As we begin 2016, the COSE staff would like to take time to provide updates on a number of issues that are of high importance to our small business members. Some of the issues COSE has been closely involved with include:
Ohio’s Energy Efficiency Benchmarks
Since 2008, utilities have been required to meet certain energy efficiency benchmarks. SB 310 passed last year freezing the benchmarks and required a study committee to give recommendations to the legislature. The study committee called for an indefinite freeze of Ohio's clean energy standards and Gov. John Kasich's spokesman said the study committee's recommendation was "unacceptable". Legislation addressing this topic is likely to be on the horizon in 2016. COSE has taken a pragmatic, consistent approach when addressing the issue before policymakers. There is evidence of savings for small business owners that take advantage of energy efficient programming and the standards have created previously unavailable opportunities. However, COSE also understands that the levels should not be overly burdensome to utilities in order to keep costs down for consumers. It’s worth noting the benchmark freeze will be in place for another year.
HB 72 / SB 185: Energy Special Improvement Districts (ESIDs) & Property Assessed Clean Energy (PACE) Programs
So often, while the desire to improve energy efficiency exists, the ready financing for projects and improvements does not. COSE supports the following provisions in these unique bills that both address access to PACE programming in Ohio:
- Allowing Port Authorities to start an energy district if they so choose.
- Expanding the types of projects qualified for PACE financing.
- And, not requiring businesses to be located in an energy district to access PACE financing.
Our position has been effectively conveyed to the respective bill sponsors and SB 185 is being redrafted. COSE is reviewing the language, will provide the appropriate feedback, and we expect a substitute bill to be introduced by Sen. Bill Seitz in 2016.
Multiple Employer Welfare Arrangements (MEWAs)
While the Affordable Care Act has provided more access to health insurance – especially for sole proprietors that were previously unable to be guaranteed access – it has also increased regulatory burdens and costs – especially for “healthy” groups. As many small businesses will be forced to transition to ACA in late 2016 and early 2017, we have been working to create new options. A multiple employer welfare arrangement, or MEWA, is one such option that may provide some relief. MEWAs are a form of self insurance that can be accessed by small businesses and that we believe could provide some alternative, more cost-effective plans to what will be available through the ACA. COSE helped successfully advocate for language to be included in the state budget bill, now Ohio law, on MEWAs that expands the ability of organizations like COSE to provide access to MEWAs. Rep. Jim Butler could include additional language on MEWAs in a separate bill that he plans to re-introduce in 2016. COSE has provided him with feedback and we’ll continue to participate in any interested parties meetings related to Rep. Butler’s legislation.
HB 248: Abuse Deterrent Opioid (ADO) Coverage Mandate
Mandates require health insurers to include coverage for specific kinds of treatments. In general, they increase the cost of insurance. HB 248 seeks to mandate availability of abuse-deterrent opioids that offer a hardened coating and a protective gel to lock in the active ingredients and make it more difficult to crush and snort the narcotic. Under HB 248, an insurance policy, contract, agreement, or plan must provide coverage for all abuse-deterrent opioid analgesic drugs if the policy, contract, agreement, or plan provides prescription drug coverage. COSE is opposed to this mandate. We support a more comprehensive approach to Ohio’s drug problem that includes education, counseling, treatment, and law enforcement. While we believe HB 248 and the bill’s co-sponsors have good intentions, we do not support this legislation because it opens the door to additional increases in health care costs on small businesses. In the words of one HB 248 supporter, “abuse-deterrent opioids are not a panacea”. We are urging the state to continue focusing on reducing the use of opioids and using proven therapies for those that do abuse or become addicted. HB 248 remains in the House Health & Aging Committee, but has not moved any further in the process.
Labor & Human Resources
SB 79: Employment Application Questions
This bill would prohibit employers from including on an employment application any question concerning whether an applicant has been convicted of or pleaded guilty to a felony. COSE opposes this legislation because it can potentially open employers to liability in the hiring process for which the legislation has not adequately protected employers. While SB 79 it was referred to Senate Committee in March of 2015 it has not seen any additional legislative action.
SB 65: Credit History
COSE opposes this legislation as it would not allow an employer to take a person's credit history into account when making decisions regarding an individual’s employment. Some employers deem this information valuable in the hiring process and we believe the employer should have the option to review that information. The bill sits in the Senate Civil Justice Committee and has not received a hearing since March 25, 2015.
Rules & Regulations
Business Filing Fees
Every little bit helps, so COSE supported legislation that passed to reduce certain business filing fees charged and collected by the Secretary of State.
