Capitol Conversation January 20

Governor DeWine signs House Bill 2 aiming to train Ohioans for the 21st Century:

Workforce development is a pressing economic development need across the nation.  Ohio is working to address this issue in many ways including through the creation of a TechCred program.  Recently, Governor DeWine signed into law House Bill 2, jointly sponsored by Ohio House Representative Jon Cross and Representative Michele Lepore-Hagan. House Bill 2 creates the Ohio TechCred program as well as the Individual Microcredential Assistance Program or IMAP.

TechCred short for technical credential is designed to support Ohio’s businesses with the expense of training and upskilling workers to do the jobs of the 21^st century. Through the program businesses can join training partners to apply for up to $2,000 in reimbursement for an employee who receives a credential approved through the Ohio TechCred program.  Additionally, House Bill 2 creates the Individual Microcredential Assistance Program or IMAP, which allows individuals who are wanting to be trained, but are not backed by an employer an opportunity to do so through an approved training provider. An individual can receive up-to $3,000 in reimbursement through the IMAP component of the bill to help pay for an approved credential. House Bill 2 was a bi-partisan bill and a priority of the Ohio General Assembly and the DeWine-Husted administration, and will serve as a foundation to train Ohio’s workforce for the more than 150,000 jobs open in the state right now.

What does it mean for Ohio’s businesses? As businesses look to grow and expand, they will need a highly trained workforce. Particularly in Ohio’s rural areas the lack of a competitive workforce is a deterrent for business location and growth. For Ohio to remain competitive economically in the Midwest and nationally, having a highly qualified workforce is essential. Ohio has experienced a strong economy over the last decade, but without workers who are trained for the jobs of the future or for the more than 150,000 jobs open today in the state, Ohio will struggle to attract and maintain the strong economic growth.

What qualifies as a credential and how would a business use the TechCred program? The legislation defines a credential as either a certificate earned by an individual who successfully completes a training, course, or series of courses, or a certification earned by an individual who passes a standardized assessment that recognizes an individual’s knowledge, skill, or competency in a particular specialty. For a credential to be eligible for the program, it must meet specific criterial, including; being industry-recognized, technology focused, and able to be completed in less than one year in a program which is fewer than 900 hours or 30 credit hours. If a credential is not currently listed in the program, businesses can apply for the inclusion of a credential that meets the above criteria.
The period for the next round of applications is currently open and closes on January 31, 2020. The program is expected to have multiple rounds of open applications for businesses and individuals each year.

You can learn more about the Ohio TechCred program, by visiting the link below.

https://techcred.ohio.gov/wps/portal/gov/techcred/home

Ohio Power Siting Board Gains State Government Veteran Craig Butler as New Leader

Former EPA Director Craig Butler recently took over the role as Executive Director of the Ohio Power Siting Board (OPSB). The board is made up of seven voting members including the directors of the Ohio Department of Agriculture, Ohio EPA, Ohio Department of Natural Resources, Ohio Department of Health, Ohio Development Services Agency, the Chairman of the Ohio Public Utilities Commission, and one public member appointed by the Governor. In addition to the voting members four members of the Ohio General Assembly serve as non-voting members; two members from the Ohio Senate and two members from the Ohio House.

In his new role, Director Butler will look to continue the strong mission of the OPSB, which aims to support sound energy policies that provide for the installation of energy capacity and transmission infrastructure for the benefit of the state of Ohio, while also promoting the state’s economic interests, and protecting the environment and land use.

Director Butler takes over the day-to-day operations of the board at a key juncture. Over the past decade Ohio has seen significant growth in the oil and gas industry as well as the need for new pipelines moving oil & natural gas from states to our west to ports on the east coast. In recent years the OPSB has reviewed and approved or denied cases ranging from new natural gas pipelines, gas fired power plants, new transmission lines, and wind and solar farms.

The Ohio Power Siting board has the sole jurisdiction on approving any major utility facility or economically significant wind farm in the State of Ohio. Before any project can begin construction on a project under the jurisdiction of the OPSB a certificate of environmental compatibility and public need must be obtained from the board. As Ohio moves forward into a new decade reliable and secure energy infrastructure as well as energy capacity is essential to furthering the state’s economic growth. 

