look, let’s do away with the bureaucratic; let’s see if institutions cannot come up with a principled approach,” he said.  The result was a “substantially different” document than those put forth in the past, he said. 

For example, Stark State College’s energy industry training center might have garnered $1 million in the past, but in this approach the group recommended it receive the full $10 million to focus on developing a strong energy program for Ohio.

Wright State University had originally proposed a renovation project this year. Once the collaborative was formed, it came back with a different proposal pairing the school and private health care providers, President Gee said.

“I cannot overemphasize that by allowing the institutions to think in a more collaborative way even amongst themselves within the institution that we really have come up with a substantially different document,” he said.

The administration advised the seven-member panel that the state planned to invest $400 million to higher education projects under the forthcoming capital bill. About $50 million of that was set aside for statewide projects.

“All of the presidents of community colleges, technical colleges, university presidents, all have signed this document indicating their support for what we’re doing, which in an of itself is very heartening,” Mr. Gee said.

He said the proposal will “allow us to be very competitive and most importantly will allow us to certainly work in the interest of 11.6 million Ohioans.”

Ohio University President Roderick McDavis said he was pleased with the process.

”I thought this was a very fair process, a way to prioritize the needs of universities and community colleges across the state,” he said. “The committee has done that with a process that welcomed input from each public university and community college in Ohio.”

Lloyd Jacobs, president of the University of Toledo, said the approach dealt with what he perceives as the two pillars of sustainability: innovation and collaboration.

“The development of principles relating to use-inspired research, use-inspired workforce knowledge, public-private partnerships are exactly the recipe for what the renaissance of the Midwest, the renaissance of manufacturing needs to consist of,” he said.

Members of the commission developed recommendations for projects based on four focus areas: public-private partnerships, workforce development, interdisciplinary approaches and long-term maintenance, according to the report.

Under the former category, the group recommended a total state investment of $14.78 million into four projects that would also see a local investment of $31.59 million and a private-sector support of $49.32 million. The projects are:

• Wright State University’s Neuroscience Engineering Collaboration at $12 million in state funding.
• University of Toledo’s Anatomy Simulation Center at $2 million.
• Northeast Ohio Medical University Redizone’s Partnership Development at $650,000.
• NEOMED’s Simulation Center Partnership at $125,000.

Workforce development projects recommended for funding total $30.39 million in state support and include:

• Stark State College’s Energy Industry Training Center at $10 million.
• Zane State College’s Energy Training and Education Center at $6 million.
• Belmont Technical College’s Health Sciences Center at $6 million.
• Sinclair Community College’s Life & Health Sciences Education Center at $4 million.
• Northwest State Community College’s Advanced Manufacturing Training Center at $3.54 million.
• North Central State College’s Health Sciences Center Renovation at $850,000.

Projects for interdisciplinary collaboration and innovation in STEM fields include projects totaling $96.93 million. The collaborative’s recommendations are:

• OSU’s Chemical and Biomolecular Engineering and Chemistry building at $50 million.
• Miami University’s Kreger Hall renovations at $18.2 million.
• Cleveland State University’s Fenn College of Engineering at $12.73 million.
• Kent State University’s Cunningham Hall repairs at $5 million, Williams Hall repairs at $5 million, Smith Hall repairs at $1 million, and Multidisciplinary Research Labs at $5 million.

The collaborative also recommended a lengthy list of long-term maintenance projects for a variety of institutions that total $207.9 million.

The administration might change the proposal before sending what Mr. Keen termed a “restrained capital bill” to the legislature, but officials said they are pleased with the process.

“We have not had a chance to review it fully, but I would say that we’re real pleased with the work product,” Director Keen said.

Gov. Kasich said this collaboration was the first step toward improving higher education in the state. “I have total confidence that it is a cultural change and a significant economic move forward for us.”

Republicans on the Senate & Public Utilities Committee this week warmed to the idea of repealing renewable energy requirements, but a new proposal to add waste heat technology to the standards appears to have more traction in the near term.