Entrepreneur-in-Residence Pilot Program
Sometimes it’s clear that government just doesn’t “get it.” COSE has been working closely with the state to create an entrepreneur-in-residence program. The goal is to put real entrepreneurs inside government agencies to work in tandem with the LeanOhio program to help improve state government processes to better serve and protect small businesses. This program was authorized and the first group of entrepreneurs-in-residence have been named. The entrepreneurs receive six sigma training, the agencies get help to better serve you, and you get your peers working to make government a better resource for your business. COSE continues to provide LeanOhio and all the entrepreneurs with feedback on the agencies that they may consider working with to alleviate burdens for COSE small business owners.
Common Sense Initiative (CSI) Representation, Toolkit
Ohio’s Common Sense Initiative (CSI) has been a successful effort to get rid of old regulations and intervene on rulemaking that hurts more small businesses than helps them. The goal is to ensure a state regulatory framework that promotes economic development, is transparent and responsive to regulated businesses, makes compliance as easy as possible, and provides predictability for businesses. Two COSE small business members continue to serve on the statewide CSI Small Business Advisory Council. Recent work has been focused on making CSI easier to access and help small business owners better navigate the state regulatory process. We will be more aggressively marketing these tools to our members and helping CSI to upload similar resources to their website in the near future. COSE and CSI staff work closely together and we look forward to continuing to use this initiative as a way to alleviate real regulatory burdens for small business owners in the future.
HB 77: Home Improvement Contractor Registration
HB 77 was introduced early this year and would require statewide registration of home improvement contractors. In April 2015, COSE recognized the admirable intentions of HB 77 in an effort to protect consumers from “contractors” who scam consumers. However, COSE members also encouraged further dialogue on this legislation with all interested parties going forward and formally opposed HB 77 as it was constructed. COSE is concerned that the additional regulations HB 77 would impose on small business owners would not effectively achieve the intent of safeguarding the public from so-called “fly-by-night contractors”. Since then two hearings have taken place on the bill and a substitute bill has been introduced. COSE small business members reviewed and discussed the pros and cons of the substitute bill and remains opposed to the bill unless the state license program is: a.) voluntary and b.) exempts home improvement contractors from complying with additional requirements at the local level. We believe this would actually better accomplish the goals of the sponsors and may even provide some advantage to credible contractors that are beleaguered today by multiple and differing requirements across municipalities.
Income Tax Cut & Deduction, Commercial Activity Tax (CAT) Rate & Exemption
Taxes are a sore subject for a lot of businesses. And, small business taxes are different in a lot of ways than big business. The Governor’s tax plan was controversial last year, but our approach was to stay focused on small business needs in that process. We focused on maintaining and increasing small business owner business income tax exemptions and the way in which the personal income tax and commercial activity tax (CAT) uniquely affect small business owners. The state budget bill reflected COSE Public Policy Agenda priorities and the final version of the tax package granted a 75% small business income exemption for the first $250,000 in small business income for 2015 and increases it to a 100% deduction beginning in 2016. One COSE small business owner cited that when they filed their 2014 taxes they saved $6,250 on 2014 state taxes due to the first small business tax deduction which was at 50%. Now, that exemption will double to a 100% exemption. In addition, we staved off increases to the CAT tax and expansion of the sales tax to service companies. And, we worked to maintain a reduction in the state income tax which affects most of our small business owners that are organized as pass through entities.
2020 Tax Policy Commission
As this Ohio General Assembly Commission reviews all current state tax policies in an effort to make recommendations for future years, COSE has already reiterated our positions on taxes with all Commission members and Sen. Peterson who chairs the Commission. We will continue to advocate for small business owners using the priorities outlined in the COSE Public Policy Agenda as a guide.
HB 394: Federal Unemployment Tax Act (FUTA)
Most employers pay both a federal and a state unemployment tax. Only the employer pays FUTA tax; it is not deducted from the employee's wages. Without sufficient reserves when the economy took a hit, Ohio and more than 30 other states were forced to borrow from a federal trust fund to continue paying jobless benefits to unemployed workers. Ohio began borrowing in 2009 and the state’s debt peaked at $2.6 billion. The federal unemployment tax paid by employers was bumped up again on January 1, 2015 under the automatic repayment system for states that have failed to repay their debts. This increase, on top of three previous ones, cost employers in Ohio an additional $84 per employee. Rep. Barbara Sears and the Unemployment Compensation Debt Study Committee held hearings on the issue and Rep. Sears introduced a bill that suggests a fix for the long-term to both reduce costs to employers and provide the type of cushion required to avoid insolvency of the state’s fund from a future recession event. Rep. Sears outlined the proposal before the COSE Advocacy Committee. While we currently have not yet taken a formal position on this legislation, we will likely provide a recommendation to our small business advocacy caucus in the future.
