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Ohio Statehouse Update: Week in Review: May 18, 2012

1. General MBR bill heads to conference committee

House Bill 487, sponsored by request by Representative Ron Amstutz (R- Wooster) underwent a litany of changes in the Senate Finance Committee this week before a full vote on the Senate Floor.

Among the changes included in the Senate-passed version of the bill are:

  • $42 million appropriation for the Clean Ohio Fund
  • Removal of a provision creating the Compressed Natural Gas Study Committee — a similar study is created in Senate Bill 315, the governor’s energy MBR bill
  • Removal of a provision that prohibits any transfer from the General Revenue Fund to the Budget Stabilization Fund without prior approval of the General Assembly
  • Establishment of a temporary procedure by which a township may apply for the abatement of unpaid property taxes, penalties and interest on property acquired from a county and used exclusively for a public purpose
  • Elimination of the exemption from the five-year cyclical rule review requirement for rules adopted, amended or rescinded by the Department of Taxation
  • Removal of provisions concerning the authority of physician assistants to prescribe drugs
  • Pursuant to the request of interested parties and the Ohio Department of Jobs and Family Services (ODJFS), removal of a provision that would have required a Medicaid managed care organization, for purposes of making a payment for a hospital inpatient service, to use a new diagnosis-related group (DRG) that the ODJFS is required to establish under current law
  • Declaration that, for purposes of the County Sewer Districts Law, a public exigency exists when an improvement is required as result of a federally imposed or state-imposed consent decree that prohibits future sewer inflows, combined sewer overflows or sewer back-ups. Authority for a board of county commissioners to appropriate and to take possession of land without a prior jury assessment of compensation and damages to the residue (quick-take) when such a public exigency exists

Upon Senate approval of H.B. 487, the House did not concur to Senate amendments and the bill will now be considered in conference committee. Representatives Ron Amstutz, Jeff McClain (R-Upper Sandusky) and Vern Sykes (D-Akron), along with Senators Chris Widener (R-Springfield), Shannon Jones (R-Springboro) and Tom Sawyer (D-Akron) will meet May 22, 2012 to decide which provisions will ultimately be included in the bill.

2. Energy MBR discussion begins in the House

The House Public Utilities Committee met for testimony on Senate Bill 315, the Governor’s energy MBR, twice this week after the bill received Senate approval on Tuesday. Senator Shannon Jones, Ohio Department of Natural Resources (ODNR) Director James Zehringer and the Public Utilities Commission of Ohio (PUCO) Chairman Todd Snitchler kicked off testimony on Wednesday.

Senator Jones said the projected growth in drilling activity in the state means a tremendous opportunity for new jobs and new economic activity pumped into local communities across the state. She added that the legislature has a responsibility to put in place regulatory safeguards that will bolster citizen confidence while protecting the environment. Jones said provisions in the bill make Ohio’s regulations one of the most — if not the most, stringent in the country.

Director Zehringer said S.B. 315 makes a good regulatory framework for hydraulic fracturing better. He pointed to a provision in the bill that updates the reporting requirements for chemicals and fluids used to drill a well. Under the current law, well operators are required to disclose the chemicals used during the well stimulation process and report those chemicals to ODNR. He said the bill puts in place the nation’s first well construction chemical disclosure requirement. Also noted in his testimony were provisions regarding water samples, water disclosure requirements and the encouragement of Road Use Maintenance Agreements with local governments.

Chairman Snitchler said the PUCO’s goal with respect to the bill is to ensure that sufficient pipeline safety regulations are in place to hold operators to a high standard and protect Ohioans. Additionally, he said the Commission supports the inclusion of waste energy recovery systems (WER) under the definition of “renewable energy resource” in Ohio’s statute as well as provisions allowing both WER and combined heat and power systems to count toward energy efficiency standards. He said the bill demonstrates that steps are being taken to expand usage and foster development of these burgeoning technologies that are cost-effective and will aid utilities in achieving the state’s renewable energy benchmarks.

