The Legislative Update is brought to us by Liz Powell, Esq., MPH, Founder of G2G. Liz is an attorney with 20 years government experience, including as Legislative Director on Capitol Hill. She leads a team of bipartisan professionals that has raised over $50M, run advocacy campaigns and shaped CMS reimbursement for clients.
The legislature is in full swing as we work through this budget season. G2G has spent much time on Capitol Square meeting with legislators, attending fundraisers, and talking with Finance and Majority leadership as budget negotiations move forward. The first amended version of HB166, the FY20-21 State Operating Budget is expected to be released the week of April 22nd. The House Finance Committee will hear testimony on the bill that week and then given another opportunity to amend the bill. If all goes as planned, the House will vote on the bill by May 1st or 2nd. Given the short time line the Legislature is working under this year, the Senate will begin its hearings the week of April 22nd. The Senate Finance Committee will hear testimony from state agencies that week and the following week the four Senate Finance subcommittees/committees will begin hearing their agencies. Those hearings will run for three weeks. The budget must be passed by June 30th. More updates on the budget and other areas of interest are below.
State Operating Budget
The heads of several departments appeared before a House panel to walk members through some of the key investments DeWine has proposed in his biennial budget emphasizing a collaborative approach to dealing with systemic issues facing the state.
Ohio Department of Health (ODH) Director Dr. Amy Acton and Board of Pharmacy Executive Director Stephen Schierholt presented their FY20-21 budget proposals to the House Finance Health and Human Services Subcommittee. Acton focused on the governor’s proposed initiatives to reduce infant mortality rates, lead abatement and teens’ use of tobacco products. Schierholt focused on the board’s Ohio Automated Rx Reporting System (OARRS) and how the online system helps the board do its job.
Ohio Department of Job and Family Services Director (ODJFS) Kimberly Hall provided the committee with an overview of the Temporary Assistance for Needy Families (TANF) Program. According to Hall, the department expects to end the current fiscal year with a nearly $545.5 million surplus or “TANF Sustainability Fund Balance.”
A new fund totaling $250M in FY20 and $300M in FY21 to support wraparound services, mental health counseling and other needs of at-risk students in Ohio schools represents the bulk of new K-12 education spending in DeWine’s first executive budget proposal. This funding will help ensure struggling children are able to learn and allow schools to redirect core funding they’ve dedicated to those purposes back to the classroom. School districts will be encouraged to partner with nonprofits, educational service centers, county mental health, addiction and job and family services agencies and others to provide the services.
Health Care Investments
BioEnterprise reported that Northeast Ohio is third-largest region in the Midwest for healthcare investments in 2018. Nearly $294 million was invested in 71 companies last year, according to the 2018 Midwest Healthcare Growth Capital Report, which tracks capital investments made in biomedical companies across in Midwestern states in medical device, biotechnology and pharmaceuticals, and health IT sectors. The $294 million invested is the second largest in the history of the Midwest Healthcare Growth Capital Report, and the 71 companies receiving funding is the highest ever, according to the report. Over the last decade, investment in Ohio’s biomedical industry has nearly tripled, rising from $189.1 million in 2008. The five Midwestern regions attracting the most investment dollars were Minneapolis ($664 million), Chicago ($551 million), Cleveland ($294 million), Columbus ($163 million) and Detroit-Ann Arbor ($125 million).
House Bill 523, effective on September 8, 2016, legalizes medical marijuana in Ohio. The Ohio Medical Marijuana Control Program will allow people with certain medical conditions, upon the recommendation of an Ohio-licensed physician certified by the State Medical Board, to purchase and use medical marijuana. Ohio consumers have spent nearly $2.9 million on medical marijuana since the opening day of sales in January 2019, according to the Ohio Medical Marijuana Control Program (MMCP). Total sales from Jan. 16 through March 31 were $2,884,096, according to a release from MMCP. Dispensaries sold 382 pounds of cannabis over that time period.
SB57 sponsored by Sens. S. Huffman and Hill would decriminalize hemp and license hemp cultivation. It passed the Senate unanimously and is now in the House Agriculture committee. DeWine’s position on marijuana reform is resistant. As Attorney General in 2018, he rejected a petition that sought to fully legalize marijuana in Ohio. There is no record of his position on this bill or if he would choose to veto.
