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Kasich Signs Capital Budget

Gov. John Kasich signed the $2.63 billion bricks-and-mortar measure (HB 529) during a ceremony at Twin Valley Behavioral Health Hospital in Columbus.

The governor pointed to efforts to stabilize the state’s budget situation over the past several years, which he said allowed for the continued investments in Ohio-owned facilities and local projects. The legislation covering Fiscal Years 2019-20 building improvements includes mostly debt-backed investments in education, mental health facilities and community projects across the state.

“We still restrain our spending enough and our debt levels are low enough that we can afford this,” he said. “If our debt level got up too high, we wouldn’t be able to do these things.”

Gov. Kasich signed the capital budget a little over a month after it was introduced. The legislation, traditionally agreed upon before its introduction, cleared both chambers quickly with overwhelming bipartisan support. This budget covers capital appropriations and reappropriations through June 30, 2020.

In education and higher education, the budget includes $625 for repairs, renovations and new K-12 education facilities and $400 million for projects at Ohio’s colleges and universities. The administration’s emphasis in education funding was on forward-looking infrastructure, including technology, not new building construction, Gov. Kasich said.

“We’re not keen on the universities building new buildings,” he said. “Buildings are 20th Century.”
The budget includes $100 million for the Clean Ohio Fund, which will help promote green space, farmland and trails across the state, the governor said. The state will provide $439 million for local infrastructure projects administered by the Ohio Public Works Commission, through both bond-backed appropriations and revolving loan funding.

The governor also touted $20 million included in the budget for community resiliency projects, intended to improve and expand infrastructure in community centers and other facilities as part of an effort to help high-risk youth and others in underserved areas.

Indemnity Provisions in Professional Design Contracts (HB554)

HB554 was introduced March 15.  It would enact section 153.81 of the Revised Code to provide limitations of indemnification on public contracts with professional design firms.  An architect or engineer only would have to indemnify the public agency “for the proportionate share of the tortious conduct.”  Historically, design professionals face exposure of unlimited indemnification for design claims, which require defense even if found ultimately not liable. In addition, insurance is available only for the limited design work, when claims often go beyond.

Complicating the issue, once a design professional retires, the “claims-made” insurance is not available, exposing the retiree to unlimited, uninsured liability.

The legislation is assigned to the House Civil Justice Committee and is pending its first sponsor hearing.

Groups Push Bill To Periodically Examine Occupational Licensing Requirements

Ohio’s occupational licensing requirements are burdensome and cost state residents hundreds of dollars each year, members of a Senate panel were told Wednesday.

Proponents testified in favor of a measure, SB 255, to establish sunset provisions for occupational licenses and provide alternatives to licensing.

Micah Derry, state director of the Ohio chapter of Americans for Prosperity, told members of the Senate Government Oversight & Reform Committee that Ohio licenses 40 lower-income occupations and has the 20th most burdensome licensing laws in the country.

On average, according to Mr. Derry, the licensing process entails 350 days of training and $188 in fees.

“Often times these requirements do not come about due to consumers complaining to lawmakers about poor or unsafe service. Rather they are lobbied for by the very industry that wants to be licensed,” he said. “This is so those practicing in the occupation can restrict competition by restricting new entrants into the occupation and as a result, raise prices on consumers. Additionally, trade schools and the associations representing the industries advocate for these licenses because the legislation mandates training and continuing education which guarantees a revenue stream.”

Mr. Derry said licensing requirements cost Ohio households an additional $775 per year.

Under the measure, all licensing boards would be sunset every five years unless reauthorized by lawmakers. Mr. Derry said that provision will create more transparency and accountability.

“The time for opaque and unaccountable license boards has gone on for too long. It is time for this legislature to reassert its authority over occupational licensing in this state and work to grant workers more opportunity while also protecting consumers,” he said, adding the bill will be scored as a key vote.

Greg Lawson, research fellow at The Buckeye Institute, said Ohioans should not have to ask the state for permission to earn a living.