The Ohio Revised code defines the types of projects which are classified as a major utility facility as an electric generating plant with a capacity of 50 megawatts or more; an electric transmission line and associated facilities of 100 kilvotls or more; or a gas pipeline that is greater than 500 feet in length, more than nine inches in outside diameter, and designed to transport gas at a maximum allowable operating pressure in excess of 125 pounds per square inch.

A qualifying wind farm is defined as wind turbines and associated facilities with a single interconnection to the electric grid and designed for, or capable of, operation at an aggregate capacity of 5 or more megawatts but less than 50 megawatts. Excluded from this definition is a wind farm that is primarily dedicated to providing electricity to a single customer at a single location and that is designed for, or capable or, operation at an aggregate capacity of less than twenty megawatts

Director Butler brings a wealth of experience to his new role. Having served in the administration for two Ohio governor’s and as the Director of the Environmental Protection agency, he is well positioned to manage the operations of the OPSB. The Montrose Group looks forward to working with him in his new role.

Gig Economy Big Focus for Tax Revenue in 2020

Gig Economy workers who contract with different employers rather than have one, traditional employer will have a major impact on corporate site location projects in 2020 as the demand for skilled workforce continues to push employers for creative approaches to building a team.  The 1950s are over.  Enter the economy where more and more organizations are employing a growing number of contract and temporary or “gig” employees. The gig economy represents a shift in how employees view work, valuing the flexibility and freedom of contract jobs over the traditional arrangement of a steady 9-to-5 job.

The National Association of Counties defined the Gig Economy as being made up of three main components: the independent workers paid by the gig (i.e., a task or a project) as opposed to those workers who receive a salary or hourly wage; the consumers who need a specific service, for example, a ride to their next destination, or a particular item delivered; and the companies that connect the worker to the consumer in a direct manner, including app-based technology platforms. Companies such as Uber, Airbnb, Lyft, Etsy or TaskRabbit act as the medium through which the worker is connected to – and ultimately paid by – the consumer. These companies make it easier for workers to find a quick, temporary job (i.e., a gig), which can include any kind of work, from a musical performance to fixing a leaky faucet. One of the main differences between a gig and traditional work arrangements, however, is that a gig is a temporary work engagement, and the worker is paid only for that specific job.  The U.S. Department of Labor estimates that 10.5% of U.S. workers are part of the Gig Economy.

Why is the Gig Economy growing?  According to a recent Harvard Business Review story, nearly 70% of Americans aren’t engaged at their jobs, according to Gallup. In contrast, a recent McKinsey survey of more than 8,000 workers found that independent workers are more satisfied with nearly every aspect of their working lives than employees. A Future Workplace/Field Nation survey of 959 freelancers found that 74% prefer being an independent worker and have no intention of returning to a full-time job. Inherent in the gig economy is the choice, autonomy, flexibility, and control that drive worker satisfaction, but which full-time employees often lack.

Local and state governments searching for tax revenues are sure to focus on the Gig Economy.  Driven by competitive opposition to Uber, Lyft and other companies disrupting traditional industries, many regions like Seattle have attacked the Uber/Lyft employment model that utilizes contract workers.  States like New Jersey are attacking Uber and presenting them with substantial tax fines bills in search of revenues and support from traditional labor unions. In fact, New Jersey presented Uber with a $650 M fine and time will tell whether the courts will agree with the New Jersey approach.  California’s AB5 law prepares to go into effect January 1, 2020 and other states like New York mull similar legislation to more strictly prevent employee misclassification in an effort to attack the Gig Economy.  With 10% of the nation’s workforce engaged in the Gig Economy, local and state government leaders will be looking more and more to whether these workers are truly contract workers or act more like permanent workers to gain new tax revenues.  Those battles could be taken through local and state tax departments or through public policy changes to what constitute an independent worker.  Time will tell whether the Gig Economy will win or lose these policy challenges.

Consumer Data Privacy and State Legislation Debate Coming

Recent news reports that major American hospital systems have shared patient data with tech giants like IBM, Microsoft and Amazon in the Wall Street Journal could be the feather that tips the scale to substantial consumer privacy discussions in Statehouses across the United States.  These tech companies, according to the Wall Street Journal, seem to have noble causes—primarily using patient data to bring the benefits of Big Data to the American health care system.  However, the rising use of consumers data is likely to produce a backlash among populist politicians on the right and the left.

