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Ohio Statehouse Update: Week in Review — April 27, 2012

1. House approves Mid-Biennium Review bills

House Bills 487, 508 and 509 received House approval on April 25, 2012. The bills, included in the Governor’s Mid-Biennium Review (MBR) package of legislation, will now go to the Senate for consideration. The House made various changes to the bills that were formerly included in H.B. 487.

Among the many provisions in the general MBR bill, H.B. 487:

  • Creates the Healthy Lake Erie Fund and provides a $3 million appropriation to reduce algae blooms on Lake Erie.
  • Directs the Department of Alcohol and Drug Addiction Services to create a pilot project in Franklin and Scioto counties for the use of a non-addictive opiate treatment with the voluntary cooperation of individuals in the criminal justice system.
  • Authorizes a township that withdraws from a RTA to submit to the voters a property tax levy to provide transportation services. Also authorizes a municipality that withdraws to submit to voters a property tax levy to operate a transit system.
  • Creates the Aging in Place pilot program, a pilot program for 180 households in Southwest Ohio to receive health services and home repairs in attempt to allow more elderly people to stay at home longer. Includes a $1.5 million appropriation.
  • Consolidates, merges, renames or repurposes more than 135 individual appropriation line items, resulting in $69 million in savings over this biennium.

House Bill 508, which includes various tax changes, does the following:

  • Requires a Commercial Activity Taxpayer that pays on a quarterly basis to exclude the first $1 million of taxable gross receipts in the first quarter of a year and may carry-forward any unused portion of the exclusion amount only to quarters within the same calendar year.
  • Exempts from the CAT, “unauthorized” insurance companies (i.e., “surplus lines”) whose gross premiums are subject to the unauthorized insurance tax.
  • Requires the Tax Commissioner to list the effective date that a taxpayer’s CAT account was cancelled rather than the date the taxpayer requests cancellation.
  • Requires the Tax Commissioner to notify all vendors and sellers, not just those registered through the Streamlined Sales Tax Central Registration System, when local sales tax rates change.
  • Makes technical changes to the formula used to reimburse taxing units for utility tangible personal property tax fixed-rate levy losses.
  • Authorizes the Tax Commissioner, beginning in 2014 and continuing for the next five years, to extend the revaluation of real property required in a county by not more than one year.

House Bill 509 makes various changes to laws governing local governments, including the following:

  • Allows local health departments to go outside of their traditional borders to share or contract with staff.
  • Allows county auditors to serve as fiscal agents for other offices with the written approval of that office.
  • Permits county auditors to share employees across county lines.
  • Increases competitive bid limits for cities, villages, specified boards, sanitary districts, counties, regional sewer and water districts, regional airports, and park districts.
  • Provides permissive authority for townships to purchase health care plans.

2. Comprehensive energy legislation considered

The Senate Energy and Public Utilities Committee met on April 24 and 25 for consideration of Senate Bill 315, a component of the Governor’s MBR. The bill makes various changes to Ohio’s energy policy. The measure may be amended and taken up for a vote in committee next week.

As currently written, the bill would:

  • Specify that installment contracts for projects under the energy and water conservation law for state buildings are eligible for financing though the Ohio Air Quality Development Authority.
  • Permit a waste energy recovery system to qualify either as energy efficient, for the requirement that electric distribution utilities achieve 22 percent efficiency savings by 2025, or as a renewable energy resource, for the renewable energy requirements on EDUs and electric services companies.
  • Give the PUCO pipeline safety jurisdiction over all pipelines between the “well facility,” which is the furthest most downstream point from a wellhead where wet gas, condensate and water are separated, all throughout the process to the intrastate or interstate transmission pipeline.
  • Establish pipeline safety requirements on all pipelines in Class 1 locations, which are very rural locations that have scarce human habitation levels and extremely low population densities.
  • Require all low pressure lines to be subject to the same leak inspection requirements as high pressure gathering lines.
  • Raise the aggregate fee threshold PUCO can assess for violations and non-compliance by operators from $500,000 to $1 million.
  • Require operators to report volume and chemical descriptions for every fluid used in every step of the drilling process, from the initial construction until the well is ultimately plugged. The Ohio Department of National Resources (ODNR) is developing a searchable database where the public can view the chemicals used in Ohio.
  • Require well operators to disclose where the water comes from that they will be using in the fracturing process.