Sen. Bill Coley (R-Middletown) introduced a measure this week that would add cogeneration technology to the state’s renewable energy portfolio standards. And the House Public Utilities Committee has already scheduled a first hearing next week on a companion bill still to be introduced by  Rep. Margaret Conditt (R-Liberty Twp.)

Sen. Coley, a member of the Senate Energy Committee, said lawmakers face a tight timetable to pass the proposal (SB289) to ensure that Air Products and Chemicals, Inc.’s $300 million cogeneration project at AK Steel’s Middletown Works plant become a reality.

“For Air Products to qualify for some federal credits and stuff that they need, this thing’s got to be up and operational within about two years, and in order to do that we got to get this bill done in about a month,” he said in a recent interview.

Last year Gov. John Kasich said he believed technology that uses waste heat or gases from industrial processes to generate electricity should be added to the alternative energy portfolio standards, which require 12.5% of the electricity consumed in Ohio to come from renewable sources by 2025.

Sen. Coley said he believed the governor’s office was supportive of his measure, but the impetus for the bill came from Air Products and AK. He expects the governor to propose more far-reaching energy proposals in the near future.

Cogeneration already qualifies under Ohio’s “advanced energy” standards, which require 12.5% of the state’s power to come from high-tech sources like nuclear and low-emissions coal technology. However, defining cogeneration as renewable will make the power it produces eligible for renewable energy credits, which utilities can purchase to comply with the standards.

Wind and solar energy developers have opposed proposals to expand the renewable energy portfolio, saying it would displace demand for their truly green technology.

However, Sen. Coley said he hasn’t heard of any opposition from environmentalists and argued that cogeneration relies on the same principal as wind and solar by harnessing energy that already exists.

“We get energy coming down from the sun every day that we lay out panels to collect, we get energy in the form of wind that we put blades up to collect, and we’ve got energy pouring out of blast furnaces just being emptied out into the ether,” he said.

“It’s a renewable resource. Every time blast furnaces are running, the same as when the wind’s blowing, we can capture energy from it,” he said.

Furthermore, cogeneration doesn’t increase carbon dioxide emissions that lead to climate change and could even reduce the amount of other kinds of pollutants being released into the atmosphere, he said.

Sen. Coley noted Democratic Sen. Joe Schiavoni of Youngstown was a joint co-sponsor and said he expects the bill will move quickly with bipartisan support.

The Republican said he also likes a separate proposal (SB216) from Sen. Chris Jordan (R-Delaware) to eliminate renewable energy requirements entirely, but he acknowledged that it was less likely to get many votes from Democrats.

Less than four years ago the 127th Ohio General Assembly enacted an AIA-Ohio endorsed law setting energy standards for the state.  On February 1 hearings opened to a largely responsive Senate Energy and Public Utilities Committee on a proposal to undo the alternative energy requirements contained in SB221, which enacted the state’s current energy policy into law, by, as sponsor of SB216 Sen. Kris Jordan (R-Powell) said, “getting rid of solar and wind requirements.

He indicated in answer to questions from a number of committee members that “the last thing we need to do in Ohio is drive up the cost of energy for both our families and businesses.”  Jordan went on to say, “by mandating that 25 percent of our state’s energy come from advanced and renewable resources by 2025, the AEPS [Alternative Energy Portfolio Standard] does just that.”

He explained that the law requires “that 12.5 percent of all energy produced come from advanced sources, such as clean coal, advanced nuclear and combined cycle natural gas” — a requirement that is not phased although the 12.5 percent required to come from renewable sources such as wind and solar is phased in between 2009 and 2025.

“A study of this mandate by the Beacon Hill Institute showed that this portfolio standard would cost Ohioans $8.629 billion on their electric bills between 2016 and 2025, with nearly $1.5 billion of that cost coming in 2025 alone.” Jordan went on to say that will cost 10,000 jobs over the decade.

“Competition is the fuel for efficiency and cost savings and I believe that SB221 needs to be revisited to ensure competitive energy pricing for our constituents. If renewable energy sources are bound to succeed, they will, and they will do so without an injection of taxpayer dollars or mandates.

