Week in Review: June 11, 2023

BALLOT ISSUES

Ohio Business Roundtable (OBRT) President and CEO Pat Tiberi told reporters Monday that while the OBRT has been concerned with the level that "out-of-state interests" had access to the ballot historically, its members have "chosen to stay out of" the Issue 1 matter "because of the other issues" related to it.

FY22-23 BUDGET

Incomes taxes generated more than $200 million above expected collections in May, bearing out the Office of Budget and Management's explanation that an April miss of about $120 million was mostly a matter of timing, according to preliminary revenue figures released this week. The monthly report puts Ohio's FY23 overage at more than $840 million as lawmakers enter the final month of deliberations on the FY24-25 biennial budget. May's income tax collections reached $1 billion versus expectations of $759.6 million, nearly $242 million or 31.9 percent more than expected.

FY24-25 BUDGET

The Senate would further flatten Ohio's income tax structure to two brackets from the current four and the House's three, while eliminating some school funding guarantees and granting at least partial EdChoice scholarships to all comers, under a substitute version of HB33 (Edwards) adopted by the Senate Finance Committee Tuesday. The Senate version would also reform how Ohio uses surpluses going forward, with an increased cap for the Rainy Day Fund and the conversion of automated income tax cut mechanisms into an expanded sales tax holiday. The Senate sub bill proposes state-only GRF spending of $27.5 billion in FY24 and $28.9 billion in FY25, respectively $691 million and $770 million lower than the House-passed version. Total GRF funding -- $41.5 billion and $45.4 billion -- is down $1.35 billion and $1.27 billion compared to the House version. All Funds spending -- $94.18 billion and $94.89 billion -- is down by $2.88 billion and $919.7 million. Finance Chair Sen. Matt Dolan (R-Chagrin Falls) outlined the budget plan as spanning four major funding sources: ongoing General Revenue Fund (GRF) spending, GRF surplus, Temporary Assistance for Needy Families (TANF) and American Rescue Plan Act (ARPA.)

Senate changes also would tighten the State Appropriation Limitation (SAL), which is meant to curb growth in state spending. The substitute bill lowers the growth factor from 3.5 percent to 3 percent and eliminates an alternative growth factor based on population growth and inflation, and specifies that the SAL encompasses more appropriations, including appropriations made to another fund supported by cash transfers from the GRF.

The sub bill also increases the cap on revenue that can be put into the Rainy Day Fund from 8.5% of revenues to 10%.

ECONOMIC DEVELOPMENT

During a JobsOhio Board of Directors meeting Friday, the economic development entity's President and CEO J. P. Nauseef said there was "record performance" for JobsOhio in 2022, with over 26,000 new jobs added through its projects being the second-highest figure behind 2021. There were also new record highs for new payroll at $1.85 billion and capital investment at $30.8 billion. JobsOhio's 10 targeted industries have seen more than 203,000 new jobs from 2010 to the third quarter of 2022, and Nauseef detailed the JobsOhio inclusive economic development strategy and vibrant communities program as well.

There are a "record number" of economic development deals in the JobsOhio pipeline, Nauseef added, but also a current "record slowdown" in how long companies take to make decisions. Deals that usually take 250 to 300 days to close now take over 400 days, and the number is creeping upward in spite of the low unemployment numbers across Ohio. The state's economic diversity is a strength as a result.

The Ohio Minority Development Financing Advisory Board (MDFAB) has approved more than $1.1 million for two Ohio businesses, the Ohio Department of Development (DOD) has announced. The support helps minority- and women-owned businesses sustain and expand their operations, DOD said. Those businesses include Ascension Construction Solutions LLC (Franklin County) which was approved for $1,063,193 from the Minority Business Direct Loan Program and Servant's Heart General Contracting LLC (Pickaway County) which was approved for $123,750 from the Women's Business Enterprise Loan Program.

ECONOMY

The May national unemployment rate rose to 3.7%, up from 3.4% in April. Total employment rose by 339,000, according to the report Friday from the Bureau of Labor Statistics (BLS). The number of unemployed people in May was 6.1 million, up 440,000 from April. President Joe Biden issued a statement on the creation of 339,000 new jobs, saying the total added in his presidency is now over 13 million. That is higher than the number for any president's four-year term. He also said the unemployment rate remained under 4% for the 16th month in a row, which has not been achieved since the 1960s.

Ohio saw the country's second highest increase in weekly unemployment claims, ranking it dead last in jobless claims per 100,000 people in the labor force, according to financial advisory website WalletHub. "Weekly unemployment claims in Ohio increased by 61.17% compared to the previous week. This was the second biggest increase in the U.S.," WalletHub said. Ohio had 288 unemployment claims per 100,000 people in the labor force, followed by California (252 claims per 100,000 people in the labor force), Alaska (200), Connecticut (191) and Minnesota (180).

FEDERAL

President Joe Biden on Saturday signed bipartisan legislation to increase the debt ceiling, preventing the U.S. from defaulting on its debt. Biden said the compromise bill cuts spending, reduces deficits and protects priorities like Social Security, Medicare, Medicaid, veteran services and infrastructure investments. Members of the U.S. Senate had voted 63 to 36 Thursday night, June 1, to approve the legislation following passage by the U.S. House earlier in the week. Ohio's U.S. Senators J.D. Vance (R) and Sherrod Brown (D) split on the vote, with Vance being the only member of Ohio's congressional delegation to vote against the Fiscal Responsibility Act, the compromise budget deal between Biden and U.S. House Speaker Kevin McCarthy (R-CA). The agreement suspends the debt limit until January 2025 -- after the 2024 election.

Ohio congressional delegation members including U.S. Sen. Sherrod Brown (D) and U.S. Reps. David Joyce (R), Marcy Kaptur (D), Max Miller (R), Joyce Beatty (D), Shontel Brown (D), Emilia Sykes (D) and Greg Landsman (D) Tuesday called on the Biden administration to choose Ohio's Wright-Patterson Air Force Base (WPAFB) in Dayton as the headquarters for the U.S. Space Command and to locate additional U.S. Space Force units in Ohio in partnership with the NASA John H. Glenn Research Center's Neil Armstrong Test Facility in Sandusky. In a letter to President Joe Biden, Secretary of Defense Lloyd Austin, Secretary of the Air Force Frank Kendall and Chief of Space Operations General B. Chance Saltzman, the lawmakers wrote that the numerous industry and university parties in the state -- along with existing U.S. Air Force and NASA bases and facilities -- make Ohio ideally suited to host U.S. Space Command and Space Force units, should the Department of Defense (DoD) choose to re-locate the Command HQ.

UNEMPLOYMENT COMPENSATION

At a time when Ohio is seeing a construction boom with the advent of Intel and the expansion of Honda and Google, opponents to the SB116 (Lang-Romanchuk) said provisions of the bill that include a reduction in benefit weeks and reduced benefits has the potential to drive the state's current construction workers into other jobs or warmer climates where the industry is not so affected by weather. Yet, despite detailed opposition testimony from Policy Matter Ohio's Zach Schiller, the Ohio Poverty Law Center's Danielle DeLeon Spires, the Associated General Contractors of Ohio's Andrea Ashley and the Ohio Association of Foodbanks' Lisa Hamler-Fugitt, the Senate Insurance Committee Wednesday had questions only for Matthew Szollosi of the Affiliated Construction Trades Ohio on the proposed unemployment compensation overhaul bill, SB116, from Sens. George Lang (R-West Chester) and Mark Romanchuk (R-Ontario). And one of those questions, from Sen. Frank Hoagland (R-Adena), was whether his association had looked into creating its own unemployment program.