Rick Doss, Regional Director for Energy Systems Group (ESG), an energy services company, provided proponent testimony. According to Mr. Doss, the bill “does not unfairly burden any entity or industry and will allow all of the existing and emerging technologies to find their rightful place in the big picture based on their application, flexibility, cost, and benefit.”

In his interested party testimony, Ohio Oil and Gas Association Executive Vice President Tom Stewart acknowledged that he believes the bill attempts to build on Ohio’s strong current regulatory framework. However, he added the association believes there are problems with the bill relating to the regulatory changes in the bill. Specifically, Mr. Stewart said the group is concerned with a provision granting the ODNR authority to enter into agreements with other state agencies to assist the department in enforcing the law.

S.B. 315 is scheduled for additional hearings on May 2 and 3.

3. New House members chosen

House Republicans have selected two new members for their caucus. Representative Marilyn Slaby (R- Copley), was sworn in as the representative of the 41st House District on April 24, 2012. She replaces her husband, Lynn Slaby, who vacated his seat following an appointment to the Public Utilities Commission of Ohio. A retired educator, Representative Slaby previously served as state representative in 2004.

Additionally, Gary Scherer of Circleville was chosen by the House Republican screening panel to replace former Representative Bob Peterson (R- Sabina), who was appointed to the Ohio Senate. Mr. Scherer owns 70 Jackson Hewitt franchises throughout Ohio, and he co-founded and served as president of Harr & Scherer, CPAs from 1994 to 2005. Additionally, he has been the president of the Circleville Oil Company since 2006.

4. Legislation approved this week

The Ohio Senate met on April 24 and 25 and approved the following bills:

Senate Bill 294: Sponsored by Senator Tim Schaffer (R- Lancaster), the bill revises the laws governing environmental protection.

Senate Bill 302: Sponsored by Senator Gayle Manning (R- North Ridgeville), the bill would revise requirements governing background investigations for purposes of the Solid, Hazardous, and Infectious Wastes Law.

Senate Bill 310: Sponsored by Senator Troy Balderson (R- Zanesville), the bill establishes requirements governing the possession of dangerous wild animals and restricted snakes.

The Ohio House met on April 24 and 25 and approved the following bills:

House Bill 375: Sponsored by Representative Jim Butler (R- Oakwood), the bill allows school districts to sell real property to private, nonprofit institutions of higher education.

House Bill 405: Sponsored by Representative Cliff Rosenberger (R- Clarksville), the bill would allow extra credit to military veterans and reserve component members on state civil service examinations and provide for the reemployment of nonteaching school employees following military service in accordance with federal law.

House Bill 423: Sponsored by Representative Anne Gonzales (R- Westerville), the bill provides for the dissolution of a joint recreation district.

House Bill 473: Sponsored by Representative Lynn Wachtmann (R- Napoleon), the bill establishes a program for the issuance of permits for the withdrawal and consumptive use of waters from the Lake Erie basin.

House Bill 487: Sponsored by Representative Ron Amstutz (R- Wooster), the bill makes operating and other appropriations, and various changes to state programs.

House Bill 489: Sponsored by Representatives Mike Dovilla (R- Berea) and Christina Hagan (R- Alliance), the bill renames the Department of Development the “Development Services Agency,” establishes the Office of TourismOhio within the Agency, and modifies the operation of JobsOhio relative to contracts with the Development Services Agency, the use of public money, and public records.

House Bill 508: Sponsored by Representative Peter Beck (R- Mason), the bill makes various changes to the laws governing state taxes. The bill is included in the Governor’s MBR package of legislation.

House Bill 509: Sponsored by Representative Terry Blair (R- Washington Township), the bill increases the competitive bidding thresholds for villages, city directors of public service or of public safety, specified boards, and sanitary districts and makes various changes to the laws governing local governments. The bill is included in the Governor’s MBR package of legislation.

For more information, please contact:

Michael Caputo
(non-attorney professional)
216.348.5770
mcaputo@mcdonaldhopkins.com

Rebecca M. Kuhns
(non-attorney professional)
614.458.0043
rkuhns@mcdonaldhopkins.com

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© 2012 McDonald Hopkins LLC All Rights Reserved. This Alert is designed to provide current information for our clients, friends and their advisors regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action.