Workers’ Compensation Prospective Billing
Ohio’s workers’ comp system is one of only two state systems run by the state. That’s not necessarily a bad thing, but it needs to get updated every once in a while. As part of ongoing efforts to modernize Ohio’s Bureau of Workers’ Compensation (BWC) operations, COSE supported legislation that is now law that transitions Ohio to a prospective billing system for private employers. That law became effective July 1, 2015 for private employers. The switch to the industry standard of prospective billing provides many benefits, including:
- An overall base-rate reduction of 2 percent for private employers;
- Allowing BWC to better forecast the level of premium required to be collected each policy year;
- Opportunities for more flexible payment options (up to 12 monthly installments);
- Better opportunities for BWC to provide quotes online or via the phone;
- Increased ability for BWC to detect employer non-compliance and fraud.
Workers’ Compensation Successor Liability
Can you imagine moving into a new space for your business and finding out that you’ve inherited someone else’s bad workers’ comp risks? COSE led and convened interested parties meetings on this subject, advocated for change, and the General Assembly passed language that offers up a long-term solution. The legislation was signed by Gov. John Kasich on December 22, 2015 and it will help to ensure entrepreneurs will not be penalized in the form of increased workers’ compensation rates, outstanding balances, or uncovered claims costs for assuming space that was previously inhabited by a completely separate business with negative claims experience; read here for more information on this victory for small business owners.
HB 207: Subrogation
The bill passed the Ohio House in December of this year and our work will continue with the Ohio Senate in 2016. COSE supports HB 207 and the goal here is to defer the charging of workers' compensation claims when a third party may be liable for the claim in an effort to keep workers’ compensation costs low for the employer.
Comprehensive Case Management & Employment Program
The state budget bill contained $5M per Fiscal Year for the Higher Education Workforce Grant Program. The amendment adds provisions of HB 1 which provide the framework for the expenditure of those funds to make grants to students pursuing qualified degrees, certifications or licenses in in-demand jobs. In addition, roughly 15 years after its passage, the federal government recently enacted the Workforce Innovation & Opportunity Act (WIOA) which updated the Workforce Investment Act (WIA). The state budget contained a number of provisions that began the transition of Ohio's workforce development programs to new WIOA requirements. This amendment makes conforming changes and aligns Ohio's employment and training activities with the new federal program guidelines. COSE remains supportive of this workforce initiative, remains hopeful that it will help streamline the tools available to small business owners in Ohio, and we will monitor the progress made.
Certificates of Qualification for Employment (CQE)
The CQE program allows those who have a previous felony or misdemeanor conviction to apply to the court to lift the collateral sanction that bars them from being considered for employment in a particular field. While only several hundred CQEs have been issued since the program’s inception, business owners – small and large alike – are always looking for greater access to the talent required to fill job vacancies. One of the big concerns for employers in hiring an ex-offender, however, is the risk of liability. While the CQE program provides Ohio businesses immunity from negligent hiring claims when the business is aware of the certificate at time of hiring, if the employer fails to take action when dangerous or criminal behavior is exhibited in the workplace after hiring and the employer retains the employee after such behavior, the employer can then be held liable for negligent retention. COSE small business members are participating in talks with the Office of Workforce Transformation. They Office of Workforce Transformation has expressed an interest in better understanding business owners’ workforce development needs – with the ultimate goal of understanding if there are improvements to the current CQE program that can be made to assist employers.
November Ballot Measures
Ohio’s ballot has become a vehicle for constitutional initiatives that can make major changes to our state. We have to remain vigilant on those issues that could impact your business. We focused on four big issues on the ballot in 2015 and had success on each of those issues with the outcomes supporting our positions.
- Issue 1, the state legislative redistricting proposal, passed with more than 70 percent of the vote.
- Issue 2, an anti-monopoly amendment proposed by the Ohio General Assembly to protect the constitution from economic monopolies passed with just over 50 percent of the vote.
- Issue 3, the Responsible Ohio led effort to change Ohio’s constitution to legalize medical and recreational marijuana was soundly rejected with 64 percent of voters opposing it.
- Issue 8, the Cuyahoga County Arts & Culture Renewal Levy, enjoyed significant support from county residents, passing with nearly 75 percent of the vote.