“No one denies that state licensing requirements are needed in some cases and industries to ensure public safety,” he said. “Requiring appropriate education and training for physicians, healthcare providers, pilots, and truck drivers, for example, helps safeguard the general public in our hospitals and on our roads and runways. But these concerns fade quickly when applied to auctioneers, travel guides, and hairdressers – all of whom are subject to Ohio’s byzantine licensing requirements.”

To emphasize his point, Mr. Lawson pointed to the case of Jennifer McClellan, a licensed massage therapist who tried to move back to Ohio to be closer to her family but was denied a license to practice because she was 10 days short of the state’s training requirements.

“Every licensing requirement raises a new red-taped obstacle for workers to clear before earning a living or starting a new career,” he said. “Every hour of unpaid training needed to satisfy bureaucratic requirements is an hour not spent earning tips, impressing a boss, serving a customer, or opening a business. Those are hours of lost productivity, hours of opportunity that young, low-income workers sorely need, but that the state continues to take for itself.”

Sen. Matt Huffman, (R-Lima) requested that Mr. Lawson develop a list of occupational licenses that are not necessary. Chairman Sen. Bill Coley (R-Liberty Twp.) said that effort is already underway.

In written proponent testimony, Brandon Ogden of Small Business Consultants of Ohio said licensing laws disproportionately impact small businesses.

“Given that small businesses are the most fragile and vulnerable employers in the state, it is important that their regulators be assessed and evaluated periodically,” he wrote.

Senate Passes Capital Budget

Senators on Wednesday signed off on the capital appropriations bill, sending it to Gov. John Kasich for his signature.

The $2.63 billion spending measure HB 529 received no changes since its introduction last month. It doubles past financial commitments for behavioral and mental health infrastructure and prioritizes projects addressing the opioid epidemic, according to sponsors.

It also includes $600 million for school facilities, $514 million for local infrastructure projects, $483 million for public colleges and universities and $150 million in community projects.

An additional $222 million is allocated for health and human services, developmental disabilities, mental health, addiction treatment and women’s health initiative facilities over the next two years.

Sen. Scott Oelslager (R-N. Canton) said the measure “provides a strong major investment in our schools, our community and our economy.”

He highlighted that $2.22 billion of the funding is supported by General Revenue Fund-backed debt obligations, with the remainder supported by non-GRF-backed bonds and cash funds. The bill also includes reappropriations for unfinished, previously authorized projects.

“Consistent with the legislature’s focus on strategic spending and pro-economic growth, HB529 represents a manageable and affordable legislation that remains within our current and future budget capacity,” he added. “More importantly, this bill keeps Ohio well under the constitutional 5% limitation on debt service as a percent of revenue.”

The budget passed 32-1 with Sen. Kris Jordan (R-Ostrander) objecting. It passed the House earlier this month in a similar near-unanimous (90-2) vote.

Tax Expenditure Review Panel to Asses Historic Preservation Tax Credits et. al.

The new Tax Expenditure Review Committee, created to give ongoing scrutiny to foregone state revenue in the form of exemptions, deductions and other special exceptions in the tax code, has announced its first meeting and the first set of tax expenditures to go under the microscope. Historic preservation tax credits are included among many “tax expenditures.”

After years of discussion among legislators and advocacy from outside groups across the political spectrum about the need for such reviews, lawmakers finally created the committee at the close of the previous General Assembly.

Under the law, the committee consists of six legislators and the tax commissioner, and it must review every tax expenditure listed in the Ohio Department of Taxation’s (ODT) biennial tax expenditure report at least once every eight years.

Sen. Scott Oelslager (R-North Canton), chair of the new committee and of the Senate Finance Committee, set an initial meeting for 10 a.m. Wednesday, April 11 in the Senate Finance Hearing Room, with the following five tax expenditures on the agenda:

  • Sales to churches and certain other nonprofit organizations, ORC 5739.02(B)(12), Department of Tax Code 1.01
  • Sales to the state, any of its political subdivisions and certain other states, ORC 5739.02(B)(1), Department of Tax Code 1.02
  • Sales by churches and certain types of nonprofit organizations, ORC 5739.02(B)(9), Department of Tax Code 1.03
  • Tangible personal property used primarily in manufacturing tangible personal property, ORC 5739.02(B)(42)(g), Department of Tax Code 1.04
  • Packaging and packaging equipment, ORC 5739.02(B)(15), Department of Tax Code 1.05

Other members of the committee include Sens. John Eklund (R-Chardon) and Vernon Sykes (D-Akron) and Reps. Tim Schaffer (R-Lancaster), Gary Scherer (R-Circleville) and John Rogers (D-Mentor-on-the-Lake.)

