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ASA Ohio April Legislative Update

 

The Ohio House of Representatives have had well over a month to debate Governor Kasich’s main operating budget (HB 64) and are prepared to make the first round of changes to the nearly 3,000 page spending plan. Since the bill’s introduction the House Finance Committee, which broke into smaller subcommittees, heard from hundreds of witnesses who testified on the various components of the legislation. As with most operating budgets, HB 64 calls for some sweeping reforms, including major changes to Ohio’s tax policy, education funding, healthcare provisions, and a number of other policy areas. These reforms have been heavily scrutinized and have received pushback by a number of stakeholders as well as legislators. The House will make its first round of changes to the bill by mid-April and will pass the measure by the end of the month. The Senate will then spend the month of May debating the measure and will likely hold a vote in early June. HB 64 will then be sent to a conference committee where members of both chambers will work on a compromise version of the bill. The two-year spending plan must be passed by both chambers and signed by the governor by the start of the fiscal year on July 1st.

Since Governor Kasich took office he has made it a priority to lower Ohio’s personal income tax rate, which he feels is a burden to growth when compared to other states with lower rates. Therefore, it is no surprise that his most recent budget proposal includes a 23% across-the-board rate cut. According to the governor, his budget proposal reflects a shift from an income tax based model to a consumption based system. The proposal would lower Ohio’s top income tax rate to 4.106%, down from the current 5.333%. The governor also proposes to eliminate the personal income tax for owners of pass-through businesses with annual gross receipts less than $2 million. The governor’s plan also calls for higher tax exemptions for low income earners. The personal exemption amount would be increased to $4,000 for those with incomes below $40,000 and to $2,850 for those with incomes between $40,000 and $80,000. The total tax reduction in the governor’s proposal would cost $5.7 billion.

The governor hopes to pay for these cuts by raising revenues in other areas. The governor’s tax plan includes increases in the commercial activity tax (CAT), cigarette and other tobacco products, oil and gas extraction, as well as a hike in the sales tax. Under the budget proposal, the CAT would be increased from the current 0.26% to 0.32%, a 23% increase. The sales tax would be increased from 5.75% to 6.25%, and the tax base would be expanded to include additional services. HB 64 also would set the severance tax at 6.5% for oil and gas produced at the wellhead, with a lower rate of 4.5% for natural gas and natural gas liquids taken downstream. Overall, the proposed severance tax increase would raise an estimated $325 million over the biennium. Governor Kasich is also proposing to increase the tax on cigarettes from $1 to $2.25 per pack, as well as make other “adjustments” to bring in revenue. Overall, the governor’s proposal will raise an estimated $5.2 billion in new revenue. 

The tax proposal in HB 64 has received criticism by many in the business community who view the proposed changes as simply shifting taxes to benefit certain entities over others. Legislators have also been slow to embrace the tax plan, and have shared concerns about the growth in the $72.3 billion spending plan. The governor’s proposal in HB 64 would include a 5.1% spending hike in fiscal year 2016 and a 4.5% increase in fiscal year 2017. While legislators do support tax decreases, they would like to do so by lowering state spending, not increasing taxes in other areas. The House is expected to make significant changes to the tax policies included in HB 64 prior to passing the bill.

In addition to the state operating budget, ASA Ohio has also been closely monitoring efforts to address Ohio’s federal unemployment compensation debt. Rep. Barbara Sears, who chaired the House Unemployment Compensation Debt Study Committee, said she is preparing a package of about five bills that would look at how to stabilize and improve the long-term financial success of Ohio’s unemployment compensation system. The proposals will focus on three areas: revenue, benefits and governance, the sponsor said. Ohio borrowed $3.4 billion from the federal government to pay benefits in the most recent recession, according to the Department of Job and Family Services. The state still owed over a billion dollars when the department testified this summer. Rep. Sears said during an interview that the state needs to “…alter the way that we’re handling the revenue stream so that we make sure when the debt is paid off we don’t immediately put ourselves back into debt.”

