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Ohio Statehouse Update: Week In Review — December 7, 2012

1. Bill to license Affordable Care Act (ACA) navigators clears House

Following lively committee and floor debate, the Ohio House passed House Bill 613 this week, which establishes regulations for navigators under the ACA. Navigators are individuals or entities charged with helping individuals obtain information regarding purchasing health insurance through health care exchanges established under the ACA. Entities that have regular access to groups of working individuals who might not be provided with insurance through an employer group plan, such as trade associations, chambers of commerce, or community organizations, are likely candidates for becoming navigators.

House Bill 613 authorizes certified navigators that are not licensed insurance agents to undertake certain activities, such as conducting public education activities to raise awareness of the availability of qualified health plans. The House Health Committee accepted a substitute version of the bill this week that authorizes navigators to facilitate the enrollment of individuals in qualified health plans, without suggesting that an individual select a particular plan.

The bill prohibits a navigator from doing any of the following, unless that navigator is otherwise licensed to do so under Ohio Insurance Law:

  • Sell, solicit, or negotiate health insurance
  • Enroll an individual or employee in a qualified health plan offered through an exchange
  • Assist or provide information to an individual or entity seeking to purchase health insurance through the small business health options program portion of an exchange

Democrat members of the committee questioned whether it was prudent to pass legislation regulating a component of the exchange, prior to the creation of the state’s exchange. The bill passed the House on December 5, 2012. It now awaits committee referral in the Senate. With the legislature planning to adjourn December 13, 2012, the likelihood of the bill’s passage remains unclear.

2. New financial institutions tax approved by Ohio Senate

A bill imposing a new tax on financial institutions cleared the Ohio Senate on December 5, 2012. House Bill 510, sponsored by Representative Ron Amstutz (R- Wooster), is a final piece of the Governor’s mid-biennial review package to receive legislative approval. The bill imposes a new tax on financial institutions—primarily banks and other businesses classified as financial institutions—and provides that such institutions are no longer subject to the corporation franchise tax after 2013. The new tax becomes effective January 1, 2014.

The bill also eliminates the existing Dealers in Intangibles Tax (DIT) and imposes the existing Commercial Activities Tax (CAT) on entities currently subject to the DIT- except on dealers that are “small dollar lenders.” A person engages in business as a “small dollar lender” if the person’s business primarily involves providing individuals with loans that do not exceed $5,000 or that have terms longer than 12 months and if, during a taxable year, the person’s gross income from providing such loans exceeds the person’s gross income from all other activities combined.

HB 510 sets the initial tax rate at 0.8 percent on the first $200 million in apportioned total equity capital, 0.4 percent for each dollar of apportioned equity capital greater than $200 million and less than or equal to $1.3 billion, and 0.25 percent on apportioned total equity capital in excess of $1.3 billion. The rates are subject to adjustment after the first and third year the new tax is imposed if the revenue generated by those rates exceeds or falls below 10 percent of the “target” revenue of $200 million for 2014 or 1.06 percent of any adjusted amount for 2016.

The bill now returns to the House for concurrence to Senate amendments. It is anticipated the House will agree to Senate changes early next week.

3. Lame duck legislation update

The following bills are among those slated for committee consideration next week:

Senate Bill 114: Sponsored by Senator Bill Seitz (R- Cincinnati), the bill would establish conditions for the operation of certain specialized motor vehicles—including low-speed and under-speed vehicles, scooters, cab-enclosed motorcycles, and mini-trucks. Additionally, the bill prohibits a motor vehicle manufacturer, remanufacturer, or distributor from providing to a licensed motor vehicle dealer a motor vehicle that violates window-tinting standards. The bill is scheduled for a possible vote in the House Transportation Committee on December 11, 2012.

House Bill 50: Sponsored by former Representative Todd Snitchler, the bill would exempt from municipal income tax the compensation paid to persons performing personal services for a political subdivision on its property when that property is annexed to a municipal corporation under the expedited type-II annexation proceeding, unless the compensation is taxable because of the person’s residency. The bill is scheduled for possible amendments and a vote in the Senate Ways & Means Committee on December 11, 2012.