California’s approach to consumer privacy may well prove to be the focus of other state governments.  The California Consumer Privacy Act of 2018 was signed into law on June 28, 2018 to prevent passage of the law through a voter initiative. The California Consumer Privacy Act gives California residents the right to know, through a general privacy policy and with more specifics available upon request, what personal information a business has collected about them, where it was sourced from, what it is being used for, whether it is being disclosed or sold, and to whom it is being disclosed or sold,  the right to “opt out” of allowing a business to sell their personal information to third parties, the right to have a business delete their personal information, with some exceptions; and the right to receive equal service and pricing from a business, even if they exercise their privacy rights under the Act. 

California’s law requires that companies make certain disclosures to consumers via their privacy policies, or otherwise at the time the personal data is collected, and  companies that sell consumer data to third parties will need to disclose that practice and give consumers the ability to opt out of the sale.  Minors are given special protections under the law.  The law also prohibits companies from discriminating against consumers who exercise their privacy rights’ but companies may charge a different price for these consumers. Personal information is defined as information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a consumer or household but does not include information that is lawfully available from government sources. Finally, the law applies to for-profit businesses that collect and control California residents’ personal information, do business in the State of California, and have annual gross revenues of at least of $25 M or receive or disclose the personal information of 50,000 or more California residents, households or devices on an annual basis, or derive 50 percent or more of their annual revenues from selling California residents’ personal information.

California is not alone.  The National Conference of State Legislators reports that Arizona, California, Connecticut, Florida, Hawaii, Illinois, Kentucky, Louisiana, Maine, Massachusetts, Maryland, Minnesota, Mississippi, Montana, North Dakota, Nevada, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Rhode Island, South Carolina, Texas, Utah, Vermont, Washington state and Puerto Rico have all debated consumer privacy legislation in the past year. 

The U.S. Business Roundtable points out the benefits for a national consumer privacy standard.  The Business Roundtable suggests a national consumer privacy law should:

Progress in Washington D.C. is always a challenge but until there is national action the California law will likely act as a national consumer privacy standard unless other states adopt more there of own legislation. 

Interns Help Ohio Businesses Boost International Sales

More than 50 Ohio college students are preparing to focus on the international marketplace over the next eight months, and they will boost Ohio companies’ sales in the process.  Companies can apply now to have a highly motivated and knowledgeable intern join their staff during the summer of 2020. The Ohio Development Services Agency will reimburse companies half of the intern’s salary, up to $3,600.

Companies have found success through the Ohio Export Internship Program in the past. Bionix Development Corp. in Toledo, which develops, manufactures and markets innovative single-patient-use medical products, has participated in the program for multiple years.  Companies looking to expand existing export initiatives or start a new one can get the help they need through the internships.  Since the internship program began in 2012, 274 students have worked with 176 Ohio companies to improve their international sales. The interns’ work has resulted in 315 new international markets, distributors or customers for the companies.

Fifty-four students will be part of the Ohio Export Internship Program for 2020 and will start the upcoming journey by taking export-focused coursework during the spring semester at one of four universities that are partners with the Development Services Agency.  Those universities are:

• The Ohio State University, Max M. Fisher College of Business.
• Cleveland State University, Monte Ahuja College of Business.
• Youngstown State University, Williamson College of Business.
• University of Dayton, School of Business Administration.

Eleven of the students will travel from their home institutions to take the export course. Those universities are Ohio Wesleyan University, Shawnee State University, Denison University, Bowling Green State University, Ashland University, University of Akron and Baldwin Wallace University.  After completing the course in May, the students will be assigned to Ohio companies that apply to be a part of the program, and the students will work at the companies for 12 weeks from May into August 2020.

The Export Assistance Office at Development is closely involved throughout the program. Staff visits with students during the spring semester class and with the companies that apply. Those contacts help Development’s staff determine which intern will be a good fit for a particular company.  During the internships, Export Assistance Office staff continues to mentor the students throughout the summer.  The internships culminate in the annual Ohio Export Internship Program Showcase, where the students’ achievements are celebrated in a ceremony at the Ohio Statehouse.

Company applications are being accepted now for on-site meetings that have begun and run through February 2020. The final deadline for companies to apply is Feb. 1, 2020.  For more information and to apply, visit eip.development.ohio.gov.