“In my view, no resource or technology should be mandated and subsidized to survive.”

He added that, ” … no amount of well-intentioned taxpayer money can make the wind blow” nor is there necessarily a market for the energy, citing findings from the Massachusetts utility NSTAR which found that fewer than 1 percent of its customers chose to purchase their electricity from wind and solar sources — at “anywhere from 15 to 30 percent” additional cost.

Asked about the “green” jobs created since these requirements went into place, Jordan called into question a Brookings Institute study that placed the number at 100,000, telling the committee that by his reckoning only 2,000 were actually from renewable energy efforts.

“I’d rather keep the 10,000 jobs we would be losing if these standards stay place rather than subsidize 2,000 jobs.”

Sen. Bill Seitz (R-Cincinnati) commented that the 3 percent cost cap included in 127-SB221 has not turned out to be 3 percent because of the way it is interpreted.

Seitz also added that a benefit of repealing these standards now means it would be before companies enter into long-term contracts that “they will be on the hook for” if action is taken later. “It is important to relieve them of the mandates before they are locked into contracts they can’t get out of,” he added.

Also supporting the legislation was Sen. Tom Patton (R-Strongsville) who called Jordan “courageous” for taking the issue on. He referenced the four power plants First Energy has just announced it is shutting down, resulting in the loss of 400 jobs. (See The Hannah Report, 1/26/12.)

Sen. Shannon Jones (R-Springboro) asked if Jordan would be willing to look at the energy efficiency standards, with Jordan saying he would consider doing so. 

Some energy-related interests are watching for energy-policy changes in Gov. John Kasich’s upcoming mid-biennium budget review.

House Democrats unveiled their “priorities to strengthen the middle class” Jan. 31, in the meantime pillorying what they described as Republicans’ “extremist partisan agenda.”

Some of the proposals House Democrats touted during a Statehouse news conference resemble bills that members introduced last session to address issues such as foreclosure and economic development incentives, charter school accountability, and human trafficking.

Caucus members described an agenda including the following proposals:

• Increase funding for the new markets tax credit, the historic preservation tax credit and the film tax credit
• Create a health insurance exchange.
• Dedicate any surplus revenue to a Local Government Jobs Fund that would help fund local police and firefighters.
• Expand oversight of public funding for the new private non-profit JobsOhio entity..
• Require licensing for mortgage servicers, increase protections for renters, and enact other measures designed to address the foreclosure crisis.
• Require banks to provide a cash bond for the continued maintenance of a foreclosed property throughout its vacancy or buy the home back at sheriff’s sale.
• Revise election law to make it easier to vote.
• Prohibit employer discrimination against unemployed workers and the classification of full-time employees as contractors.
• Provide more oversight public funding to for-profit charter schools and will reduce the amount of money going to failing charters.
• Expand the Ohio Workforce Guarantee program and align it with JobsOhio.

Rep. Budish said all of the proposals would not cost the state any money or be self-funding, such as economic development incentives that would ultimately generate more tax revenue. “We have not raised costs in any way, shape or form,” he said.

The Ohio House Ways and Means Committee took testimony January 26 relative to HB 332 which would authorize a nonrefundable income tax credit for the purchase or construction of an accessible home or for the renovation of a home to improve its accessibility.

Testimony in support to HB332 was given by Elizabeth Thompson, a multiple sclerosis (MS) activist and ambassador for the Ohio Buckeye Chapter of the National MS Society; Sue Hetrick, public policy director for the Ability Center of Greater Toledo; and Paul Jarvis, public policy staff person for the Ohio Developmental Disabilities Council. Written testimony was submitted by Robert Doersam, vice chair of the Ohio Statewide Independent Living Council.

 Thompson described the access and mobility challenges she faces in her home which was built in 1964. She said her husband has been able to install a few modifications to help her navigate steps and narrow hallways and doorways.

