News and Analysis
Legislative Session Concludes
The 127th Ohio General Assembly drew to a close this week as both the House and Senate adjourned with no further business. The legislative session was characterized by political wrangling which often evolved into bi-partisan compromise between Republican legislators and the Democrat governor.
Electricity restructuring, preservation of tax reform, workers’ comp actuarial improvements are among the public policy victories for manufacturers over the two-year legislative session.
Term limits means the OMA must bid a fond farewell to departing friends of manufacturing in both the House and Senate and compels manufacturers to form new alliances.
The 128th General Assembly will begin on January 5. A slate of leaders from both parties has already been selected by members of their caucus.
Civil Justice: Two OMA-Backed Tort Reforms Fail
As the General Assembly cleared the decks, completing unfinished priorities before adjourning, two civil justice reforms fell short of completion. The OMA had advocated for passage of S.B. 370, which was defeated on the House floor in the final hour of session. The bill would have imposed new disclosure requirements in state asbestos claims, requiring claimants in state civil actions to disclose claims already made against asbestos trusts.
Also unable to get out of the House, S.B. 309, sponsored by Senator Bill Seitz, would have required use of consistent language when the legislature intends to create private rights of action. In a letter to members of the Ohio House of Representatives, the OMA urged support of the law change to curtail court findings that result in unexpected liability.
OMA Elects Marietta Manufacturer to First Vice Chair of Board
At its quarterly meeting this month, the OMA Board of Directors elected Jeffrey L. Hollister, President, Vanguard Paints & Finishes, Inc., Marietta, as its first vice chair. Jeff will become the OMA chairman in June 2010 at the conclusion of the term held currently by Jim McGregor, CEO, McGregor Metalworking Companies, Springfield.
OMA President Eric Burkland said, “We are honored that Jeff accepted this leadership position: he knows the OMA, he knows Ohio, he knows government and he knows manufacturing. He is a steady and insightful advocate for the mission of protecting and growing Ohio manufacturing.”
Jeff is a longtime OMA board member and also holds professional memberships in Ohio State Bar Association, Washington County Bar Association and the Ohio Paint Council. His civic involvement includes 13 years as a member of the Marietta City Board of Education. Prior to working the family manufacturing business, Jeff practiced law. His education includes: B.A., University of Virginia, and J. D., Case Western Reserve University.
Jeff is married to Nancy Putnam Hollister, former Lt. Governor of Ohio, and has five children and two grand children.
Strickland Message: No Tax Increases
Both publicly and privately (to OMA leadership and others), and in the face of huge budget shortfalls, Governor Strickland continues to oppose tax increases. The governor also continues to advocate for the protection of recently-achieved tax reforms. The Strickland message: “a recession is not the time for a tax increase.”
Here is how the Dispatch reports the position: “Strickland has said he wants to protect tax cuts, including a 21 percent reduction in income-tax rates enacted by Republicans before he took office, and says any tax increase in this economy would be counterproductive.”
The OMA appreciates the Strickland steadfastness.
Prevailing Wage Compromise Reached – Sort of
The legislative proposal to block newly adopted prevailing wage guidelines fell apart late last week. In September, the Ohio Department of Commerce revised guidelines regulating the applicability of prevailing (union-scale) wages on construction projects undertaken by public / private partnerships. The new guidelines would create higher construction costs for manufacturers and other businesses that receive public grants or loans.
Senate President William M. Harris (R – Ashland) was upset by the policy change and worked to counter the new guidelines. He worked with Senate Finance Committee Chairman John Carey on a legislative remedy to reverse the new guidelines.
Progress appeared to be nearing as a revised version of SB 376 was offered December 3. The very next day Commerce Department Director Kimberly Zurz announced an agreement with the Senate to adopt the guidelines by administrative rule, affording parties an opportunity for public comment during the rule-making process, a potentially more difficult venue for opponents.
Most outspoken against the new guidelines have been Ohio’s economic development professionals who note that Ohio is one of only four states imposing the union scale on public-private partnerships.
OMA Board Prepares for “Card Check” Battle
During the OMA Board of Directors quarterly meeting this week, the priority issue was the Employee Free Choice Act, federal legislation expected to be considered in the first 100 days of President Obama’s term. This legislation frequently referred to as ‘card check,’ eliminates employees’ rights to a secret ballot in union elections and lowers the barriers for unions to form.
At a time when Ohio manufacturers are literally battling for their survival, it is hard to imagine a more disastrous bill. OMA directors examined ideas to band together with manufacturers in other Midwest industrial states to potentially pool resources and campaign aggressively in the congressional districts where the vote is likely to go the wrong way for manufacturers. OMA staff is developing educational materials for members and their employees, which will be available first quarter of 2009.
OMA directors believe absent a strong campaign on card check, Ohio manufacturers will be even more vulnerable to a Congressional labor and employment agenda which includes: mandating minimum paid sick leave, lowering the employee headcount threshold of employers who must comply with FMLA, enacting paid FMLA leave, and a host of other ruinous measures.
OMA Pushes Asbestos Transparency Legislation
This week legislation advanced in both the Ohio House and Senate to impose new disclosure requirements on claims filed in state civil actions against asbestos trusts. The bill’s purpose is to prevent double-dipping at federal and state levels.
With the General Assembly expected to adjourn “sine die” next week, the OMA wrote all state lawmakers to urge swift action on the legislation.
State Budget Planning: 25% Cut Scenario
The Strickland Administration produced a 25% funding cut scenario this week as part of a continuing effort to describe the financial problems facing the State of Ohio. Economic advisers to the state right now project a $7.3 billion deficit for the next biennium (starting July 1, 2009) at the appropriation levels of the current biennium.
Agencies were asked to provide scenarios that describe possible program reductions. The administration was careful to say that the scenarios are solely for illustrative purposes and are not recommendations.
Ohio Revenue Contraction of Historic Proportion
Ohio Office of Budget and Management Director Pari Sabety this week presented a startlingly bleak economic forecast for the State of Ohio. State revenues are on a rapid and steep decline. Forecasts for 2009, 2010 and 2011 show a contraction of historic proportions.
State economic advisers expect that “in the next 2 years, Ohio will confront the most serious erosion in revenues it has experienced in the last 40 or 50 years.” For FY 2008-2009, an additional $640 million budget gap is projected, after earlier cuts of $1.3 billion. Current agency spending is at 87% of the legislatively-enacted state budget.
Until FY 2008, “there was no time in the past half century when General Revenue Fund tax revenues declined two years in a row.” The forecast projects another three years of decline.
Forecasters believe that “Ohio could see a reduction in wage and salary income for the first time.” Personal income tax revenues are forecast to drop from $9.1 billion in 2008 to $7.7 billion in 2011.
Sales tax revenues are expected to be $491 million lower in FY 2010 than in FY 2008 ($7.61 billion to $7.123 billion). Under the forecast, total general fund tax revenues for FY 2011 would be less than FY 2004 revenues.
At currently budgeted levels of spending, the FY 2010-2011 budget would be in deficit by $7.3 billion. At 90% levels the deficit would be $4.7 billion.
Lawmakers Consider Transparency In Asbestos Torts
This week House and Senate committees heard testimony on legislation that would increase claim transparency in asbestos exposure tort actions. Senate Bill 370 sponsored by Senator Bill Seitz (R – Cincinnati), and an identical companion bill, House Bill 631, sponsored by Representative Louis Blessing (R – Cincinnati), require claimants seeking damages in lawsuits in state court to disclose claims already made against asbestos trusts. The enhanced transparency would help courts better factor relevant information, further improving Ohio’s legal climate.