Economic Development Legislation Tracker

House Bill 264—Authorizing the Ohio Water Development Authority (OWDA) to make loans and grants to persons and government agencies for the refinancing of certain public water and wastewater infrastructure projects. The bill allows OWDA to provide for the financing and refinancing of loans made for those projects and to adopt rules governing the financing and refinancing of loans to government agencies. The bill authorizes OWDA to issue water development bonds to notes for the purpose of paying any part of refinancing one or more projects. 

Status: Currently pending in the Ohio Senate; Passed the Ohio House 86-0 on 12/12/19

House Bill 288—Prohibits the use of eminent domain for the purpose of providing a recreational trail.

Status: Currently pending in the Ohio House Civil Justice Committee

Senate Bill 38—Clarifies that the Revised Code does not restrict a municipal corporation from using surplus revenue deposited in its water or sewer fund for the enlargement or extension of the municipal water and sewer system, including for economic development purposes. The bill also stipulates that the authority to use surplus revenue in this manner is derived from the home rule provisions of the Ohio Constitution.

Status: Currently pending in the Ohio Senate Local Government, Public Safety & Veterans Affairs Committee.

Senate Bill 39—Authorizes a nonrefundable insurance premiums tax credit for capital contributions to the construction of “transformational mixed use developments” (TMUDs). Sets the amount of the credit at 10% of documented development costs or 10% of an insurance company’s capital contribution, and permits unclaimed credit amounts to be carried forward for up to five years.  Allows insurance companies to apply directly for the credit or to purchase the right to claim the credit from the property owner. Establishes procedures by which the Director of Development Services may certify a development plan, monitor construction progress, and award tax credit certificates upon completion of the TMUD.

Status: Currently pending in the Ohio House Economic & Workforce Development Committee

Senate Bill 89— Provides that, when a city, local, or exempted village school district negotiates to receive compensation for property tax revenue foregone due to an enterprise zone tax exemption, any JVSD located in the enterprise zone also must receive similar compensation.

Status: Currently pending in the Ohio House primary and secondary education committee.

Senate Bill 180— Authorizes a township to issue industrial development bonds. Eliminates the requirement that a county or municipal corporation designate a community improvement corporation as its agency for industrial, commercial, distribution, and research development before the county or municipal corporation may issue industrial development bonds.

Status: Currently pending in the Ohio Senate Finance Committee.

Senate Bill 204— Authorizes a regional airport authority to create an airport development district (ADD) to generate revenue for airport infrastructure improvements and other expenditures meant to attract airlines or increase scheduled flights to and from an airport. Requires that the territory of an ADD be contiguous and encompass, or be adjacent to, a “qualifying airport” that is located in two counties, one of which has a population between 500,000 and 800,000. Requires that the resolution proposing creation of an ADD include a development plan that describes the improvements and expenditures that will be undertaken, state the development charge that will be imposed, and provide for creation of the nonprofit corporation that will govern the ADD. Requires the regional airport authority to obtain the approval of the owners of 60% of the property located within the ADD and the Director of Development Services before the ADD is operative. Prescribes procedures for organizing the nonprofit corporation, filing the articles of incorporation, appointing its board of directors, and amending the articles of incorporation or the development plan. Allows the board of directors to impose a development charge on real property located within the ADD in accordance with the development plan based on either (1) the square footage of buildings or other structures located on the property, or (2) profits, gross receipts, or other revenues of a business operating on the property. Caps the “rate” of the development charge at $2 per square foot or 2% of profits, gross receipts, or other revenues. Requires that the base and rate of the development charge be the same for all property. Requires ADD expenditures to be approved by the board of trustees of the regional airport authority. Prescribes a procedure for dissolving an ADD or repealing the development plan. Terminates approval of new ADDs after December 31, 2023.

Status: Currently pending in the Ohio Senate Finance committee.

Senate Bill 212—Allows a municipality or township to designate all or a portion of its territory as a Neighborhood Development Area (NDA). Authorizes developers and owners of newly constructed single-family homes within an NDA to apply for a full or partial exemption from property taxation that continues throughout the construction and market period and for ten years after the home becomes occupied.  Authorizes owners who renovate single-family homes within an NDA to apply for an incremental value exemption that continues for five years. Specifies that property that is already exempt under a tax increment financing (TIF) agreement or as part of a Community Reinvestment Area (CRA) cannot also be part of an NDA.

Status: Currently pending in the Ohio Senate Ways & Means Committee.