Hetrick said, “Disability does not discriminate based on age, race or socio-economic status.” She called HB332 “a first step,” and said the goal should be for visitability standards to be mandatory, across-the-board for all new all single family residences.

Jarvis said modifying existing homes is much more expensive than including visitability standards in the original design and construction. He said, “Indirectly, the tax credit offered for new home construction will bring awareness to many homeowners who may have never considered the potential need for accessibility in their own homes, or the impact a lack of access can have on their friends and loved ones.”

Doersam wrote, “[HB332] would provide a significant incentive to homebuilders to update and upgrade at least some of their floor plans, which should be a significant help to the many Ohioans who, like me, would like to age at home.”

With the administration planning an “austere” capital appropriations bill, Ohio’s colleges and universities have been asked to work together to propose projects rather than duke it out and see what gets funded.

Gov. John Kasich in December called on higher education institutions to collaborate and advocate for each other’s proposals. His guidance prompted the formation of a capital planning commission that is now working to meet a Feb. 15 deadline to offer recommendations.

“What we’ve asked them to do is to come to a consensus among themselves as to what they deem to be the important projects,” Kasich spokesman Rob Nichols said. “We think this is a far better way of doing it than simply seeing which university’s lobbyists can yell the loudest. We think it’s fair and maximizes resources in a time when we have to do that.”

The process is different from past capital bill approaches that relied on a formula.

“An amount of money was distributed to campuses according to formula, which means a campus was entitled to a certain amount of money based upon the age of its facilities and its enrollment and the amount of infrastructure that it had to maintain,” Inter-University Council of Ohio President Bruce Johnson said in a Friday interview. He said the new approach is more strategic.

Mr. Johnson is on the seven-member planning commission led by Ohio State University President E. Gordon Gee. Members, which include leaders from community colleges and universities, have been teleconferencing every week since mid-December.

Mr. Johnson that the group will evaluate each institution’s proposal and make recommendations to the college and university presidents as a group. He said choosing projects will be based on certain principals based on “how you describe a good project, so it would be strengthening learning environments, and campus safety and adding to the number of degrees” among other considerations.

“The various university presidents can look around and they know what are important projects and critical projects and the projects that must be attended to at a time when you’re just cash-strapped and finite resources,” Mr. Nichols said. “We feel that they’ll be able to advise us as to what’s necessary as opposed to the decisions coming from Broad and High (streets).”

Mr. Johnson said he would meet with leaders at 15 universities next week to hear their proposals.

“We will have a better understand of what they believe their best projects are for the capital bill and then we will be evaluating them and making a series of recommendations,” he said. “You can’t fund everybody’s project.”

Mr. Johnson said the Office of Budget and Management has given the committee a control number of $400 million, which is down from years past. Although the state did not do a capital bill in fiscal years 2011-12, higher education received $498.56 million in FY 2009-10 and $528.63 million in FY 2007-08, according to budget documents.

“The money is a little bit less, so we’ll be struggling with that,” Mr. Johnson said.

OBM has also advised that $50 million would likely be earmarked for statewide projects. Mr. Johnson said the OhioLINK library consortium would be an example of such a project.

“The reality is this capital bill’s going to be far more austere and constrained than in years past,” Mr. Nichols said. “Given the fact that we have limited resources, we want to maximize them as much as possible.”

Mr. Johnson said the proposal likely wouldn’t facilitate any campus expansions.

“We heard there was a strong preference (from the administration) for maintenance and renovation as opposed to new builds and we support that,” he said. “There’s not nearly enough money to continue to build out the campuses. It’s important that we maintain the structures that we currently have and renovate them so that they’re capable of delivering world-class education.”

Mr. Johnson said the new approach to providing a capital proposal is challenging but that all parties are up to it and it is progressing nicely.

“It’ll go really well until everyone sees the print outs of the recommendations,” he said, adding he is not sure how higher education presidents will react.

“The governor has challenged us to collaborate and to focus on those projects that are most important to the state and we’re trying to do that to the best of our ability while meeting the state’s obligation to provide education to all of our students,” he said.