An education workgroup led by Reps. Bob Cupp (R-Lima) and John Patterson (D-Jefferson) released financial estimates of its effects on school districts and the state budget. Aggregate traditional school district foundation aid is estimated at $7.24 billion in FY20 and $7.56 billion in FY21, compared to $6.84 billion in FY19. That excludes weighted career-technical education funding, estimated to total $52 million per fiscal year.
The Senate unanimously passed legislation that would create the Ohio Cyber Reserve aimed at protecting Ohio’s cyber infrastructure. Sen. Theresa Gavarone (R-Bowling Green) said SB52 establishes the Ohio civilian cyber security reserve forces to help deter and remedy cyberattacks on governmental entities and businesses in the state. It also puts into law post-election audits. The bill puts a greater emphasis on election security and will provide opportunities for boards of elections to be more resilient against cyber-attacks. The bill provides $100,000 of funding for 2019 and $550,000 for 2020.
Ohio SNAP App
ODJFS announced that the new Oh SNAP mobile phone application is now available. The app has detailed information about the Supplemental Nutrition Assistance Program (SNAP) and other food programs, not only for Ohioans receiving benefits but for those who think they may be eligible. It’s available for free on mobile devices through the App Store or Google Play.
JobsOhio’s new president and chief investment officer (CIO) J.P. Nauseef has formally stepped into the role. The organization also recently released its 2018 annual report and 2019 strategic plan. Five-year aspirations for 2019-2023 include accelerating Ohio’s growth to have the highest rate in the Midwest and be in the top 10 U.S. states; enabling “shared prosperity” across regions; increasing resilient industries; enhancing the “state brand” and competitiveness; and making Ohio a leading state for business.
The Senate unanimously passed legislation that would create a new tax credit designed to piggyback off of the federal Opportunity Zone law passed by Congress in 2017.
SB8 (Schuring) will establish a two tier-tax credit that will piggyback off the federal tax law, which was designed to incentivize investment in certain economically distressed areas. The first tier, a 1 percent tax credit, would be available when a taxpayer invests $250,000 or more in a qualified opportunity zone fund. The second tier, an additional 2 percent tax credit, is available five years after the completion of a qualified opportunity zone project if it can be shown that the new state and local taxes generated from the project during the period exceeded the amount of the first-tier credit. The maximum amount of credits allowed by Ohio for a two-year period is $50 Million, with a per applicant cap of $1 million. This credit should also available to investors that do not have capital gains to invest. Investors would apply for credits between January 1 and February 1 each year, and the credits are non-refundable but can be carried forward for five years.
The bill now goes to the House and is expected to pass before the end of the General Assembly.
The Opportunity Zone Program can be complex, and it takes multiple steps to qualify. The investor must first realize eligible capital gain income and then must defer the capital gain and reinvest the capital gain in an “Opportunity Zone Fund” within 180 days and subject to certain exceptions. The investor must ensure the Opportunity Zone Fund invests more than 90 percent of its assets in a Qualified Opportunity Zone Property within an Opportunity Zone, either through operating a Qualified Opportunity Zone Business itself or investing in a subsidiary that operates a qualified business. If an investor follows these steps and qualifies, the investor can defer taxes by reinvesting capital gains from an asset sale into a qualified Opportunity Zone Fund. The capital gains will be tax-free until the fund is divested or 2026 has ended, whichever occurs first. The investment in the fund will have a zero-tax basis. If the investment is held for five years, there is a 10% step-up in basis and a 15% step-up if held for seven years. If the investment is held in the Opportunity Zone Fund for at least 10 years, those capital gains would be permanently exempt from taxes. There are 320 Opportunity Zones across the state, including 64 in Cuyahoga County and 43 and Franklin County.
G2G (Government to Growth Consulting), LLC is a consulting firm specializing in assisting businesses and non-profit organizations. G2G provides comprehensive consultation in the fields of government affairs, economic development, grant writing, public relations, and event planning. G2G also has extensive experience in the areas of lobbying, advocacy, fundraising and grassroots organizing.