2018 lame duck summary and 2019 budget and legislative preview

With a new year comes a new General Assembly. Bills that the 132^nd General Assembly did not pass will have to be reintroduced if legislators want to pursue those issues in the 133^rd General Assembly. 

In 2019, Ohio will also see new constitutional statewide elected officials take office. The DeWine-Husted administration will have until as late as March 15 to present the administration’s first draft of the FY 2020-21 Operating Budget to the General Assembly. However, we anticipate learning more about the new administration’s priorities in the near future. 

1. Overview

Please find below several notable legislative efforts that we monitored through the post-election, November-December “lame duck” legislative session. We also provide an overview of legislative efforts to anticipate from a new General Assembly and Governor’s administration.

2. Select legislation passed during the 132^nd General Assembly lame duck session

H.B. 7 medical care protections. The legislature passed H.B. 7, which generally grants qualified civil immunity to specific types of health care providers and to EMTs that provide emergency medical services, first aid treatment or other emergency professional care as a result of a disaster. The bill does not grant immunity from tort or other liability for actions that are outside the provider’s authority. This bill was sponsored by Representative Bob Cupp (R-Lima).

H.B. 58 cursive handwriting instruction. Representative Andy Brenner (R-Powell) introduced H.B. 58 that requires the Ohio Department of Education to create supplemental instructional materials on cursive handwriting; however the legislation also leaves the decision of including cursive handwriting in curriculum to local school boards.

H.B. 494 franchisors-compensation law. This legislation, which was sponsored by Representative Niraj Antani (R-Miamisburg), clarifies that a franchisor is not an employer of a franchisee or a franchisee’s employees under Ohio’s minimum wage and overtime laws, the Bimonthly Pay Law, Workers’ Compensation, Unemployment Compensation and the Income Tax Law.

S.B. 51 Lake Erie Improvement District. Senator Skindell (D-Lakewood) sponsored this bill that was originally designed to authorize a special improvement district to facilitate improvements along the Lake Erie shoreline. However, S.B. 51 became a “Christmas tree” bill, picking up several amendments. These amendments were mostly capital expenditures, including $15 million for the new Columbus Crew stadium; $20 million for the renovations to the Statehouse parking garage; and $2 million for upgrades and renovations to the Governor’s residence.

S.B. 259 physician assistant regulation. Legislation revising and updating the laws regulating physician assistants was introduced by Senator Bob Hackett (R-London). The bill was amended during the lame duck session to also revise the laws regulating certain practices of dentists, dental hygienists and expanded function dental auxiliaries. Among other changes for physician assistants, the bill increases the ratio of physician assistants supervised by a physician at any one time from three to five and eliminates a formulary in Ohio law to allow physician assistants to collaborate on the best treatment and medication prescribed for patients. 

S.B. 263 Notary Public Modernization Act. Enacted into law was an overhaul of Ohio’s notary laws, including allowing the notarization of signatures online, utilizing live video links, electronic signatures and electronic notary seals. The legislation also picked up an amendment that exempts oil and land gas professionals from the Real Estate Broker Licensing Law but requires they register with the superintendent of real estate, in response to a ruling by the Ohio Supreme Court. Senator Matt Huffman (R-Lima) sponsored this legislation.

S.B. 273 rating agency-statutory definition. Senator Bob Hackett (R-London) sponsored this bill that defines “rating agency.” This bill ultimately ended up being amended with a variety of different insurance related provisions, including language establishing standards for data security and for the investigation and notification of the Superintendent of Insurance of a cybersecurity event. Additionally, the final bill includes language regarding motor vehicle ancillary product protection contracts, motor vehicle service contracts and authorizing domestic surplus lines insurers. Finally, the bill includes language altering the way certain insurance policies are cancelled and modifying the regulatory authority of the Superintendent of Insurance accordingly.

