The Greater Cleveland Partnership (GCP) released its non-partisan two-year Public Policy Agenda in early 2019, a guide that outlines the top policy priorities of its members over the next two years. The latest installment of the agenda reflects shared issues that are of greatest importance to more than 12,000 diverse GCP organizations – comprised from global corporations to middle-market companies to local entrepreneurs and small businesses throughout Greater Cleveland.
Growth and innovation will continue to define the GCP agenda and drive much of our work in the region, Statehouse, and Washington, D.C. This is a snapshot of some of the key state government advocacy issues in which our members were engaged in 2019 and what may lie ahead in 2020 as we continue to work closely with our public sector partners in government in an ever-changing landscape.
Biennial State Operating Budget
Ohio’s process for a biennial spending bill that sets the state FY2020 – 2021 budget concluded, albeit later than expected, in the summer of 2019. 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 the region: 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 our business members – many of which, the GCP advocacy team was deeply engaged in – and how these issues were addressed in Ohio’s new budget:
- Business Income Deduction (BID)
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. GCP took a lead role on this issue and, in the end, the budget 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. 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.
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%.
- State Regulatory Review
Ohio’s signed budget also included provisions requiring 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.
- Medical Marijuana
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.
- Opportunity Zones
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.
- School Funding
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.
More State Budget: Education Reforms
The biennial state operating budget contained several successes in education reform which GCP has long supported. The budget reformed Ohio’s high school graduation requirements—which have proven controversial for years—by eliminating most test score requirements. The state currently requires students to have strong scores on a variety of tests. Under the new plan, students will need strong scores only on one English and one math test, in addition to earning at least two of twelve diploma “seals” offered by the state, showing advanced skills in areas like the arts or technology.
This work would not have been possible without the support of Ohio Excels, an organization that provides an informed business perspective to help improve and transform Ohio’s education system. Ohio Excels—which is chaired by GCP—developed the proposal for new graduation requirements that was ultimately adopted by state lawmakers as part of the biennial budget.
The state budget also set a 1-year moratorium on “Academic Distress Commissions,” state-operated commissions that took away control from elected school boards of struggling districts. Since the law was passed in 2015, it has been controversial for local school districts like Youngstown, Lorain, and East Cleveland, which each saw state intervention. The 1-year moratorium prevents Academic Distress Commissions from taking control of any more districts until at least the fall of 2020.
GCP has remained committed to focusing its resources—through efforts like Ohio Excels—to create an environment that will improve educational outcomes in our city, region, and state. Consistent with GCP’s recommendation, the biennial state operating budget contained several education reforms that support efforts to revitalize public education in Cleveland.
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. It’s also worth noting that Ohio employers received $1.5 billion in rebates from the Ohio Bureau of Workers Compensation in 2019. The Governor also signed into law a non-controversial $109.5 million two-year budget for the Ohio Industrial Commission, which handles appeals for workers’ compensation disputes.
The Governor signed House Bill 62 – the state transportation budget – into law. This came after a long debate on increasing the state gas tax and funding for public transit. Ultimately, the legislature agreed to increasing the gas tax to 10.5 cents per gallon and diesel to 19 cents per gallon, without indexing it to inflation. The final bill also provided more money to local governments for infrastructure projects by shifting the state and local share for gas tax funding to 55/45 compared to the 60/40 split it is today. Notably, the final bill funds public transit at $70 million per year in state general revenue funding (GRF). This is up from the current $6.5 million per year that has been allocated for transit funding in state GRF. However, the transportation budget shifted away from the use of federal “flex” funding (currently at $33 million per year) to support public transit needs.
GCP applauded the efforts of the Governor and the legislature to pass this important legislation to support Ohio’s public transportation and infrastructure network. We will continue to work closely with the legislature and the Administration to ensure the long-term needs for public transit, particularly in major cities like Cleveland, are addressed going forward.
SB 57 was introduced in late February of last year. The bill aimed to decriminalize hemp in Ohio by excluding it from the definition of marijuana that is used to enforce controlled substance laws. The latest federal farm bill, enacted by Congress, removed hemp from listing under the Controlled Substances Act, and allowed states to regulate hemp through their departments of agriculture. SB 57 – a bill GCP supported – passed in July and it was signed by the Governor. In line with federal law, SB 57 allows for the sales of hemp, clearly defining hemp and marijuana as different. Our membership saw merit in aligning state and federal laws – as it relates to hemp – allowing for a responsible, reputable hemp market with the potential to expand jobs and increase prosperity in Ohio. Ohio evolved from anti-hemp to a hemp trendsetter in a matter of months.
Two bills are primed to become law in Ohio this year related to workforce development. HB 2 ensures the TechCred Program is administered. The other legislation, HB 4, requires the Governor’s Office of Workforce Transformation to act as a liaison between the business community and the Department of Education (ODE) or the Chancellor of Higher Education (ODHE) with regard to industry-recognized credentials or certificate programs.
