1. Finance hears testimony on tax reform, Medicaid expansion The House Finance Committee met for a long day of testimony on February 12, 2013 to hear from Department of Tax Commissioner Joe Testa. The commissioner was peppered with questions regarding tax provisions in House Bill 59, Governor John Kasich’s biennial budget proposal.
In his testimony, Testa discussed the governor’s plan for tax reform—which would result in $1.4 billion in tax cuts if changes to the state sales tax and severance tax increases remain in the bill. Saying, “The best environment for job creation is one in which there is no income tax,” Testa said the budget takes a significant step towards transforming the economic and business climate through an across-the-board cut in income tax rates.
The governor’s plan calls for expanding the state sales tax to services not deemed “essential.” Services, such as medical and housing, would remain tax exempt. If the plan is adopted, effective September 1, 2013, the current state sales tax rate of 5.5 percent would drop to five percent on goods and services. Testa told the committee that broadening the state sales tax base to include most services results in a fundamental shift from a state reliance on income taxes to a consumption tax basis.
In order to prevent a significant increase in local sales taxes resulting from the expansion of the sales tax base, Testa said the legislation would impose a temporary suspension of the local sales tax rate-setting authority and make a series of tax rate adjustments to better align the rates with the newly-enhanced tax base. For most counties, this would mean a “guaranteed-growth” payment of 110 percent of the amount received in the same month of the previous year through June 2015.
Responding to legislators' concerns regarding specific industries that would be impacted by the expansion of services subject to the tax, Testa said the agency is open to discussing the list of services with members.
On the subject of the severance tax, Testa said Ohio is one of the few states that imposes a fixed rate— nearly all other states with severance taxes now use a price percentage based tax. The severance tax changes would contribute an additional $45 million to the General Revenue Fund in Fiscal Year (FY) 2014, and $155 million in FY 2015. The department projects that number to grow to $305 million in FY 2016 and $415 million in FY 2017.
The committee also heard testimony from the Governor’s Office of Health Transformation (OHT) Director Greg Moody this week, who was joined by a panel of directors from the Departments of Medicaid, Mental Health, Addiction Services, Developmental Disabilities, Aging, and Health.
Moody told committee members that after weighing the options, the governor decided that extending coverage to more low-income Ohioans makes sense—referring to the budget’s inclusion of language to expand Medicaid coverage to adults earning up to 138 percent of the federal poverty level. He said Ohio has the legal authority to automatically roll back the extension should the federal government make changes to the cost share for the expanded population, adding that such language is included in the budget.
Moody said the proposal would allow 275,000 more low-income Ohioans—about half of whom are employed—to be covered by Medicaid. Additionally, he said the proposal would protect local hospitals from federal cuts to uncompensated care payments, which will be cut in half by 2019.
If the legislature decides against the decision to expand Medicaid coverage, the state estimates that the $13 billion in federal tax dollars paid by Ohioans would be used to expand health coverage in other states.
The Finance Committee is scheduled to hear testimony on the transportation budget and turnpike proposal on February 19 and 20. The committee will conclude by 11:00 a.m. on February 19, to allow members to travel to Lima for the State of the State address, which will be held at the Veterans Memorial Civic & Convention Center at 7:00 p.m.
2. Senate announces legislative priorities Ohio Senate President Keith Faber (R- Celina) announced this week the top initiatives that the Senate Majority will pursue during the 130th General Assembly. The first legislative priorities include 10 initial bills. Faber said his members remain committed to job creation and workforce development.
“Though Ohio has built great momentum for job creation and a robust economy, there is still much left to do,” said Faber. “Our top priority remains unchanged as we find new, innovative ways to train the state’s workforce and pair Ohio job-seekers with opportunity right here in the Buckeye State.”
The following bills are the first to be introduced in the Senate:
Senate Bill 1: Sponsored by Senators Bill Beagle (R- Tipp City) and Troy Balderson (R- Zanesville), the bill creates the OhioMeansJobs Workforce Development Revolving Loan Fund. The legislation allocates a portion of casino license fees to finance the loan program.
Senate Bill 2: Sponsored by Senators Peggy Lehner (R- Kettering) and Bill Beagle, the legislation would require a local workforce investment area to use OhioMeansJobs—the electronic job placement system operated by the state—as the local workforce investment area's job placement system. Additionally, the bill would rename the county one-stop systems.
Senate Bill 3: Sponsored by Senator Frank LaRose (R- Copley), the bill would make changes to rule-making and rule-review procedures and regulatory processes. The legislation establishes a “Rule Watch” system to make it easier for Ohioans and employers to be notified when a rule affecting them is up for review. It also authorizes the creation of a pilot program identifying three to five entrepreneurs annually to assist state agencies in strengthening coordination with small business employers.
Senate Bill 4: Sponsored by Senators Gayle Manning (R- North Ridgeville) and Scott Oelslager (R- Canton), the bill would require a pulse oximetry screening, intended to identify congenital heart defects for each newborn born in a hospital or freestanding birthing center.
Senate Bill 5: Sponsored by Senators Edna Brown (D- Toledo) and Gayle Manning, the bill would require wireless service providers to provide call location information to law enforcement officers or agencies in certain emergency situations.
Senate Bill 6: Sponsored by Senator Tim Schaffer (R- Lancaster), the bill establishes education programs and continuing education requirements for the fiscal officers of townships and municipal corporations. Additionally, it would establish procedures for removing those fiscal officers, county treasurers and county auditors from office, and create fiscal accountability requirements for public schools, counties, municipal corporations, and townships.
Senate Bill 7: Sponsored by Senators Chris Widener (R- Springfield) and Bill Beagle, the bill requires courts to notify law enforcement officers of violent offenders who are sentenced to mental health treatment rather than incarceration.
Senate Bill 8: Sponsored by Senator Frank LaRose, the bill permits persons who quit work to accompany the person's spouse on a military transfer to be eligible for unemployment compensation benefits.
Senate Bill 9: Sponsored by Senator Kevin Bacon (R- Minerva Township), the bill specifies licensing and continuing education requirements for insurance agents involved in selling, soliciting, or negotiating sickness and accident insurance through a health benefit exchange.
Senate Bill 10: Sponsored by Senator Bill Coley (R- Liberty Township), the bill revises the law regarding polling places and voting machines. Among the changes included, the legislation ensures that journalists have reasonable access to a polling location.
3. New PUCO Commissioner chosen Governor Kasich today announced the appointment of Beth Trombold as Commissioner at the Public Utilities Committee of Ohio (PUCO). Currently serving as assistant director of the Development Services Agency, Trombold returns to the PUCO where she worked from 1996-2012.
Trombold was among the four finalists chosen by the PUCO Nominating Council. She was selected to fill vacancies resulting from former Commissioner Cheryl Roberto’s decision to resign. She will fill the unexpired term commencing immediately and ending on April 10, 2013. Additionally, Trumbold will fill the term commencing on April 11, 2013, and ending on April 10, 2018.
For more information, please contact:
Michael Caputo (non-attorney professional)
Rebecca M. Kuhns (non-attorney professional)
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