April 25, 2023
Carfagna Outlines Ohio Chamber Budget Priorities in Testimony
Appearing before the Ohio House Finance Committee, Ohio Chamber SVP of Government Affairs Rick Carfagna provided proponent testimony this past week for the pending two-year state operating budget (House Bill 33). Carfagna identified key Ohio Chamber policy priorities contained in the draft budget aligned with the Chamber’s Blueprint for Ohio’s Economic Future, while also listing additional measures the Chamber hopes will remain intact or be further bolstered throughout the legislative process.

The link to the entirety of the Ohio Chamber’s written proponent testimony can be found here, while you can watch Carfagna’s remarks and Q&A with committee members here.

In his remarks, Carfagna advocated for five specific items aligned with both the Blueprint and the OCC’s top policy priorities for the 135th General Assembly:

  • Innovation Hubs – state funding to convene Innovation Hubs (modeled after Innovation Districts in Cleveland, Columbus and Cincinnati) in multiple mid-sized Ohio metropolitan centers. In cooperation with regional businesses, higher education, and economic development partners, these Hubs would fully unlock the potential of unique, high-growth opportunities existing in various key industries. The as-introduced budget appropriated $150 million for Innovation Hubs, while the first round of House edits took it down to $25 million with another potential $25 million in surplus funds.

  • Smart Technologies Assistance Program – modeled after the Indiana Manufacturing Readiness Grant, this proposed program would target small and medium-sized manufacturers otherwise lacking the capital and capability to modernize their machinery and facilities. The Ohio Chamber and Ohio Manufacturers’ Association have both been pushing for an amendment to create this program in the budget, funded with $12 million each fiscal year.

  • Ohio Workforce Housing State Tax Credit Program – included in the as-introduced version, and then upgraded by the House in the substitute budget bill, this would create an annual tax credit for the development of new, high-quality, affordable housing units. It would also allow Ohio to draw down $120 million of federal bond volume cap for multifamily development. The creation of more workforce housing stock is a top priority of the Ohio Chamber, and we commend the Ohio House for making this a significant initiative in this budget.

  • Promotion of Computer Science/STEM Offerings at the K-12 and Post-Secondary Education Levels – the Ohio Chamber is pushing hard for the continued integration of more technology courses at the K-12 level. 50% of Ohio’s public high schools have zero offerings of Computer Science and Ohio ranks 33rd of 50 states in the percentage of college degrees produced in Computer Science. The current budget draft provides a number of recommendations to address this phenomenon, including the provision of more in-school and virtual CS courses and professional development to grow more CS teachers. Unfortunately, the $18.5 million annual appropriation to stand up these ideas was removed in the recent draft. Carfagna advocated for restoring this funding and prioritizing technology among our youth.

  • Age Extension for Medicaid Buy-In for Workers with Disabilities Program – identified as a benefits cliff that can be alleviated in this budget, this program allows individuals with disabilities between 16 and 64 years of age to work and earn a living while paying a monthly amount to receive their needed Medicaid coverage. At age 65, however, they are no longer eligible to participate and either have to pay astronomical premiums to continue or completely retire and rely further on public assistance. At least 17 states have filed state plan amendments with the federal government to lift this age cap, and many have had these lifted. At a time when Ohio can ill-afford to turn away workforce, the Ohio Chamber has stressed allowing these able-bodied, enthusiastic Ohio employees to continue working and paying for these benefits.

In addition to these priorities, the Chamber also touted the need for a Commuter Benefits Tax Credit, stronger childcare supports, a pole replacement and undergrounding program, the “All Ohio Future Fund” for more site development, more critical care workers, and strengthened financial aid for post-secondary job training and education. All of these points are further clarified in the Ohio Chamber’s written testimony.

House Bill 33 is undergoing a second wave of amendments, and is expected to be unveiled and voted out of committee sometime this week with a floor vote soon to follow.
House Bill 116 Testimony
The Ohio Chamber presented proponent testimony for House Bill 116 in the House Ways & Means Committee this week.

HB 116 would allow taxpayers to use depreciation expenses in the current year of the expense.

Currently, Ohio requires a taxpayer to recapture 5/6 of the expense and then use the remainder of the expense over the next five tax years. As pointed out in our testimony, the current methodology adds cost, time and leads to errors. Ohio should follow the federal tax code and fully allow the bonus depreciation expense.
Ohio Chamber Discusses Workforce in Warren County
Workforce and prepping Ohio for the manufacturing renaissance were just some of the biggest topics of discussion at the Warren County Strategic Outlook Breakfast, held last week at Miami Valley Gaming. The event, hosted by the Warren County Chamber Alliance, brought together hundreds of leaders from businesses, non-profits, and government.

Keynote Speaker Lieutenant Governor Jon Husted announced Ohio’s unemployment rate of 3.8%, tied for the lowest on record, and detailed Ohio’s significant economic wins and Warren County’s diversity of industry. In reminding the audience that “talent is the deciding factor going forward,” he explained that as Ohio's businesses modernize, it should be mindful of how technology – particularly artificial intelligence and ChatGPT (Generative Pre-Trained Transformer) – will transform traditional processes and could even replace humans in a variety of workplace functions.