Prior to Gov. Kasich’s request that institutions work together on their capital proposals, institutions submitted requests to the Board of Regents. Mr. Johnson said the final proposal would likely not resemble those submissions, which include:

 ·       Ohio State University: $78.1 million for two dozen projects that include repairs, upgrades and renovations.

• Ohio University: $24.79 million for the main campus’ basic renovations and instructional and data processing.
• University of Toledo: $20.75 million for nine projects including renovations and project designs.
• Kent State University: $19.08 million for 12 projects including roof work, replacements and renovations in addition to basic renovations.
• University of Akron: $13.8 million for major renovations at its main campus through its academic facilities enhancement initiative.
• Bowling Green State University: $12.48 million for academic buildings rehabilitation.
• Cleveland State University: $12.3 million for seven projects including repairs and planning study.
• Stark State University: $10.98 million for four projects including basic renovations and a parking lot project.
• Wright State University: $9.85 million for four renovation projects at the Dayton Campus and $461,750 for two renovations at Lake Campus.
• Youngstown State University: $8 million for four upgrade or renovation projects.
• Southern State Community College: $5.88 million for four projects including renovations.
• Shawnee State Community College: $1.64 million for plaza concrete renovation.
• Rio Grande Community College: $6.75 million for four renovation and remediation projects.

Two noted economics professors at separate Ohio universities expressed different levels of concern about the use of tax deductions, exemptions and credits – also known as tax expenditures – to attract capital investment and jobs to the state. One was openly opposed to them on the grounds that they violate the tax principle of economic neutrality and result in government picking winners & losers rather than a functioning, free market. The other viewed tax expenditures as just another way to accomplish and fund a legislatively approved purpose without having to go through the state budget’s appropriation process.

In testimony before the Senate Ways & Means & Economic Development Committee, Professor Richard Vedder of Ohio University first outlined the attributes of a good tax – those being simplicity/uniformity, fairness/equity, transparency, and economic neutrality. He then said tax expenditures are deviations from uniformity and simplicity involving de facto substitution of varying effective rates of taxation in an administratively costly manner. He believes the benefits of tax expenditures are somewhat over-stated and their continued existence impedes economic growth because their relationship to lowering overall tax rates is not understood by the public.

On the other hand, Professor Ned Hill of Cleveland State University recognized it is the nature of the beast that tax expenditures will accumulate in any state’s tax code as economic development deals are struck. Most of his concerns were related to the state’s ability to verify the actual impact of the tax expenditure – for example, does it generate other tax revenues to indirectly pay for itself? Should the tax expenditure be treated as a state investment and, if so, how should the return-on-investment be measured? 

The House Ways and Means Committee took testimony January 18 with respect to HB 332 which would authorize a nonrefundable income tax credit for the purchase or construction of an accessible home or for the renovation of a home to improve its accessibility.  

Reps. Stinziano and Grossman told the committee that HB332 “provides up to a $2,500 non-refundable income tax credit for a taxpayer that purchases or constructs a new residence or a contractor that incurs costs in constructing a new home that includes accessibility and visitability features. In addition, the bill would also provide up to a $1,000 non-refundable income tax credit for the costs incurred to modify an existing home.  The tax credit would have an annual cap of $300,000.

Stinziano noted that “home modification investments are essential to promote independent living because older Americans tend to occupy homes that were constructed in earlier decades when physical accessibility was not a priority.” 

Grossman added that the accessibility features have been found “to reduce the incidence of falls among older adults.” She said a study from Hawaii indicates “that every $1 in home safety modifications results in $3 in direct medical costs saved” as a result of the preventive aspects of the modifications. 

There were a number of questions about just how this would work and who would be eligible with Stinziano telling Rep. McCain that it is available only to disabled individuals, not to those making the changes in anticipation of aging. The sponsors were asked how that is different from the new home provisions. Stinziano said he would go back to the Virginia law, upon which the bill is based, to see how that is handled.

Stinziano did say they are attempting to keep the budget “realistic” but that they are open to finding the right model.