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Last week the Ohio legislature held marathon session days to wrap up its activity for the 131st General Assembly. This lame duck session seemed a bit more hurried, with loftier goals set this year by leadership than in previous years. With just three weeks of committee meetings and session days after the November Election, members found themselves voting on a wide array of topics from unemployment compensation, opiate addiction, handguns, abortion, energy and even language that prohibits the state from doing business with those boycotting Israel.
There were several pieces of tax reform, or legislation pertaining to taxes, that passed during the lame duck session. The provisions included a musical entertainment device sales tax exemption; a water works tangible personal property tax assessment reduction; elimination of the rehabilitation tax credit for catalytic projects; a clarification of the sales and use tax exemption on certain property used in oil and gas drilling; an exemption certificate procedure for the sales tax on employment services, and more. Efforts to reform the sales tax on employment services and prevent municipalities from imposing tax on certain pension income were put on hold until the next budget cycle. Watch this space in the coming days for a detailed write-up on all tax items passed this month by the General Assembly.
Unemployment Compensation Reform
One of the largest and most important topics by far was strengthening the state's unemployment compensation program. In the spring, the legislature had taken steps to pay off the remaining debt owed to the federal government after having to borrow money during the last recession to keep the state's unemployment compensation fund solvent. As part of that agreement, all parties pledged to return to the issue and devise a plan to ensure that the fund and program can run itself without having to borrow again. While interested parties met over the summer with the hopes of developing a complete reform package, negotiations were not able to deliver a final product. Instead, a short term compromise was enacted which will freeze benefits and provide a $500 increase in the taxable wage base for a two year period starting in 2018. The language also repealed the penalties put in place this past spring for failing to pay back the federal government and repealed the April 1, 2017 deadline to reach a full solvency reform plan. We expect unemployment compensation reform to be one of the first efforts taken by the 132nd General Assembly at the beginning of 2017.
Other hot button topics debated in the late hours of the night last week were mandates on energy efficiency and renewable energy. Two years ago the legislature froze mandates enacted in 2008, leaving the freeze in place until 2017 unless other legislation was enacted before then requiring reductions in energy usage and the amount of energy Ohioans use from forms of renewable energy. House Bill 554 restored the requirements that were frozen, but now labels them as goals rather than mandates for the next two years. The language narrowly passed the Senate with many Republican members voting against it. The Governor Kasich has indicated that he wanted reforms to the original 2008 law, but has threatened a veto of the bill if it does not go far enough in regulating Ohio's energy landscape.
A bill that was originally intended to only regulate pet stores now contains language that, as some believe, limits local authority. Specifically, the bill prohibits local governments from raising the minimum wage higher than the state rate. The legislation also allows construction of micro-wireless facilities in the public right of way. These facilities, known as small cells, allow effective deployment for 5G service, but local municipalities claim they may be forced to accept the construction without the ability to reject a permit.
Gun issues returned to the forefront of legislative activity in the last days of the General Assembly. Two bills were up for consideration: one that expands where someone can carry a concealed weapon and one that would have made permit holders a protected class. Language was approved that lifts the mandatory ban on where a permit holder can carry a concealed weapon such as an airport or a daycare. The language allows employees to keep firearms in their vehicles on an employer's property. Therefore, employers have lost the right to prohibit employees from keeping weapons in their cars while on the employer’s property. The legislation allows colleges and universities to set their own policies regarding concealed carry of firearms on campus. However, language that would have treated concealed carry permit holders as a protected class under the Ohio Civil Rights Act was rejected by the General Assembly. Such language would have provided protections that are currently available for gender, age, race, etc. For instance, if the language had been enacted, employers would not have been able to fire, or otherwise adversely impact, an employee for bringing a weapon to work. Business groups overwhelmingly opposed this language which helped defeat the measure.
Another controversial and emotional issue that garnered action was abortion, with the legislature passing two measures. In an unexpected move, the Senate inserted a measure known as the Heartbeat Bill into another piece of legislation over much opposition on procedure by Democrats. The adopted language would have banned abortion after a fetal heartbeat could be detected, which can often be around the six week mark. This legislation has been voted on several times over the past three or four years, however it has never made it to the Governor's desk. Governor Kasich vetoed this bill on December 13th. The Governor's veto message indicated that the reason for the veto was due to likelihood that this language would be stuck down as it has been in two other states. The other measure, which was signed by Governor Kasich, will limit abortion twenty weeks after fertilization. Similar measures have been upheld by courts in other states.
In an effort to help combat the opioid epidemic, Ohio legislators passed legislation reining in prescriptions, as well as other matters dealing with this growing problem. Specifically under the bill, a patient will not be able to get a prescription for more than 90 days of opiates. Additionally, the bill establishes a network of registered pharmacies, pharmacists and pharmacy technicians; further regulates the use of naloxone (a lifesaving drug used in overdoses); makes reforms to methadone treatment facilities' licenses; requires medical professionals to encourage pregnant women to seek addiction help; and makes reforms to the mental health boards.
Also in the healthcare realm, the General Assembly passed an infant mortality bill that legislators are hopeful will help curb infant mortality in Ohio. The legislation institutes many of the recommendations of the Commission on Infant Mortality which issued a report in the spring of this year. The bill contains a multitude of program changes that all seek to decrease Ohio's staggering rate of infant mortality. Some of these include the following: better data keeping throughout all prenatal care and infant deaths as well as initiatives throughout the state and their effectiveness; sleep education; tobacco cessation programs; birth spacing education; and restructuring health programs to achieve better results. Ohio currently ranks 45th in infant mortality.
Legislation designed to prohibit state contracts with entities involved in boycotting Israel was broadened and successfully passed by the General Assembly. The bill prohibits state agencies from entering into or renewing contracts with companies for supplies or services if the companies do not declare that they are not boycotting any jurisdiction, including Israel. Many opponents spoke against the measure during the committee process, likening the language to a ban on free speech.
As you can see, the Ohio legislature did not waste any of its time after Election Day getting back to business. For the most part, the 131st General Assembly is now done, unless it needs to reconvene to address any vetoes that Gov. Kasich may issue. The 132nd General Assembly officially starts on January 1st with legislative activity starting sometime in the middle of the month. The Governor's budget will be released on or around January 31st kicking off five months of budget negotiations before it is signed in to law by July 1st. Many expect Governor Kasich to propose more reductions to the personal income tax and higher taxes on business. However, Ohio faces some significant budget challenges in the coming biennium, including the elimination of its Medicaid funding mechanism and a slowing Ohio economy. Stay tuned for more details to come on what the new General Assembly may be facing as it buckles down and gets to work.