Ohio Department of Development Director Lydia Mihalik and JobsOhio President and CEO J.P. Nauseef called for more career tech emphasis, and explained how both of their organizations complement each other to attract and retain job growth. They also highlighted many of the resources offered to upskill and reskill Ohio’s workforce, including TechCred and the Individual Microcredential Assistance Program (IMAP). TechCred, which gives businesses the chance to upskill current and future employees in today’s tech-infused economy, has helped around 2,000 employers since its inception and enabled the earning of nearly 50,000 tech-focused credentials by Ohio employees. IMAP helps Ohioans who are low income, partially unemployed, or totally unemployed participate in a training program to receive a credential at no cost. IMAP training providers cover all tuition, fees, and additional costs to help recipients learn new skills and earn a credential that can lead to a good job.

Ohio Chamber SVP of Government Affairs, Rick Carfagna, built upon the other speakers’ pleas for greater workforce supports around job training, housing, and childcare. With over 20,000 future jobs announced just in 2022, Carfagna stressed the window of opportunity for state and local policymakers to prioritize more single-family and multifamily housing stock to accommodate this growth. Likewise, with 60% of rural Ohioans and 39% of overall Ohioans living in a childcare desert, the Ohio Chamber is pushing for efforts to create more capacity, which drives more availability and affordability. Finally, Carfagna outlined the need to cultivate a more technology-proficient workforce in Ohio starting with more computer science offerings in the K-12 setting. With only half of Ohio’s public high schools offering any computer science courses, with the jobs in the pipeline requiring technology proficiencies, and with most businesses needing IT personnel, Ohio will have to continue importing talent from overseas via H1B visas or from out of state to fill these critical, well-paying jobs.

Carfagna also highlighted how Warren County is uniquely positioned to thrive moving forward. With a diversity of industry, as outlined by Lt. Gov. Husted, Carfagna noted that Warren County has close proximity to several airports. The county is approximately 80 miles from Rickenbacker International Airport, 50 miles from Cincinnati/Northern Kentucky International Airport, 40 miles from Dayton International Airport, and 30 miles from Wilmington Air Park. The digital economy has led to more use of cloud-based services and online commerce, and Warren County can capitalize on these logistical proximities, including a highway system placing Ohio within a 10-hour drive of half the U.S. population, to move people and freight.
Stivers Joins Business Leaders and Economists to Unveil Ohio’s Economic Competitiveness Data
Ohio Chamber President and CEO Steve Stivers joined with other statewide business organizations, economists, and State Senator George Lang (R-West Chester) at an Ohio Statehouse press conference to release an economic report showing that Ohio’s competitiveness has dramatically improved in the last five years. The study, led by economists Dr. Timothy Nash of Northwood University and Dr. Jing Li of Miami University, has Ohio jumping from 24th most competitive in the United States in 2018 to 13th in 2023. Among the factors contributing to this climb are:

  • Improvements in Ohio’s tax structure
  • A drop in Ohio state debt per capita
  • An improved opinion of Ohio business climate among national business leaders
  • Dramatically improved auto insurance rates
  • Several tax rate reductions

The study was convened by Ohio’s “Big 6” coalition of business advocates: The Ohio Chamber of Commerce, Ohio Business Roundtable, NFIB-Ohio, Ohio Council of Retail Merchants, Ohio Manufacturers’ Association, and the Ohio Farm Bureau. The collective membership of these organizations employ millions of Ohioans and dominate the state’s $829 billion in annual economic output.

Senator Lang, a co-chair and founder of the Ohio General Assembly’s Business First Caucus, was instrumental in convening these organizations and Drs. Nash and Li. As Senator Lang outlined at the event, “The results here speak for themselves. Ohioans across the state are benefiting from lower taxes, higher wages, and a state that is poised to become a national leader in commerce. I’m proud of the progress Ohio has made and look forward to continuing to make Ohio the most business-friendly state in the nation.”

In addition to the positive economic attributes, the study also itemizes several key factors inhibiting continued growth, including:
  • Ohio’s tax standing ranks only 37th among the 50 states, far behind Indiana’s overall tax rank of 9th and Michigan’s 12th. This low standing was caused in part by Ohio’s low rankings of 41st for personal income taxes, 39th for corporate taxes and 36th for sales tax burdens.
  • Ohio’s Gross State Product has lagged well behind the national average, growing only 116% to the U.S.’s growth rate of 160% since 1998.
  • Job growth was slow, increasing only 4.8% in Ohio while U.S. jobs overall grew 23% from 2000 to 2021.
  • Ohio’s entrepreneurial activity was weak, earning a score of -1.37 versus a national figure of 0.6 according to the Kauffman Early-Stage Entrepreneurship (KESE) Index.

To download the full study, go to https://qrco.de/bdtZYZ.
Tax Update
In other tax news, the state budget sub-bill was introduced, and it included several pieces of tax legislation. These changes include the state-level LIHTC tax credit (House Bill 3), the allowance for bad debt for tobacco wholesalers (HB 66), and reduction in the amount a municipality can charge in penalties for late filings (House Bill 105).

The budget also includes a modest personal income tax cut. The budget collapsed the current 3.226% tax bracket into the 2.765% bracket. This new bracket was then further reduced to 2.75% for individuals making up to $92,150. The first $26,050 of income would be exempt from personal income tax.
Ohio Chamber Meets with Max Miller
Last week, Ohio Chamber staff attended an event with Congressman Max Miller (OH-7) hosted by the US Chamber and the Medina Chamber. Rep. Miller shared his thoughts regarding legislative activity in Washington on a number of issues, as well as his priorities in addressing career-technical education, immigration, government spending, and veterans services. We are proud to work with members of our Congressional delegation of both parties on issues important to the business community and making Ohio’s economy more vibrant.