3. Bill to create Financial Institutions Tax moves to Senate

Upon approval by the House on Wednesday, House Bill 510 began testimony in the Senate Ways and Means Committee on Thursday, May 17, 2012. The bill imposes a new tax on financial institutions, effective January 1, 2014, and provides that such institutions and dealers in intangibles are no longer subject to the corporation franchise tax or dealers in intangibles tax after 2013. The bill would require current dealers in intangibles to pay the Commercial Activity Tax (CAT) after 2013. The bill was originally included in the Governor’s general MBR bill, but was put in separate legislation to provide additional discussion.

Ohio Department of Taxation Chief Counsel Matt Chafin, said it is the administration’s goal to finalize the elimination of the Corporate Franchise Tax, which was mostly repealed with 2005 tax reform. Department of Commerce Director David Goodman told the committee that House Bill 510 would bring fairness to the way Ohio taxes its banks, without reducing the needed income to the state. He said the tax code will be simplified for both the companies that pay the tax and the tax collectors.

The bill is scheduled for a hearing Thursday, May 24. It is unclear whether the Senate will take action on the bill prior to the legislative summer recess.

4. Bills to watch

A sampling of the bills introduced this week:

Senate Bill 345: Sponsored by President Tom Niehaus (R- New Richmond), the bill makes changes to the law governing the State Highway Patrol Retirement System. Changes the definition of “final average salary” to mean the average of the highest salary paid to a member during any five (from three) consecutive or nonconsecutive years.

Senate Bill 346: Sponsored by Senator Kevin Bacon (R- Columbus), the bill regulates certificates of insurance prepared or issued as evidence of property or casualty insurance coverage.

House Bill 546: Sponsored by Representatives Stephen Slesnick (D- Canton) and Ross McGregor (R- Springfield), the bill changes the definition of “appraisal” for purposes of the Real Estate Appraiser Licensing Law, and makes changes to the exceptions to licensure under that law, and regulates appraisal management companies.

5. Legislation approved this week

The Ohio Senate met on May 15 and 16. Some of the bills approved this week:

House Bill 326: Sponsored by Representatives Jeff McClain (R- Upper Sandusky) and Brian Hill (R- Zanesville), the bill prohibits any person from knowingly conducting any transaction of public funds to the benefit of any campaign committee or candidate.

Senate Bill 315: Sponsored by request by Senator Shannon Jones (R- Springboro), the bill makes changes to the energy and natural resources laws and related programs of the state (see number 2 above).

Senate Bill 321: Sponsored by Senator Bill Beagle (R- Tipp City), the bill authorizes the State Library Board to establish library districts for association libraries, and makes other changes to the law governing the organization, governance and operation of public libraries.

House Bill 322: Sponsored by Representative Andrew Brenner (R- Powell), the bill permits Ohio banks, savings and loan associations, savings banks, and credit unions to charge the same or lower rates or amounts of interest, fees or other charges under a revolving credit agreement that the respective out-of-state financial institutions may charge Ohio revolving credit customers.

House Bill 487: Sponsored by request by Representative Ron Amstutz (R- Wooster), the bill includes various changes to state programs and is referred to as the Governor’s general Mid Biennium Review bill (see number 1 above).

Senate Bill 340: Sponsored by President Tom Niehaus (R- New Richmond) and Minority Leader Eric Kearney (D- Cincinnati), the bill makes changes to the Ohio Police and Fire Pension Fund (OP&F). Beginning July 2, 2013, the bill requires that employee contributions rates increase by increments to 12.25% (from 10%) of salary. Additionally, the bill authorizes the Board to increase age and service requirements for all members if the Board’s actuary determines that an increase is necessary to meet the Board’s funding requirements. For those who become OP&F members on or after July 2, 2013, increases to age 52 (from 48) the age a member must attain to be eligible for an unreduced retirement benefit.

