June 13, 2023

Ohio Senate Holds Third Hearing on Unemployment Reform Legislation

Appearing before the Ohio Senate Finance Committee, Ohio Chamber SVP of Government Affairs Rick Carfagna provided interested party testimony this past week for the pending two-year state operating budget (House Bill 33). 

Carfagna identified key Ohio Chamber policy priorities contained in the draft budget aligned with the Chamber’s Blueprint for Ohio’s Economic Future, while also listing additional measures the Chamber hopes will be added, restored, or further bolstered throughout the remainder of the legislative process. The link to the entirety of the Ohio Chamber’s written remarks can be found here.

In his testimony, Carfagna noted several improvements to the budget by the Ohio Senate while advocating for five specific items aligned with both the Blueprint and the OCC’s policy priorities:

1) Ohio Workforce Housing State Tax Credit Program – included in the as-introduced version, upgraded by the House, but then removed in the initial Senate budget, this would create an annual tax credit for the development of new, high-quality, affordable housing units. It would also allow Ohio to draw down $120 million of federal bond volume cap for multifamily development. The creation of more workforce housing stock is a top priority of the Ohio Chamber, and we have stressed to the DeWine/Husted Administration, the Ohio House, and now the Ohio Senate to make this a significant initiative in this budget.

2) Investments in Childcare - childcare options throughout Ohio remain scarce and expensive, and one of the largest throttles holding back people from fully returning to the workforce. With 39% of overall Ohioans living in a childcare desert, Ohio needs to both expand eligibility for more working families while driving more capacity to enable more childcare options. The OCC is urging the Senate to increase the federal poverty level to 160% as proposed by both the Administration and Ohio House, reconsider funding for childcare scholarships, and to increase infant and toddler capacity in communities throughout the state.

3) Smart Technologies Assistance Program – modeled after the Indiana Manufacturing Readiness Grant, this proposed program would target small and medium-sized manufacturers otherwise lacking the capital and capability to modernize their machinery and facilities. The Ohio Chamber and Ohio Manufacturers’ Association have both been pushing for an amendment to create this program in the budget, funded with $12 million each fiscal year.

4) Promotion of Computer Science/STEM Offerings at the K-12 and Post-Secondary Education Levels – the Ohio Chamber is pushing hard for the continued integration of more technology courses at the K-12 level. 50% of Ohio’s public high schools have zero offerings of Computer Science and Ohio ranks 33^rd of 50 states in the percentage of college degrees produced in Computer Science. The current budget draft provides a number of recommendations to address this phenomenon, including the provision of more in-school and virtual CS courses and professional development to grow more CS teachers. While the Senate restored funding that was removed in the House for more teacher training, the need remains to fund more courses that expose Ohio’s youth to technology.

5)    Certified Mental Health Assistant Program - nearly two million adults out of Ohio’s population of 11.8 million people have a mental health condition, with this problem compounded by the severe shortage of our state’s behavioral health professionals. Pending legislation would create a new, licensed healthcare professional called a Certified Mental Health Assistant, specializing in behavioral health and substance abuse disorders. The House-passed budget contained an appropriation of $4.5 million to stand up this new program, which was removed in the initial Senate budget. The OCC is advocating to have this funding in place once the new licensure program is approved in statute.

In addition to these priorities, the Chamber also touted the need for a Commuter Benefits Tax Credit, tweaks to the Senate-proposed tax cuts, changes to the regulation of real estate investment trusts (REITs), the restoration of the Governor’s proposed Merit Scholarships, more discussion surrounding proposed social media parental notifications, and newborn screenings for a rare, fatal, yet treatable pediatric disease known as Duchenne Muscular Dystrophy. All of these points are further clarified in the Ohio Chamber’s written testimony.

The Senate version of House Bill 33 is undergoing a second wave of changes, and is expected to be unveiled and voted out of committee this week with a floor vote soon to follow. Those changes will then head back to the House, where that chamber will either vote to concur with the Senate or reject the changes and send the budget to conference committee to reconcile the differences.