ASA Ohio has also met with legislative leaders regarding legislation that would create a workforce training grant program to help address the workforce shortage in the industry. Sponsored by Rep. Kirk Schuring (R-Canton) and Rep. Nathan Manning (R-North Ridgeville), HB 1 would reward students pursing education in in-demand fields, which includes the automotive repair profession. If passed, we hope this legislation will help motivate students to pursue jobs in the automotive services industry, as well as encourage technical schools and community colleges to work alongside automotive repair businesses to better train future technicians. The proposal would provide up to $5,000 per student for those pursuing coursework in an in-demand job field. To earn funding, a student must also spend three months in a workplace setting that is similar to the job they are seeking. If students complete their education and get a job in that in-demand field, they would be eligible for a 25% annual tax credit on what they pay on student loans. The bill will also require grant recipients to receive “soft skill” training that would cover things such as interpersonal skills and work ethic.

ASA Ohio has also been heavily involved in the development of SB 37, which was recently introduced by Senator Joe Uecker (R-Miami Township). This legislation is similar to SB 232 from last session, which would register mechanical repair facilities with the Motor Vehicle Repair Board. Last session SB 232 was passed by the Senate with overwhelming support and was reported by the House Commerce and Labor committee before the end of session. SB 37 builds upon this momentum and ASA Ohio hopes to have this important legislation enacted this session. The Motor Vehicle Repair Board has been registering the collision repair industry for over 15 years. Since this time the collision side has made great strides in improving the image of the industry and encouraging fair competition. SB 37 would have a similar impact on the mechanical repair industry by ensuring that all facilities are operating under the same standards. The Board will also serve as a resource for mechanical repair shops that register. The Board constantly monitors state and federal laws and will notify businesses of changes that will impact the industry. Additionally, the Board will serve as a resource to customers who will be able to work with the Board to resolve disputes and identify legitimate repair operators. “I have received feedback from many business owners and consumers who want to see standards brought to an industry that impacts all Ohioans,” said Senator Uecker. “I want facilities to see the Motor Vehicle Repair Board as a valuable resource in understanding their industry and as a way to offer transparency to their customers.”

 ASA Ohio’s success in the legislative process depends largely on the participation of its members. As we engage in issues it will be important to have members volunteer to testify and offer to contact their legislators on issues that are important to the automotive repair industry. ASA Ohio also manages a Political Action Committee. We encourage you to make donations to the ASA Ohio PAC so we can effectively advocate on behalf of the industry. You can learn more about the PAC as well as our legislative initiatives through the following link: http://www.asaohio.org/government-affairs/

 

We have been tracking the following legislation that has been introduced in the 131st General Assembly:

 

HB1

WORKFORCE GRANT PROGRAM (SCHURING K, MANNING N) To establish the Workforce Grant Program, to authorize an income tax credit equal to 25% of the student loan payments a grant recipient makes per year, and to make an appropriation.

 

Current Status:   

3/25/2015

REPORTED OUT AS AMENDED

House Economic and Workforce Development Committee

Sixth Hearing

 

HB53

TRANSPORTATION BUDGET (GROSSMAN C) To make appropriations for programs related to transportation and public safety for the biennium beginning July 1, 2015, and ending June 30, 2017, and to provide authorization and conditions for the operation of those programs.

 

Current Status:   

4/1/2015

SIGNED BY GOVERNOR

Effective in 90 days

 

HB64

OPERATING BUDGET (SMITH R) To make operating appropriations for the biennium beginning July 1, 2015, and ending June 30, 2017, and to provide authorization and conditions for the operation of state programs.

 

Current Status:   

4/17/2015

House Finance Committee

Eleventh Hearing

 

HB104

FRONT-LICENSE PLATE DISPLAY (DEVITIS A) To specify that failure to display a license plate on the front of a motor vehicle that is required to display a license plate on the front and rear of the vehicle is a secondary traffic offense, and to establish a maximum fine of $25 for such an offense.

 

Current Status:   

3/26/2015

House Armed Services, Veterans Affairs and Public Safety Committee

First Hearing

 

SB37

MOTOR VEHICLE REPAIR BOARD JURISDICTION (UECKER J) To extend the jurisdiction of the Motor Vehicle Repair Board to persons who perform motor vehicle mechanical repairs.

 

Current Status:   

2/11/2015

Referred to the Senate Transportation, Commerce and Labor Committee