Ohio’s process for a biennial spending bill that sets the state FY2020 – 2021 budget has concluded. The GCP Public Policy Agenda, based on feedback from the NE Ohio business community, focuses on three leading areas to allow for and advance growth and innovation in Northeast Ohio: An Adaptable Government & Public Sector; A Sustainable & Predictable Tax & Regulatory Environment; Talent Development & Retention to Advance Business Growth. Below is a summary of a few of the headline policy issues that are of importance to GCP members – many of which, the GCP advocacy team have been deeply engaged in – and how these issues were addressed in Ohio’s new budget.
Business Income Deduction (BID) / Taxes
Since its inception a few years ago, GCP members have maintained that preserving Ohio’s small business tax deduction on the first $250,000 in business income allows entrepreneurs greater ability to plan and invest in their companies and workforce.
The future of the BID was in jeopardy as state budget talks progressed, but in the end the deal kept the first $250,000 of income for limited liability corporations and other business entities tax-free and maintained an existing 3% flat rate on income above that. Language was included that make lawyers and lobbyists ineligible for the BID; this change was supposedly meant to guard against individuals who utilize the BID and form businesses without hiring any employees.
Over the years and consistently throughout the budget process, GCP members continued to provide examples of the importance of the BID and urged against shifting the tax burden from one group of taxpayers to another. GCP applauds elected leaders for their support of the business community on this key issue.
The new budget also mirrored other GCP tax priorities by maintaining today’s sales tax base, the current commercial activity tax (CAT) rate, and upholding today’s CAT exemption level.
The bill effectively eliminated taxes for people in Ohio’s lowest two tax brackets and cut other tax rates by 4%.
Lastly, the legislation set a threshold of $100,000 in Ohio sales or 200-plus transactions in Ohio for sales tax collection by online sellers, as proposed by the House, while adopting Senate changes to the conditions under which a "marketplace facilitator" must collect sales taxes.
Ohio’s signed budget includes provisions that would require state agencies to review and repeal regulatory restrictions over the course of the next four years. GCP submitted testimony numerous times, on behalf of our members, in support of this effort over the course of the last two years. Congruent with the GCP Public Policy Agenda, our members believe regulatory restrictions should continually be evaluated and focus on consistency and predictability – especially for small or middle-market businesses that may struggle to comply.
Qualified Energy Project Exemption
The state budget extends, by two years from December 31, 2020 to December 31, 2022, the deadline by which the owner or lessee of a qualified renewable energy project may apply for a property tax exemption. And, it clarifies the calculation of payments-in-lieu-of taxes, paid by solar energy projects that receive the exemption.
A GCP Board member serves on the Ohio Medical Marijuana Advisory Committee, continually looking out for the interests of employers. Ohio’s budget requires the Ohio State Highway Patrol to purchase drug testing equipment for the purpose of determining the level of THC in marijuana or hemp.
The final bill creates an Opportunity Zone Investment tax credit equal to 10% of an individual’s investment in Ohio Opportunity Zone investment funds, up to $1 million per biennium. GCP supported an amendment—to create an Opportunity Zone Study Committee to study impact investment strategies that support more highly distressed rural and urban communities—that was not included in the final bill.
Governor DeWine vetoed a minimum per-student funding guarantee for all school districts, which would have set the minimum at the amount of $1,300 per student. The final bill appropriated $275 million in FY2020 and $400 million in FY2021 for wraparound student wellness and success services.
Ohio Bureau of Workers’ Compensation / Industrial Commission Budgets
GCP offers a group rated workers’ compensation program that can provide savings on premiums and safety discount programs. Ultimately, contentious provisions were removed from a state workers’ compensation funding bill that supports administrative costs to help injured workers receive care needed. The Governor also recently signed into law a non-controversial $109.5 million two-year budget for the Ohio Industrial Commission, which handles appeals for workers’ compensation disputes.