Ohio Senate Holds Third Hearing on Unemployment Reform Legislation

The Ohio Senate Insurance Committee held opponent testimony on Senate Bill 116 last week where labor unions, contractors, and left-leaning organizations highlighted their opposition to the bill. These groups grounded their opposition in the bill’s elimination of a supplementary benefit for certain high wage earners and requirement to lower the maximum duration of unemployment benefits from 26 weeks to a sliding scale between 12-20 weeks based upon the state’s unemployment rate.

However, these provisions in Senate Bill 116 are a key part of putting our state’s unemployment trust fund in a better financial position. The Legislative Service Commission’s analysis of the legislation highlights this fact because the legislature’s research arm determined the trust fund would go insolvent by 2029 if nothing is done. However, under SB 116, the trust fund remains solvent with a balance of nearly $1 billion in 2036, which is the last year LSC performed a projection. 

Assuring the solvency of Ohio’s unemployment system protects employers from higher payroll costs because payroll taxes rise by $21 per employee when the state must borrow from the federal government to cover unemployment benefits. This tax doubles every year, so employers pay $42 per employee after two years of loan repayments and $63 per employee after three years of loan repayments. In fact, after the 2008 recession employers faced higher payroll taxes until 2016.

The Ohio Chamber will continue to meet with legislators to share why unemployment solvency reforms are necessary and why doing nothing at the legislature puts Ohio employers at risk of higher taxes at the next recession. 

Ohio Chamber Convenes Crime Task Force

The Ohio Chamber formally rolled out its Crime Task Force last week, pulling together representatives of the retail community along with state and county law enforcement officials in an organizational meeting. The body will meet over the next few months to examine retail theft and other crime phenomena across Ohio that is throttling commercial growth. This initiative follows an October 2022 study commissioned by the Ohio Chamber, where 62% of businesses surveyed responded that rising crime is keeping businesses from expanding. 

Led by former federal prosecutor David DeVillers and retired Judge Scott VanDerKarr, the group will discuss criminal justice reforms, prosecutorial authority, and new or enhanced penalties to produce recommendations for the Ohio General Assembly. Ohio Chamber members interested in learning more about these efforts are encouraged to contact Rick Carfagna, Senior Vice President of Government Affairs, at rcarfagna@ohiochamber.com.

Tax Policy

Last week the Ohio Chamber joined with NFIB, Ohio Farm Bureau, Ohio Realtors, Ohio Society of CPAs, and the Manufacturing Policy Alliance in a letter to the Ohio Senate Finance Committee. The letter outlined an alternative to the Ohio Senate Commercial Activity Tax (CAT) proposal to cut the CAT rate by 25% across the board. In the letter the groups proposed the removal of the minimum tax and an increase in the exemption level for gross receipts. The exemption would move to $4 million dollars in FY 24 and $10 million dollars in FY 25. While this removes a tax cut for the filers above $10 million, it does remove nearly 94% of the current filers. Future General Assemblies could continue to raise the exemption levels if the goal is to eliminate the CAT.

The alternative approach is a more conservative approach that recognizes any downturn in state revenues impacts the business community first – remember the inclusion of the employment services to sales tax in the 1990s – and provides more time outside the pressures of a budget to study the tax structure of Ohio to craft a structure that provides revenue to government while making Ohio an attractive place to start a business and raise a family.

Legal News

The Ohio Supreme Court accepted the appeal of Tera LLC v. Rice Drilling. The Ohio Chamber of Commerce submitted an amicus brief urging the Court to review the matter. The Ohio Supreme Court accepted 2 of the 3 propositions of law. The first addresses whether the trial court should have considered evidence of common meaning, and the second concerns whether a bad faith trespass turns on subjective intent. The case will now go through merit briefing ahead of an oral argument (probably held in the fall).

Energy Policy

In federal news, funding for rural electrification by rural cooperatives was announced. Under Sections 22001 and 22004 of the Inflation Reduction Act $10.7 billion dollars is available. Section 22004 makes available through loans and grants $9.7 billion dollars to transition rural electric generation sources to clean energy. Section 22001 provides $1 billion dollars for a program called Powering Affordable Clean Energy (PACE) and that portal opens on June 30, 2023. The Section 22004 dollars are available through an application process that begins in July and ends on August 31, 2023.