07/01/2023

ACEC Ohio Legislative Update--July 1, 2023

GRF Budget Bill Approved

Government Advantage Group provided the following update on the GRF Budget Bill.

Late Friday morning, the Conference Committee wrapped up its meeting and reported the final budget on a party-line vote. The Senate then passed the bill 25-6, and the House followed late yesterday afternoon passing the conference report 67-30. There were almost 900 differences between the House & Senate versions of the bill.

Tax Cuts: The Legislature also doubled down on income tax cuts by increasing the threshold for the bottom tax bracket from $92,000 to $100,000, that will be taxed at 2.75%.  Income over $100,000 will be taxed at 3.5%. There will only be two tax brackets in the state, down from the current six.  The conferees also allocated $250 million less to the one-time sales tax holiday (total dedicated now is $741 million).  The Legislature also decided to transfer $150 million more to the budget stabilization fund, in addition to keeping the Senate’s additional percentage transfer there and the tighter spending limitations.  In addition to the income tax cuts, the final budget makes changes to the Commercial Activity Tax (CAT) by phasing in over two years a $6 million exemption that would eliminate the tax for 90% of all Ohio businesses or 145,000 of the current payers.

Below are highlights from the final budget document:

Transportation

• Appropriates $500 million to Connect4Ohio (up from the Senate’s removal of the fund):
• Same policy provisions as the House, but removes PWC from involvement in project prioritization, specifies that as part of the program ODOT and TRAC fund Tier 1, 2, and 3 projects on the TRAC program list published in March 2023, and elaborates on project priorities as follows: (1) completing existing corridor projects, particularly corridor projects that benefit two or more connected rural counties; (2) eliminating traffic impediments on county, township, state, and federal highway routes, particularly within rural counties; (3) funding such projects at one hundred per cent of the project cost, when appropriate, particularly for projects that are located in a rural county or that extend between two or more connected rural counties; and (4) providing the necessary matching funds to receive TRAC approval for any construction projects that are related to the Program and its purpose.
• Alters the definition of “rural county” given in the House version to mean a county that does not contain a municipal corporation with a population greater than 55,000 residents, according to the most recent federal decennial census.
• Specifies that the earmark of $10,000,000 in each fiscal year from the Roadwork Development Fund is allocated to the Licking County Board of Commissioners to support local roads impacted by the Intel economic development project.
• Restores FlyOhio Tethered Drones Pilot Program as proposed by the House with some changes
• Retains Senate provisions regarding Regional Transportation Improvement Projects
• Restores House language regarding taking a distracted driving safety course in lieu of paying a fine and incurring points for violations
• Retains senate appropriation on Orphan Rail Crossing, Wayside detector grants (with some new guardrails on funding) and Rail Safety Crossing Match funds ($100 million)
• Removes funding for Airport Development Grants
• Removes provisions in the House and Senate versions regarding EV charging stations, EDU recovering the cost of make-ready infrastructure and ownership of charging stations. The parties on both sides of this had come up with a compromise but it was not included. It may not have been ready by the deadline and could be being held for another vehicle.

Economic Development

• Retains funding for brownfields, but regarding the new brownfield program policy additions in the Senate:
• Revises the bill's procedures for designation of a county lead entity under the Brownfield Remediation Program and the Building Demolition and Site Revitalization Program as follows: 1. If the county has a population of less than 100,000, or a population of more than 100,000 without a county land reutilization corporation (land bank), the DEV Director must select the lead entity from a list of recommendations made by the board of county commissioners of the county; and 2. If the county has a population of 100,000 or more and has a land bank, the land bank is the lead entity.
• Removes the bill's provision that allows the All Ohio Future Fund to be used for sewer and water infrastructure projects but appropriates $4 million separately in FY24 for the water & sewer program
• Decreases amount in one time Strategic Community Investments Fund to $700 million
• Decreases by $250,000,000 the transfer to the All Ohio Future Fund so it amounts to $750 million
• Revises the bill's procedures for designation of a county lead entity under the Brownfield Remediation Program and the Building Demolition and Site Revitalization Program as follows: 
• If the county has a population of less than 100,000, or a population of more than 100,000 without a county land reutilization corporation (land bank), the DEV Director must select the lead entity from a list of recommendations made by the board of county commissioners of the county; and
• If the county has a population of 100,000 or more and has a land bank, the land bank is the lead entity.
• Removes a Senate provision that would have transferred the authority, duties, assets and liabilities of OHFA to a newly created Governor's Office of Housing Transformation in the Department of Development.
• Keeps in Senate language altering the criteria used to evaluate whether a county or municipality is distressed for the Rural Industrial Park Loan Program and Rural Initiative Grant Program
• Retains Senate language regarding the changed definition of tier 1 broadband service, eligible address, and new challenge provisions
• Several capital earmarks, including some infrastructure pieces in Amendment 0642
• Retains Senate’s Welcome Home Ohio Program where land banks can appl for funds to purchase or rehab certain residential property
• Abolishes Clean Ohio Council and transfers duties to the Dept. of Development
• Retains Senate’s low income housing tax credit provisions
• Keeps single family housing development income tax credit
• Retains $50 million for the Broadband Pole Replacement fund
• Nixes Downtown Development Grant Fund and Main Street Recovery Program
• Increases the appropriation under Innovation Hubs Fund 12 (Fund 5ZK0) ALI 1956F8, Innovation Hubs, by $75,000,000 in 13 fiscal year 2024, bringing the total appropriation to 14 $125,000,000 in fiscal year 2024. 

Environment

• Keeps out creation of the Ohio Surface Water Model that the House proposed
• Keeps out $2 million water quality pilot program focused on legacy phosphorus
• Retains overall Senate reduced amount for H2Ohio of $270 million
• Restores House’s Maritime Assistance Program funding but only at $5 million as opposed to $20 million

Miscellaneous

• Authorizes CIC boards, JEDZ boards and Joint economic development review councils to hold remote meetings
• Restores ability of local governments to levy a replacement property tax levy

Some specific Governor vetoed items:

• Regarding the language that restricts EPA policies to be no more stringent than or establish any duty or prohibition not imposed by law or rule, or to assume powers not delegated in law or rule, the Governor vetoed a specific line that he believed would restrict the agency’s ability to clarify policies. The line removed defines policy as “elaboration based on EPA authority or expectations.” The rest of the language remains intact.
• He vetoed the proposed changes in TRAC membership, which excluded the ODOT Director 
• He vetoed language allowing All Ohio Future funds to be awarded to counties, CICs, JEDDs, PPPs and port authorities. He also vetoed language allowing the funds to be used for gas infrastructure projects, electric infrastructure development or electric infrastructure improvements by coops and municipal utilities. He also vetoed the specifics on the rules the Legislature wanted Development to address, specifically the division of potential economic development projects into tiers and the specific dollar limits for those tiers.

If you’re interested in viewing the full veto message, click here.