Additional meetings will take place at 10 a.m. on Wednesday, April 25 and Wednesday, May 9, according to Oelslager’s office, which said it will announce the tax expenditures to be reviewed ahead of those meetings.

The law calls for the committee to consider several criteria in reviewing tax expenditures, such as the number and types of people who benefit, the public policy objectives and how successfully it meets them, and whether it has turned out to be more expansive than intended, among others.

The committee is required to issue a report by July 1 of every even-numbered year.

Registration Board Review Bill Has Sponsor’s Hearing (SB255)

The State Government Oversight and Reform Committee took Sponsor’s testimony March 7 with regard to SB255 which would require “regular legislative oversight” of occupational licensing boards and reduce “onerous barriers” to entry in the workforce that some believe keep hard-working Ohioans sidelined.

Sponsor Robert McColley noted the hours of training required to become a licensed cosmetologist, barber or auctioneer and contrasted it to the far lower number of training hours to become a licensed Emergency Medical Technician, saying these requirements are “unjustly burdensome on some professions more than others.”

McColley also said the occupational licensing boards can act unilaterally on issues regarding issuance or revocation of licenses, fees, renewal processes and conduct rules. This kind of occupational regulation, he said, “is the antithesis of job creation” and requires well-intentioned people to “ask the government for a permission slip to simply earn a living.”

He said that reducing licensure has bipartisan appeal, with support from the Heritage Foundation, Buckeye Institute and Brookings Institute and backing from the administrations of former President Barack Obama and President Donald Trump.

The bill describes the board review process– the Legislative Service Commission (LSC) would: submit a public report on the board’s impact; create an official state policy on review of occupational licensing boards and regulations; require the chief of the Common Sense Initiative be notified of each board’s review and testify regarding the board’s effectiveness and efficiency; and establish a sunsetting process where licensing boards are reviewed every five years in a staggered process of 20 percent of the boards each year. If they fail to be renewed, boards would automatically sunset on Dec. 31 of the fifth year after they were established or last renewed. McColley qualified that by saying it is “highly unlikely” boards would be eliminated en masse.

Community Projects in Capital Budget Run Gamut

FC Cincinnati currently shares Nippert Stadium (pictured above) with the Cincinnati Bearcats football program. Plans for their own professional soccer stadium are in the making.

Total community project funding of $147 million represents between 5 percent and 6 percent of the total capital budget appropriations proposed in SB266 (Oelslager) and HB529 (Ryan).

Among Ohio’s three largest counties, Cuyahoga County stands out for the number of community projects, though its share of funding is not significantly higher than those for Franklin and Hamilton counties.

Cuyahoga County is in line for about 50 projects worth $20.5 million, from about $2.5 million apiece for a Franklin Hill stabilization project and the Cleveland Museum of Natural History, to $32,500 for an emergency boat shelter in Bay Village.

Franklin and Hamilton counties each have about 30 projects and are in line for about $19.5 million each. They also have the two of the three largest funding awards in the capital budget — $5 million for Columbus’ Center of Science and Industry (COSI) and $4 million for a professional soccer stadium project in Cincinnati, contingent on the award of an expansion franchise from Major League Soccer.

Outside of the three largest counties, seven-figure funding allocations are proposed for:

– Clinton County, with $1.5 million for the Laurel Oaks Career Campus and $1 million for the county airport.

– Lawrence County, whose sole community project award is $1 million for Lawrence EMS Services and Senior Center.

– Lucas County, with $1 million apiece for the Toledo Museum of Art and the Imagination Station Theater Experience.

– Mahoning County, with $4 million for the Mahoning Valley Innovation and Commercialization Center.