S.B. 296 officer death benefit fund revisions. Legislation to increase the death benefits paid to survivors of first responders killed in the line of duty quickly became controversial when legislators added an amendment to increase the salary of local, county and state elected officials. The bill was sponsored by Senators Jay Hottinger (R-Newark) and Frank LaRose (R-Hudson). On December 21, 2018, Governor Kasich vetoed the bill based on his opposition of the inclusion of the additional language. The General Assembly successfully voted to override the governor’s veto on December 27.

3. Legislation Failing to Pass Prior to the End of the 132^nd General Assembly.

H.B. 114 renewable energy standards. The legislature has grappled with Ohio’s renewable and energy efficiency standards for multiple General Assemblies. In the 131^st General Assembly, Governor Kasich vetoed legislation that essentially ended Ohio’s standards. In the 132^nd General Assembly, the House moved quickly to pass similar legislation that ended the mandates attached to the standards. The Senate, however, took a different path, keeping the standards in place, albeit at a lower rate than current law. The Senate also included changes to Ohio’s wind turbine setback laws designed to foster increased investment and development of wind energy projects, a top priority of the Senate. However, negotiations with the House and the governor ultimately stalled the legislation. We expect the legislature, who is likely hoping for a different result with a new governor’s administration, to tackle this proposal again.

H.B. 343 property value contest-resolutions. Representative Derek Merrin (R-Monclova Twp.) introduced this bill early in the 132^nd General Assembly to make it more difficult for local governments, including school districts, to contest changes in property value. The as-introduced version of the bill required local governments to formally pass an authorizing resolution for each contest and to provide additional notice to property owners on top of the requirement already in the Board of Tax Appeals process. Interested parties worked together for two years to reach a compromise after the bill continued to receive hearings in the House and Senate. Ultimately, the Senate Ways and Means Committee adopted a substitute bill that most interested parties agreed upon and reported the bill favorably out of committee.  However, the bill never received a floor vote from the Senate and, thus, died before the end of the year.

H.J.R. 19 modify initiative petition process. After several high profile and costly ballot initiatives funded by out-of-state interests failed, both Senate President Larry Obhof (R-Medina) and House Speaker Ryan Smith (R-Bidwell) publicly spoke about their desire to protect the Ohio Constitution. Representatives Sarah LaTourette (R-Chesterland) and Glenn Holmes (D-MacDonald) introduced a joint resolution designed to make amending the constitution more difficult, while modifying the initiated statute process to preserve citizens’ access to the ballot initiative process. The joint resolution included language that limits the time period for signature collection and places an expiration date on the signatures. It also reforms the process for initiated statutes by removing the second signature gathering period if the General Assembly does not act on a proposal. The resolution received six hearings in the House Government Accountability and Oversight Committee but, ultimately, did not move forward. The General Assembly is expected to revisit this issue in 2019.

S.B. 250 critical infrastructure facility trespass. Senator Frank Hoagland (R-Mingo Junction) sponsored this bill that increased the criminal penalties for trespassing and mischief at critical infrastructure facilities. The Senate passed the bill late in 2018 after several hearings and prolonged debate as to whether the bill intruded on the constitutional right to protest at critical infrastructure facilities. The bill did not make it through the House before the end of the General Assembly. A new version of the bill will likely be introduced in 2019.

4. 2019 budget year preview

The General Assembly returned to open the 133^rd General Assembly on January 7, 2019. While that day is usually filled with mostly pomp and circumstance, as members are sworn into office and the chambers formally elect their leadership, this year was more eventful than usual. The Ohio House entered session without a clear decision on who will serve as Speaker of the House in the 133^rd General Assembly.

The House Speaker of the 132^nd General Assembly, Ryan Smith, who assumed the role when previous House Speaker, Cliff Rosenberger, resigned, faced a challenge from Rep. Larry Householder (R-Glenford), who previously served as House Speaker from 2001-04. Rep. Householder, with the support of a number of Democratic members, received 52 votes and was elected Speaker of the House for the 133^rd General Assembly.

Senate President Obhof was reelected to that position on January 7, as well.