Senate Bill 341: Sponsored by President Tom Niehaus (R- New Richmond) and Minority Leader Eric Kearney (D- Cincinnati), the bill makes changes to the law governing the School Employees Retirement System (SERS). The bill specifies retirement eligibility requirements, including a requirement that the member be at least age 57 with at least 30 years of service, but permits the SERS Board to adjust eligibility requirements if the Board’s actuary determines that adjustment is necessary to ensure that SERS meets amortization period requirements of current law. Further, it reduces the retirement benefit of a member who retires with less than 30 years of service if the member is under age 67, instead of under age 65, and requires the SERS Board to direct its actuary to consider every five years, rather than every ten years, the actuarial equivalents used to determine the reduction. The bill maintains current age and service eligibility requirements for members of the SERS who as of August 1, 2017, will have at least 25 years of total service credit and permits an SERS member who does not have 25 years of service credit as of August 17, 2017 to retire under current age and service eligibility criteria if, not later than that date, the member pays an amount equal to the additional liability to SERS resulting from the member’s retirement under the current criteria. The bill states explicitly that the law does not require SERS to establish, maintain, offer, or continue any health care program, provide any level of coverage, or provide access to a health care program.

Senate Bill 342: Sponsored by President Tom Niehaus (R- New Richmond) and Minority Leader Eric Kearney (D- Cincinnati), the bill makes changes to the law governing the State Teachers Retirement System (STRS). The bill states that beginning July 1, 2013, employee contribution rates increase by increments to 14% (from 10%) of compensation. For compensation earned on or after July 1, 2017, the bill permits the STRS Board to reduce the employee contribution rate to less than 14% if the Board’s actuary determines that a reduction in the rate does not materially impair the fiscal integrity of the retirement system.

Senate Bill 343: Sponsored by President Tom Niehaus (R- New Richmond) and Minority Leader Eric Kearney (D- Cincinnati), the bill makes changes to the law governing the Employees Retirement System (PERS). The bill changes retirement and disability benefit eligibility criteria for PERS members by creating three transition groups. Members who under the criteria of current law are eligible to retire no later than five years after the bill’s effective date are exempt from the changes to the benefit eligibility criteria and are referred to by PERS as “Group A.” Members who on the bill’s effective date have 20 years of service credit or will be eligible to retire under existing law’s criteria not later than 10 years after the bill’s effective date are subject to modified eligibility requirements, which will require one or two more years of age or service credit depending on circumstances. They are referred to by PERS as “Group B.” Members who are not in either of the previous groups are generally required to complete an additional two years of service credit, and except for certain law enforcement and public safety officers, attain at least age 55 to receive a benefit. They are “Group C.”

The Ohio House met on May 15 and 16. Among the bills approved this week:

House Bill 303: Sponsored by Representative Kirk Schuring (R- Canton), the bill revises the law governing nurses, medication aides, dialysis technicians, and certified community health workers.

House Bill 472: Sponsored by Representative Peter Beck (R- Mason), the bill expressly incorporates changes in the Internal Revenue Code since March 7, 2011, into Ohio law. The bill includes an emergency provision.

Senate Bill 202: Sponsored by Senator Bill Seitz (R- Cincinnati), the bill specifies the responsibility of a possessor of real property to a trespasser and the circumstances in which the possessor may be liable in a tort action for the death or injury of a trespasser, and specifies that it is the intent of the General Assembly to declare that the American Law Institute’s finalized “Restatement Third of Torts: Liability for Physical and Emotional Harm” does not constitute the public policy of the state of Ohio.

House Bill 510: Sponsored by Representative Ron Amstutz (R- Wooster), the bill imposes a new tax on financial institutions, effective January 1, 2014, and provides that such institutions and dealers in intangibles are no longer subject to the corporation franchise tax or dealers in intangibles tax after 2013, and requires dealers in intangibles to pay the commercial activity tax after 2013.

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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