Ohio Fairness Act
GCP is among the many organizations and individuals that have expressed widespread support for HB 369 and SB 11. The legislation would ensure discrimination in housing, employment, education, credit and public accommodation that’s specifically outlawed in Ohio based on gender, race, religion, national origin and the like is no longer permitted for reasons of sexual orientation or gender identity and expression. In its proponent testimony, GCP highlighted its history of support for statewide protections of the LGBTQ community. For example, GCP joined Ohio Business Competes, a non-partisan coalition of more than 600 companies and organizations – including member companies like Eaton, Sherwin-Williams, and KeyBank – that is committed to achieving nondiscrimination policies at the state level in order to attract the best talent, to increase business-to-business and business-to-consumer relationships, and to grow Ohio’s economy.
Commerce Uniformity Act
In late June, the Ohio House State & Local Government Committee approved HB 242, a bill to prohibit taxes, fees, or bans on auxiliary containers like plastic grocery bags. When Cuyahoga County introduced and later passed an ordinance that would ban single-use plastic bags countywide, GCP supported an amendment to delay the implementation of the ban pending further examination. GCP delivered written testimony supporting HB 242, and its companion bill SB 222, urging lawmakers to further study how to reduce the use of plastic bags while preserving the economic vitality of Ohio’s small businesses and retailers. You can read more about this issue here.
In October, GCP offered testimony in support of HB 312, a bill regarding intrastate crowdfunding in Ohio. The bill passed the Ohio House unanimously on November 19, 2019 and awaits action in Senate Finance Committee.
SB 21, introduced by Sen. Matt Dolan, is supported by GCP and it passed the Ohio Senate unanimously in March. The bill would allow a business to be classified in Ohio as a benefit corporation – a corporation whose purposes includes having a positive effect or to reducing one or more negative effects of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological nature for the benefit of persons, entities, communities, or interests aside from shareholders. In GCP’s oral testimony on SB 21, GCP welcomed the opportunity to serve as a resource to Ohio legislators as they continue considering the merits of the bill.
Alternate Employer Organizations
SB 201 would create Alternate Employer Organizations (AEOs). An AEO would function in all respects as a Professional Employer Organization (PEO) with one key exception: the AEO would pay taxes to the federal government under the federal Employer Identification Number (“EIN”) of its various client-employers – not the EIN of the PEO. Some have expressed a preference for this model because they believe it offers greater transparency in terms of how taxes are processed. GCP convened stakeholder meetings on the issue years ago and offered support for SB 201 in November via testimony. Similar provisions from SB 201 have also been amended into SB 9, legislation related to health plan issuers.
Unemployment compensation reform
Unfortunately, and like years past, legitimate interest has been remote among elected leaders in solving Ohio’s unemployment compensation challenges and the burden the current predicament poses on GCP employers; it remains to be seen if serious talks will resume. For more information please see an opinion piece on the subject that was posted in the fall of 2019.
HB 7 would create the H2Ohio Trust Fund to provide for the protection, preservation, and restoration of the water quality of Ohio’s lakes and rivers. The bill was passed by the House and now is pending a second committee hearing in the Senate. The H2Ohio Fund could distribute up to $100 million annually for water quality projects across the state. The GCP is supportive of the bill, which aligns with our broader efforts to advocate for Great Lakes water quality through the Great Lakes Metro Chambers Coalition.
Mixed Use Development Projects
SB 39 would authorize an insurance premiums tax credit for capital contributions to transformational mixed-use development projects and sets the amount of the credit at 10% of documented development costs or 10% of an insurance company’s capital contribution. The GCP remains supportive of the bill, which is a critical incentive for various regional economic development projects. SB 39 is currently pending a sixth hearing in the Ohio House and was passed by the Senate earlier in 2019.
State & Local Tax Inducements
SB 95 would enhance state and local tax inducements for businesses making substantial fixed asset and employment investments and their suppliers. The GCP testified in support of the bill in November 2019, stating that the bill’s proposed reforms to the Job Creation Tax Credit as well as community reinvestment and enterprise zones could be helpful to future transformational attraction efforts. The bill was passed by the Senate unanimously in 2019 and now awaits additional hearings in the House Ways and Means Committee.
State Capital Bill
GCP is recommending that the Ohio Legislature include financing for over a dozen regional priority projects in the state’s 2020 Capital Budget. Each of this year’s projects are rooted in GCP’s strategic plan, Forward CLE, and Northeast Ohio’s public and economic development priorities. GCP placed the strongest emphasis on projects that will yield high-impact opportunities, consistent with Forward CLE’s focus on places with impact.
The Importance of GCP’s Political Action Committee
GCP members are extensively engaged in and understand the importance of our collective linchpin efforts to boost the economic vitality of the region. The GCP Political Action Committee (GCP PAC) is an important tool to that end. Crucial public policy issues in Ohio today include tax and trade policies, the Great Lakes, infrastructure projects, education reform, a predictable regulatory environment, air service, and others. And, as the political landscape continually evolves it is more important than ever for our business members to continue to have a seat at the table.