Budget. Governor-elect Mike DeWine (R-Cedarville) has until March 15, 2019, to introduce his administration’s budget. The General Assembly will have a shorter amount of time to debate the FY 2020-21 Operating Budget, because, by law, a new governor can submit his budget later than in non-election years. State tax revenues have been trending above estimates, which means that the governor-elect could have more flexibility for funding his initiatives and priorities. However, we anticipate that both the governor-elect and the legislature will be fiscally conservative with regard to expenditures. The budget must be enacted by June 30.

Energy regulation and policy. In the 132^nd General Assembly, there was much activity surrounding energy policy. But at the end of the biennium, the General Assembly did not pass any legislation substantially impacting the industry. For months the legislature held hearings on proposals to subsidize the operations of FirstEnergy’s two nuclear power plants, Davis-Besse and Perry, and a proposal to subsidize the operations of the two coal fired-power plants utilized by the Ohio Valley Electric Corporation but took no formal action. With FirstEnergy announcing its intention to close the two nuclear plants if the company does not receive financial assistance, it is expected that the legislation will be reintroduced in the next General Assembly. We also expect legislation amending Ohio’s wind turbine setback laws to allow for more development of wind energy to resurface. The language almost became part of the budget in 2017 but was removed during conference committee after facing opposition from the House. It has remained a priority of the Ohio Senate and is expected to return early next year. With the failure of H.B. 114, it is also expected that a version of that legislation, amending Ohio’s renewable and energy efficiency standards, will also resurface.

Unemployment compensation. Ohio has been seeking to reform its unemployment compensation system for several years after the recession of 2007 left Ohio’s unemployment system in debt to the federal government. Ohio was forced to borrow funds to make payments to unemployed workers. In 2016, Ohio repaid the debt, avoiding a massive tax increase to Ohio businesses, but the system is still structurally imbalanced and at risk should the state see another economic downturn. Business and labor leaders struck an initial deal to pass a stop-gap this year and work with the legislature to establish a long-term solution in legislation in 2017. The temporary fix was passed in the waning hours of the 131^st General Assembly. Under that deal, benefits to jobless workers are frozen for two years beginning in 2018, and employers must pay unemployment taxes on an employee’s first $9,500 of wages. The parties intended that stop-gap solution as a good faith gesture to bring the sides together to form a final agreement by April 10, 2017. Unfortunately, that compromise never came to fruition. Legislative leaders have stated that the issue is still at the forefront of issues they are interested in tackling, so we can expect legislation to be introduced in 2019.

Healthcare. Medicaid remains one of the largest expenditures in the state budget and, as such, will likely remain a major focal point for 2019. Throughout his career Governor-elect DeWine has emphasized family and children’s issues and at various points during the transition, including making one of his first senior staff announcements the appointment of a Director of Children’s Initiatives.

Education. Representatives Bob Cupp (R-Lima) and John Patterson (D-Jefferson) spent the better part of 2018 working on a revision to Ohio’s education funding formula. They unveiled a framework late in the year, which should serve as the launching point for 2019’s education funding discussions during the consideration of the state budget.

Local government. Leaders of local government are hopeful that the new administration will restore state funding of the local government fund. With state tax returns running ahead of projections, it is no doubt the governor-elect will also seek to utilize that funding for many of the initiatives he announced during the campaign. DeWine made no promises on this front during the campaign but clearly stated his desire to work with local government on their needs.

Initiative petition process. While H.J.R. 19 did not pass the General Assembly, it is clear that legislative leaders will prioritize reforming Ohio’s ballot initiative petition process. Both legislative leaders mentioned on multiple occasions their desire to amend the process to avoid out-of-state interests from placing divisive and costly measures on the ballot. We expect a new proposal to be introduced next year.

5. Conclusion

The new Governor’s administration officially takes office on January 14, 2019. Between now and then, we expect more announcements of cabinet directors and senior staff that reveal more of Governor-elect DeWine’s intentions and priorities for the state budget. The House Speaker decision should also be decided, providing additional clarity on legislative priorities for 2019.