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Legislative Update - July

Post date
July 09, 2021
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The Ohio General Assembly concluded an active first six months of 2021 and now stand in recess until September.  A majority of the legislature’s time was focused on the passage of the Transportation, Industrial Commission, Bureau of Workers Compensation, and Operating Budgets. CEA and its lobbying team worked on a myriad of issues on behalf of our industry during this busy first half of the year and we are happy to report that we had much success.  We would like to thank our Board of Directors and Legislative Committee for their hard work during this time, and we look forward to building on our successes during the remainder of the legislative session. 

State Budget Becomes Law

After months of committee hearings, testimony and debate, Ohio’s two year state budget (HB 110) was signed by Governor on June 30th. The measure appropriates just under $74.1 billion during fiscal years 2022 and 2023 from the General Revenue Fund and $161.9 billion across all funding areas. The bill contains a number of policy changes in its thousands of pages. Here are some provisions that may be of interest:

  • Income Tax Reduction - Reduces tax rates by 3% in tax year 2021 and thereafter, except eliminates the top bracket and further reduces the tax rate in the next-to-top bracket to 3.99%. Increases the income level at which the lowest tax bracket begins to $25,000 in tax year 2021.
  • Municipal income tax temporary COVID-19 withholding rules - Amends H.B. 197 of the 133rd General Assembly to provide that a temporary municipal income tax withholding rule in effect during the Governor's COVID 19 emergency declaration extends through December 31, 2021, regardless of when the declaration ends. (Under current law, the rule is set to expire 30 days after the emergency declaration expires; under the temporary rule, employers withhold municipal income taxes to an employee's principal place of work even though the employee may be working from home or another location due to the emergency declaration.) States that the temporary rule applies only to an employer's tax withholding obligations and net profit calculation, and not to an employee's actual tax liability, but applies beginning on and after January 1, 2021 through December 31, 2021.
  • Permanent CAT exemption for BWC dividends - Authorizes a CAT exemption for Bureau of Workers' Compensation (BWC) dividends paid to employers, beginning with dividends paid in 2022. (S.B. 18 of the 134th General Assembly exempted dividends paid in 2020 and 2021).
  • Unemployment compensation income tax withholding - Amends S.B. 18 of the 134th General Assembly to delay by one year, from 2022 to 2023, the date by which JFS must begin to accept state income tax withholding requests from unemployment compensation recipients.
  • Transformational mixed use development tax credit - Modifies an existing insurance premium tax credit for capital contributions to the  construction of a transformational mixed-use development (TMUD) by (1) extending the sunset date for certifying new TMUD projects by two years, to June 30, 2025; and (2) setting the maximum annual credit  allotment for FY 2024 and FY 2025 at $100 million (the same limit that applies under current law to FY 2020 to FY 2022, though no credits have been issued in FY 2020 or FY 2021).
  • Megaproject tax incentives - Authorizes various tax incentives for operators and certain suppliers of a "megaproject" (i.e., a development project that includes at least $1 billion in investment or creates at least $75 million in Ohio payroll, both indexed to inflation). Requires such operators and suppliers to apply to the Director of Development Services, similar to the existing job creation tax credit (JCTC) requirements. Excludes from gross receipts subject to the commercial activity tax (CAT) a megaproject supplier’s receipts from the sale of tangible personal property to a megaproject operator. Increases the maximum number of years a JCTC may be awarded by the Ohio Tax Credit Authority (OTCA) from 15 to 30 years for a business that is a megaproject operator or qualifying megaproject supplier.
  • Income tax deduction for capital gain from sale of business - Allows an income tax deduction, beginning tax year 2026, for capital gains for taxpayers with an ownership interest in a business. Provides that the deduction equals the lesser of 1) the capital gain or 2) a percentage of the business' payroll over a specified period, based on the taxpayer's proportionate interest in the business. Allows the deduction to taxpayers who either 1) materially participated in a business that was headquartered in Ohio for the five preceding years or 2) made a venture capital investment of at least $1 million in such a business. Provides that the deduction based on the business' payroll is based on payroll as defined for income tax withholding purposes, excluding amounts paid to the taxpayer or specified relatives of the taxpayer.
  • Transfer of Equal Employment Opportunity Division and Contractor Compliance Program from DAS to Development - Transfers responsibility to administer the Contractor Compliance Program from DAS to DEV. (The program ensures state contractors adhere to state affirmative action policies.)
  • Truck Driving Grant Program - $2,500,000 is allocated in each fiscal year to provide grants and loans under the program.
  • Water well, water diversion, and water withdrawal fines - Revises the amount of the surety bond that an applicant for a dam or levee construction permit must file.
  • Fraudulent unemployment compensation - Declares that the State of Ohio does not intend to impose tax on unemployment compensation reported to a person whose identity was fraudulently used by a third party to collect unemployment Compensation. CEA and its lobbying team, along with others in the industry, were also successful in keeping additional force account changes out of the budget bill. The language that came out of the bill would have had significant force account increases directly taking work away from private employers and workers and giving it to government entities and public sector workers. This is a great win for contractors. CEA was also successful in obtaining one of only fourteen budget vetoes in regard to how the state controlling board agenda is scheduled. The vetoed language would have slowed public construction and would have led to inefficiencies in agency procurement processes.

First Member From the Ohio House Removed Since Before The Civil War

Former Speaker Larry Householder was expelled from the Ohio House during a historic vote. The debate took about an hour and a half and ended with the House voting 75-21 to remove the former Speaker. Former Rep. Householder is still awaiting his day in court on a variety of charges related to HB 6.

Bill To Undermine Prevailing Wage Receives a Committee Hearing

The Ohio House Commerce and Labor Committee had a second hearing on HB 146 Prevailing Wage (Riedel, Manchester) - To allow political subdivisions, to elect to apply Prevailing Wage Law to public improvement projects. Some of those that submitted testimony for the bill included the Delaware County Commissioners, The Ohio Chamber of Commerce, Americans for Prosperity, The National Federation of Independent Businesses and the Ohio Fair Managers Association. Supporters of HB 146 brought up cost and government inefficiencies as reasons to change prevailing wage law. CEA and our industry partners understand the need for qualified, trained, workers to complete jobs efficiently and safely. We continue to advocate against this bill and others like it. CEA and its lobbying team also continue to educate members on the committee and the entire General Assembly why prevailing wage is so important.

Cuyahoga County

The County continues its work on implementation of previously passed equity ordinances and executive orders. County Equity committees are meeting and working on equity issues. CEA continues to engage the County during this process. The County recently released one of its agenda items for equity by providing a 24 month listing of projects. You can access the forecast for the upcoming 24-month period (July 1, 2021 through June 30, 2023) by downloading the file.