House Bill 279: Sponsored by Representatives Cheryl Grossman (R- Grove City) and Denise Driehaus (D- Cincinnati), the bill requires a public children services agency or private child placing agency that receives temporary custody of a child to identify and provide notice to all adult grandparents and other adult relatives of the child, within 30 days of the child’s removal from the custody of the parents. Additionally, the bill eliminates the automatic termination of a power of attorney granting parental rights and responsibilities to a grandparent that occurs when one year elapses from the date the power of attorney is notarized or when the child ceases to live with the grandparent. The bill is scheduled for a possible vote in the Senate Judiciary Committee on December 11, 2012.

House Bill 278: Sponsored by Representative Gerald Stebleton (R- Lancaster), the bill increases the minimum dollar amounts of motor vehicle public liability insurance coverage required for a driver to have as follows:

  • Bodily injury to or death of one person in any one accident: from $12,500 to $25,000
  • Bodily injury to or death of two or more in any one accident: from $25,000 to $50,000
  • Injury to property of others in any one accident: from $7,500 to $25,000

The bill is scheduled for a possible vote in the Senate Insurance, Commerce and Labor Committee on December 11, 2012.

House Bill 555: Sponsored by Representatives Gerald Stebleton (R- Lancaster) and Jim Butler (R- Oakwood), the bill replaces the current academic performance rating system for school districts with a phased-in letter grade system under which districts and schools are assigned grades of  A, B, C, D, or F based on 15 measures to reflect the performance profile of each district or school. The bill is scheduled for a possible vote in the Senate Education Committee on December 11, 2012.

4. Supreme Court decision on CAT application to motor vehicle fuel sales has potential budget impact

The Supreme Court of Ohio announced on December 7, 2012 that the current allocation of Commercial Activity Tax (CAT) revenue, which is derived from the imposition of the CAT on gross receipts relating to the sale of motor vehicle fuel violates the Ohio Constitution. In Beaver Excavating Co. v. Testa, Slip Opinion No. 2012-Ohio-5776, the court held that Revised Code 5751.20 improperly allocates CAT revenue from these gross receipts.

Article XII, Section 5a of the Ohio Constitution requires that moneys derived from fees, excises, or license taxes relating to fuels used for propelling motor vehicles on public highways must be used for highway purposes. The court found that Section 5751.20 allocates this revenue to be used for non-highway purposes, and therefore violates the Ohio Constitution.

The court made clear that Ohio may continue to impose the CAT upon these gross receipts. However, revenue collected from the CAT relating to these gross receipts may not be expended until the General Assembly makes an appropriate revision to the Revised Code. The General Assembly has several options available to address the potential budget impact of the lost revenue, approximately $140 million, previously used for other purposes that must now be used for highway purposes.

5. PUCO Nominating Council seeks applications

The Public Utilities Commission of Ohio (PUCO) Nominating Council is seeking applicants to replace Commissioner Cheryl Roberto, who recently announced her decision to resign effective December 31, 2012. Applicants must submit their resumes to apply to fill her unexpired term commencing upon appointment by the Governor and ending on April 10, 2013. Additionally, applications will be accepted for the term commencing on April 11, 2013, and ending on April 10, 2018. It is anticipated one applicant will be selected for both terms.

The PUCO is comprised of five commissioners appointed to rotating, five-year terms by the governor. The commissioners are responsible for regulating Ohio’s investor-owned public utilities. The Revised Code specifies that the Commission may consist of no more than three members of the same political affiliation—affiliation is based upon one’s vote in the last primary election. Due to the present composition of the Commission, persons registered as Republican are not eligible for this appointment.

After reviewing the résumés of all applicants, the Nominating Council will narrow the list to those found to be most qualified for the position. In January 2013, the Nominating Council will meet to interview the selected applicants and recommend four finalists to Governor John Kasich. The governor will have 30 days to either appoint a commissioner from the list or request a new list from the Nominating Council. The governor’s appointment is subject to confirmation by the Ohio Senate.

Applications must be delivered to the Nominating Council no later than 5 p.m. on December 26, 2012. For additional information about the PUCO appointment process please click here.

For more information, please contact:

Michael Caputo
(non-attorney professional)

Rebecca M. Kuhns
(non-attorney professional)

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