Ohio Economic Development Association Legislative Update

Transcription

1 Ohio Economic Development Association Legislative Update Mid-Year Briefing Presentation by Chris Slagle, Esq. Chris Schmenk, Esq. Rob McCarthy, Esq. Bricker & Eckler LLP Columbus l Cleveland l Cincinnati-Dayton I Marietta 2014 Bricker & Eckler LLP

2 What We ll Cover 131 st General Assembly Spring Session The State Budget Bill!! What Little Else Was Done 131 st General Assembly: Predictions for the Fall Session Bricker & Eckler LLP

3 The State Budget Bill Bricker & Eckler LLP

4 Ohio Political Science 101 Ohio Constitution, Article II, Section 22, states: No money shall be drawn from the state treasury, except in pursuance of a specific appropriation, made by law; and no appropriation shall be made for a longer period than two years. State budget generally in effect for two fiscal years. Each fiscal year runs from July 1-June 30. Four Budget Bills: the main Operating appropriations bill (Executive Budget Bill) and appropriations for Transportation, the Bureau of Workers Compensation and the Industrial Commission Bricker & Eckler LLP

5 Where do State Funds Come From? Bricker & Eckler LLP

6 The Process The Office of Budget and Management (OBM) initiates the process. Agency budgets are facilitated by the Governor s Office and added to those of the Legislature and Judiciary into the Executive Budget Bill, typically introduced in the House in January by the Finance Committee Chair. After passage by the House, the Senate considers the Budget (as amended) Conference committee recommends final bill to Governor for signature Bricker & Eckler LLP

7 The Process this Year Bricker & Eckler LLP

8 The End Result: H.B. 64 $71.2 billion budget Signed by Governor June 30 Net income tax cut of $1.9 billion over two years for individuals and small businesses. It cuts taxes across all brackets by 6.3 percent. Small businesses receive a 75 percent break on their first $250,000 in income earned (2015). No taxes on first $250,000 income. Flat 3 percent rate on income above $250,000 (2016 beyond). Recent hiccup.some higher taxes?!?!?! Bricker & Eckler LLP

9 The End Result: H.B. 64 New Sales Tax Nexus Provisions The law creates new criteria for determining whether out-of-state sellers have substantial nexus with Ohio. It creates a presumption that out-of-state sellers have substantial nexus with Ohio, but allows the seller to rebut the presumption by demonstrating that the seller s activities in the state do not significantly contribute to the seller s ability to maintain a marketplace in Ohio Bricker & Eckler LLP

10 Economic Development Provisions Ohio Enterprise Zone Program Extended to October 15, 2017 Affects ORC Sections et seq. Historic Preservation Tax Credit Senate had proposed a possible conversion of the program to a grant program Not included in final bill but study required in 2020 Tax Policy Study Commission (more later) Extends provision authorizing credit against CAT if cannot claim against another tax Bricker & Eckler LLP

11 Economic Development Provisions Job Creation Tax Credit Program Formerly calculated as a percentage of taxpayer s Ohio income tax withholdings (could have included nonresidents working in Ohio) Now: JCTC: Agreed-upon percent of taxpayer s Ohio employee payroll minus baseline payroll (taxable income paid to Ohio residents during last 12 months before agreement) JRTC: Agreed-upon percent of taxpayer s Ohio employee payroll; Removes 75% cap Will prevent a reduction in the credit amount due to Ohio s declining income tax rates Taxpayers that entered into a JCTC or JRTC agreement before October 16, 2009 are eligible to request a modification Director of Development must now report an estimate of revenue lost from incentives within 30 days of TCA approval 2014 Bricker & Eckler LLP

12 Economic Development Provisions Third Frontier Internship Program: Restored in final bill Housing Trust Reserve Fund: Housing Trust Fund fees in excess of $50 million (up to $15 million) will be deposited in newly-created House Trust Reserve Fund, designed to stabilize funding for housing projects in future years New Community Authorities: pilot program provisions made permanent (including expanded definition of community facilities, authority to levy sales tax, and more flexibility) Bricker & Eckler LLP

13 The Governor s Vetoes 44 provisions vetoed Some portions of school funding (guarantee) Provisions that would have repealed tangible personal taxes on electric generation plants Several provisions that would have limited Medicaid expansion Provision for dedicated funding to the largest Chamber of Commerce in each of the state's designated economic development regions Bricker & Eckler LLP