– Montgomery County, with $1 million for the Dayton Arcade Innovation Hub.

– Sandusky County, with $1 million for the Ohio Partnership for Water, Industrial and Cyber Security.

– Stark County, with $1 million for the Pro Football Hall of Fame Center of Excellence.

– Summit County, with $1.3 million for Blossom Music Center.

– Wood County, with $1.6 million for the Wood County Senior Center.

The smallest funding award in the budget is $5,000 for the Medina County village of Seville’s Vietnam War Memorial.

Eight Ohio counties do not have any community projects listed, according to the Legislative Service Commission county-by-county analysis — Hardin, Knox, Logan, Mercer, Morgan, Morrow, Noble and Paulding.

Of those eight, six also lack state agency and higher education institution projects. In Knox County, a state developmental center is in line for a share of $4.5 million allocated to the Ohio Department of Developmental Disabilities. Morgan County is among three counties getting $6.8 million for Muskingum River lock and dam projects.

Legislators Debut $2.6B Capital Budget

Lawmakers introduced the $2.6 billion capital budget for FY19-20 Monday, highlighting a $222 million portion dedicated to addiction and other health and human services purposes.

Both chambers plan hearings this week on their respective measures — SB266 (Oelslager) and HB529 (Ryan) — as the General Assembly looks to make quick work of the bill. Senate President Larry Obhof (R-Medina) told reporters Monday he hopes to finish work on the bill in the third week of March. The House version is expected to be the final vehicle.

Obhof said the $222 million for health and human services projects is more than double what the previous capital budget allocated. Within that is a $20 million pool of money to be made available through competitive grants for “opioid community resiliency projects” that focus on youth. The Ohio Department of Mental Health and Addiction Services (Ohio MHAS) will set rules for distributing that money.

Other major funding allocations in the bills are as follows:

  •  $600 million for school construction through the Ohio Facilities Construction Commission,
  •  $483 million for universities and community colleges
  •  $514 million for local infrastructure projects through the Ohio Public Works commission, including $100 million for the Clean Ohio program.
  •  $234 million for parks, dams, trails, waterways and wildlife.
  •  About $147 million for community projects.

Obhof said school security upgrades are likely to be discussed as part of separate safety legislation.

The House Finance Committee is scheduled to consider HB529 at hearings Tuesday and Wednesday, while the Senate Finance Committee has hearings on SB266 scheduled for Tuesday and Thursday.

Twin Capital Budget Bills Planned For Introduction Next Week

In a departure from prior years, lawmakers are planning not one but two capital appropriations bills, according to the Senate’s leader.

Senate President Larry Obhof (R-Medina) said lawmakers are on track to introduce House and Senate bills early next week.

In prior cycles, it was the Senate that has taken the lead in authoring a single two-year spending bill. But the thought is that by introducing twin bills, lawmakers can begin hearings in both chambers simultaneously, expediting the legislative process.

“I think we’ve worked very well together with the administration and with the House and it’ll be a pretty smooth process,” Sen. Obhof said in an interview.

It’s the House version, Sen. Obhof said, that he believes will ultimately be passed. Brad Miller, a spokesman for House Speaker Cliff Rosenberger (R-Clarksville) confirmed the House measure is on track to be unveiled early next week.

Sen. Obhof has previously predicted this cycle’s capital budget will be “a little bit tighter” than 2016’s $2.6 billion spending bill.

Lawmakers in both chambers have spent recent weeks meeting among themselves and with interested parties to hammer out the finer points of the proposal in advance of its introduction. The goal, as in past years, is to have the legislation as close to a final product as possible before the formal hearings begin.

Gov. John Kasich, meanwhile, is expected to push for the inclusion of $20 million in bond-backed funds to be set aside for funding community service organizations. That’s on top of about $130 million being targeted for other “community projects.”

The 2019-2020 funding bill is also expected to include reappropriations for ongoing projects, a topic tackled in years past through separate legislation.

If it pans out like recent capital bills, the measure that’s enacted will clear both chambers with few if any changes, having been worked out behind the scenes beforehand.