Ohio Statehouse Update: This Week in Ohio -- April 16, 2015

House makes good on promise to remove Governor’s tax plan

This week House Republicans unveiled their first revision of House Bill 64, the state biennial budget, giving the bill a major overhaul from what Governor Kasich had previously proposed. The Governor’s plan to increase the severance, commercial activities, sales, and cigarette taxes to fund a state income tax cut bumped up against substantial opposition from businesses and industries that would be affected by the respective increases. Many legislators expressed frustration at the volume of changes to tax policy that have been enacted each year with the introduction of the Mid-Biennium Review process that the Governor initiated during off-budget years.

The House Finance Committee accepted a substitute bill on April 14, removing the increases while still providing a 6.3 percent across the board income tax cut beginning in tax year 2015. The sub bill lowers the top rate to below 5 percent and provides over $1.2 billion in tax relief over the next two years. The bill would establish the Ohio 2020 Tax Policy Study Commission that would study, in part, whether Ohio should shift to a consumption-based tax system.

Among the various changes also included, the sub bill would:

• Include an additional $179 million into the foundation formula above the executive proposal and ensure that no district will receive less foundation funding in Fiscal Year (FY) 2016 or 2017
• Create a grant program for capital improvements for county and independent fairgrounds with a 2-to-1 state match
• Create the Health Food Financing Initiative to support access to healthy food in underserved areas; funds the initiative with $1.5 million in FY 2016 and $2 million in FY 2017
• Compel pharmacy benefit managers to update maximum allowable cost pricing for pharmacies and health plan sponsors every seven days
• Permit a medical transportation provider to submit a claim to Medicaid before first being denied by Medicare if Medicaid is responsible for payment
• Raise the hospital franchise fee to 4 percent
• Provide a 10 percent rate increase for agency nurses who work in Home and Community Based waiver programs
• Allow students at private universities to participate in the Student Debt Reduction Program
• Require all colleges participating in the College Credit Plus Program to offer an associate degree pathway
• Grant counties the permission to enter into sale/leaseback agreements
• Requires the Ohio Retirement Study Council to establish for each state retirement system a custodial bank selection committee of the Council's Director, the Treasurer of State, and the Executive Director of the system; requires the committee, instead of the Treasurer, as in current law, to select the financial institutions to serve as the depository of the system

Additional changes will be made to the House version of the budget bill next week in the form of an omnibus amendment. The committee will likely approve the measure on April 21, sending the bill to a floor vote on either April 22 or 23.

Senate President Keith Faber this week announced his chamber intends to take six weeks to review and make changes to the budget. Hearings are scheduled in the Senate Finance Committee next week, with Administration testimony scheduled in advance of the House vote on the bill.

New leadership at the PUCO and Department of Commerce

Andre Porter was sworn in this week as chairman of the Public Utilities Commission of Ohio (PUCO), returning to the agency where he served as commissioner from April 2011 through April 2013. Statehouse observers anticipated the change in leadership was imminent once Porter, who at the time was serving as Director of the Department of Commerce, applied to replace former Commissioner Steven Lesser’s seat.

Porter replaced fellow Commissioner Thomas Johnson as head of the PUCO, following an announcement by Johnson that he was stepping down from his leadership role to spend more time with his family.

“To be trusted by Governor Kasich to return to the PUCO as chairman is an honor,” said Porter. “The industries regulated by the PUCO affect nearly every Ohioan everyday. My vision is that of a process-driven and competent PUCO which works to outline regulatory policies that contribute to the success of the state of Ohio.”

Porter’s return to the PUCO will be met with hot debate surrounding the state’s role in the competitive electric markets. Three of the four electric distribution utilities (EDUs) in the state have asked the PUCO to guarantee profits at their generation facilities through Power Purchase Agreements. While two of the decisions were not approved, the door has been opened to allow the utilities to resubmit their requests in the future. Proponents of competition argue that guaranteeing profit on EDU-owned generation facilities would turn back on the state’s move to competitive markets. Robust debate is sure to continue on this contentious issue.

In addition to the electric markets discussion, Chairman Porter will oversee deliberations over many other key regulatory matters involving the regulation of natural gas and water utilities, landline telecommunications, and transportation – all of which fall under the jurisdiction of the PUCO. Additionally, the PUCO is responsible for assisting the United States Department of Transportation, Pipeline and Hazardous Materials Safety Administration with PHMSA’s pipeline safety responsibilities.

In addition to his responsibilities at the PUCO, Chairman Porter will also assume the role of Chairman of the Ohio Power Siting Board which oversees the siting and approval of virtually all power generation units, high voltage electricity transmission lines, and intrastate natural gas pipelines. 

Governor Kasich recently announced Jacqueline T. Williams would replace Porter as Director of the Department of Commerce. Williams previously served as chief of the Minority Business Development Division at the Ohio Development Services Agency (DSA). As chief, Williams led Ohio’s minority business development initiatives and worked with minority businesses to help them identify and apply for financial incentives.

Prior to her role at DSA, Williams served as executive director of the Ohio Liquor Control Commission as well as the Tuition Trust Authority, where she helped establish CollegeAdvantage.