14 A Parting Gift: The 2020 Tax Policy Study Commission Comprised of House & Senate Chairs of Ways & Means Committee, one additional majority and minority member from each body and one gubernatorial appointee Will develop recommendations for reforms, including: Consideration of shifting Ohio to a flat income-tax rate of percent (report due October 2017) Severance tax on oil and gas production (report due October 1, 2015) All tax credit programs affected by changes made in the tax code Historic Preservation: Must study whether to make credit refundable or whether to create a grant program (report due October 31, 2016) But also: JCTC, JRTC, Film Credit, etc. (due Oct. 2017) Bricker & Eckler LLP

15 Enrolled Legislation 15

16 Business Fees H.B. 3 Reduces certain business filing fees charged and collected by the Secretary of State (corporate and trade and fictitious name filing fees) Specifies that Ohio-based companies in good standing will have access to the employer application services of the OhioMeansJobs website Requires the Governor's Executive Workforce Board to prepare an annual report on the performance of the OhioMeansJobs website Signed by the Governor June 25; effective in 90 days 16

17 Transportation Budget H.B. 53 $5 billion budget Helps fund 1600 projects including I-71 in Columbus, I-70 in Clark County, Phase 2 of Cleveland s Opportunity Corridor, Mill Creek Expressway in Cincinnati Establishes a Transportation Improvement District (TID) Program TIDs may be created by counties Can issue bonds, levy assessments and use other financing means $3.5 million available in 2016 and 2017 for TIDs that have facilitated funding with other agencies for transportation projects Requests due before September 1 each year Funding limited to 25% total project costs not to exceed $250k/year; reimbursement basis Signed by the Governor April 1 and in effect 17

18 Pending Legislation 18

19 TIF Creation H.B. 12 Adds notice requirements in connection with TIF incentive district establishment Establishes opt-out procedure for real property owners outside of a 300-acre overlay district 19

20 Port Authorities H.B. 72 Enables port authorities to create energy special improvement districts Expands the scope of projects that can be financed by energy ESIDs 20

21 JEDDs H.B. 182 Creates opt-out procedure, with DSA oversight, for businesses within a JEDD Enables school districts to approve enterprise zones without DSA involvement 21

22 Downtown Redevelopment Districts H.B. 233 Establishes new special purpose district with purpose of rehabilitating historic buildings in support of economic development Similar to TIFs, with authority to provide for service payments up to 70% of increased value 22

23 New Markets Tax Credits S.B. 41 Tweaks New Markets Tax Credit program to expand use of program Expands eligibility and credit percentage 23

24 PACE S.B. 185 Simplifies Property Assessed Clean Energy financing process Expands process to permit special assessment without use of ESID 24

25 131st General Assembly What to Expect this Fall Announced Session Dates: House September 30 October 7, 14 (if needed) November 10 (if needed), 17, 18 December 1 (if needed), 2, 8, 9 25

26 131st General Assembly What to Expect this Fall Announced Session Dates: Senate September 15, 16, 22, 23, 29, 30 October 7, 14, 20, 21 November 10, 17, 18 December 1, 2, 8, 9, (if needed) 26

27 131st General Assembly What to Expect this Fall Dates, dates, and more dates 27

28 131st General Assembly What to Expect this Fall Another Interesting Date: Tuesday, July 21, 2015 Significance? 28

29 More Dates: 131st General Assembly What to Expect this Fall August 6, 2015 December 28, 2015 Tuesday, March 15, 2016 July 18-21, 2016 July 25-28,

30 131st General Assembly What to Expect this Fall Fall 2015 Spring 2016 Capital Appropriations MBR Small Business Tax fix Oil & Gas / Severance Tax Additional Vetoed provisions: Subrogation Traffic Signal Clinton County 30

31 131st General Assembly What to Expect this Fall Severance Tax 2020 Tax Policy Study Commission Perfect Timing Workgroup effective date: September 30, 2015 Workgroup report due October 1, 2015 Coincidence? 31

32 131st General Assembly What to Expect this Fall Yep another date Tuesday, November 3, 2015 Redistricting Reform Responsible Ohio v. HJR 4 32

33 Questions? Contact Chris Slagle, Esq Chris Schmenk, Esq. Rob McCarthy, Esq Bricker & Eckler LLP Bricker & Eckler LLP