News and Analysis
At their quarterly meeting this week, members of the OMA board of directors visited with ODOT Director Dr. Jack Marchbanks. Front and center was the Statehouse debate on law changes to adjust Ohio’s motor fuel tax.
Dr. Marchbanks explained why the state needs an 18 cent hike on the motor fuel state tax in order to fund transportation projects and maintenance. The ODOT director illustrated that even with the increase, Ohio’s motor fuel tax would still be competitive compared to surrounding states.
The state tax per gallon of fuel stands at 28 cents and has not been changed since 2003. The director noted how more fuel-efficient vehicles have contributed to declining revenues for over a decade.
The OMA is on record as supporting the governor’s originally proposed 18 cent increase. 3/21/2019
Of the many law changes tucked into the pending state transportation budget, House Bill 62, the House included an amendment that would improve how the state’s popular “regional heavy haul permit” would function. Since 2013, the permit has allowed heavier loads under certain restrictions. The regional heavy haul permit has been well received by manufacturers that transport heavier materials.
Railroad lobbyists took aim at the trucking efficiency improvement during the Senate debate.
The Senate Commerce, Labor & Workforce Committee removed the beneficial provision from the bill. However, yesterday evening, the full Senate restored the permit provision during debate on the Senate floor.
The OMA’s policy priorities call for support of state and federal legislation, rules and regulations that safely provide greater flexibility and efficiency in truck movements. The OMA is also supportive of technology and workforce solutions that address the shortage of truck drivers. 3/21/2019
President Trump’s recently released budget effectively mandates that employers in states that have low balances in their unemployment compensation trust funds would be required to pay a higher federal unemployment tax than states with healthy trust fund balances.
If enacted, the projected total for the increase in taxes over the next ten years is $9.2 billion. This would require higher taxes on employers in ten states, including Ohio, even though an employer’s individual unemployment insurance account is adequate to cover charges associated with benefits.
Here is the U.S. Department of Labor unemployment insurance program outlook. 3/21/2019
OMA member Ross McGregor, Executive Vice President, Pentaflex, Inc., Springfield, delivered testimony to the Senate Transportation, Commerce and Workforce Committee this week defending Governor DeWine’s proposed increase to the motor fuel tax.
The tax hike, targeted to fund infrastructure improvements, is included in the state transportation budget, House Bill 62, which has cleared the House and is now pending in the Senate.
The OMA witness took issue with revisions to the proposal that would tax diesel fuel at a rate 25% higher than gasoline. “Like most states, Ohio has one simple motor fuel tax rate that applies equally to all vehicles that consume motor fuel. The bill pending before you confounds the established simple tax and will result in diesel fuel being taxed at a rate of 25% greater than gasoline. Why?” testified McGregor.
McGregor made the point to senators that it is a common practice in shipping contracts for the carrier to pass along the total fuel costs to the shipper: “So, in effect, when you raise taxes on diesel fuel, you are increasing costs on economic drivers of our state’s prosperity.” 3/14/2019
Governor Mike DeWine’s first biennial budget will be unveiled today with the release of the budget “blue book.”
We’ll have a rundown of the elements of the budget that impact Ohio manufacturing in next week’s Leadership Briefing and ongoing as the budget debates continue through June 30, the date by which the state budget must be signed into law. 3/14/2019
Gov. Mike DeWine made a commitment to Ohio’s children in his State of the State Address. This week he outlined a plan to combat lead poisoning.
The governor’s media release said that lead exposure is a serious preventable, environmental public health threat to children, who are exposed to deteriorating lead paint (dust) in houses and apartments built prior to 1978. Exposure to lead causes issues with genitive development, behavior, IQ, hearing and speech.
The plan recommends targeting $10 million over the next two years to implement a multi-pronged approach including testing, early intervention services and abatement measures. 3/14/2019
Appearing before a joint session of the Ohio House and Senate on Tuesday, Governor Mike DeWine used the occasion of his first State of the State Address to press lawmakers to enact a responsible increase to the motor fuel tax in order to fund infrastructure improvements.
The governor sounded traditional themes: children’s initiatives, opioid abuse prevention and recovery, workforce preparedness, and water quality.
On the subject of water, the governor announced his budget bill will include the creation of a new state fund, “H2-Ohio Fund” to invest in targeted solutions to ensure safe and clean water all across the State of Ohio.
Regarding energy, DeWIne said, “Mr. Speaker, I share your interest in making sure that the air we breathe is as clean as it can be. I look forward to working with you and all the members of the General Assembly on an all-the-above energy strategy for our state that not only will ensure that Ohio’s economy remains competitive, but that also generates clean electricity that lights our homes and powers our businesses.”
You can watch the recorded address here. 3/7/2019
The Ohio House this week completed work on the state transportation budget. The transportation budget allocates monies from the federal government and state gas tax collection toward specific transportation construction projects.
The current gas tax is not producing adequate revenue to maintain, repair and improve Ohio’s roads and bridges. Never a popular thing to do, DeWine urged lawmakers to responsibly update the tax rate. It was most recently increased in 2005.
Currently, 28 cents on every gallon of motor fuel is collected by the state. In his budget proposal, the governor increased the amount by 18 cents or 64%.
In the end, the House passed the transportation budget, HB62 (Oelslager), 71-27 with bi-partisan support. The House amended the bill to bifurcate the tax so a higher rate applies to diesel gasoline. The House plan will gradually phase-in a 10.7 cent increase on gasoline over two years. Diesel will be taxed by an additional 20 cents per gallon or 70% increase with a three-year phase-in. The bill also imposes a new annual fee on hybrid vehicles ($100 per year) and electric vehicles ($200 per year). Finally, the bill appropriates $100 million for public transit.
The governor released a statement in reaction to the House amendments, saying: “The House-passed bill is far from ideal, but I appreciate the strong bipartisan acknowledgement that our state and local jurisdictions have a major revenue shortage to deal with vital transportation needs.”
Next the bill moves to the Senate. Leading senators have taken a dim view of the proposal.
Members of the OMA’s Government Affairs Committee gathered this week in Columbus to assess the state’s political climate and discuss top legislative and regulatory issues affecting manufacturers.
The agenda focused on motor fuel tax hikes, electricity-generation bailouts, the Lake Erie Bill of Rights and workforce development. The agenda also included a preview of anticipated state budget priorities.
The next scheduled meeting of OMA’s Government Affairs Committee is June 5 in Columbus. Save the date and plan to join the discussion. 3/7/2019
OMA members Arthur Pang (l.), Government Affairs Representative, and Jeff Oravitz (r.), Vice President, both of PPG, attended Gov. DeWine’s State of State Address as guests of the governor. Prior to the governor’s address, they met with Ohio Senate Majority Floor Leader Matt Huffman (R-Lima).
A new report by the John Glenn College of Public Affairs at The Ohio State University, The Economic Impact of the Trade Skirmish of 2018 on the Nation and Ohio, examines impacts with an emphasis on Ohio.
The researchers found that the trade war has not had a great impact on the economy to date, with the 2017-2018 Tax Cuts & Jobs Act providing enough stimulus to overcome harm from the tariffs and retaliatory tariffs.
However, the study notes that Ohio is the state that is most affected by the retaliatory tariffs put in place by Canada. And a poll of Ohio manufacturers that was completed in January shows that more of Ohio’s manufacturers were harmed by the trade skirmish than benefited from it.
The report offers cautions about the continuation or expansion of the trade actions as there are signs that metal-users are beginning to make adjustments in their supply chains including where they source metal-intense products.
Access the report here. 3/7/2019