How Kasich’s mid-biennium review affects you

Buckeye Farm News

Ohio Farm Bureau is taking a close look at Gov. John Kasich’s 1,600-page mid-biennium review (MBR), a package of policy and budgetary provisions that lay out Kasich’s goals for the year.

The MBR has been split out into 14 separate bills so legislative committees can consider them. The MBR is comprehensive and covers everything from K-12 and higher education to various tax changes to amusement ride inspection fees.

Here are some of the bills Ohio Farm Bureau is studying:

House Bill 490: Agriculture, natural resources, environmental protection laws

This bill includes various regulatory changes for programs at the Ohio Department of Agriculture, Ohio Department of Natural Resources and Ohio Environmental Protection Agency.

Some highlights:

The statutory and rulemaking and enforcement authority of manure from non-permitted facilities would move from ODNR to ODA. The bill is not intended to expand regulatory authority.

Proposed oil and gas regulation changes include creating new requirements for brine transportation, making changes to mandatory pooling agreements, increasing civil and criminal penalties that producers face for violations of oil and gas laws and reporting inventories of hazardous substances.

House Bill 487: Education

Several changes would be made to K-12 education programs including career technical programs that affect ag education. Schools would be required to provide career-technical education to students in grades 7-12 and adopt a career advising policy for students in grades 6-12 to link school work to careers. The bill creates a funding formula that prohibits colleges and universities from charging more than $160 per credit hour and no less than $40 per credit hour.

House Bill 483: Operation of state programs

This bill makes appropriations and provides for programs in the operation of state government. It includes programs related to underground storage tanks, apprenticeship programs for high school students, the establishment of a nonresident deer hunting permit and rules relating to the transportation of hazardous wastes.

House Bill 472: Tax reform

This bill would make changes to the Commercial Activity Tax, tobacco taxes and the state income tax. OFBF opposes any CAT rate increases.

House Bill 375: Oil and gas severance tax

This bill levies a severance tax on well owners of oil and gas severed from horizontal wells and establishes various uses for oil and gas severance tax revenue. The current proposal is:

For horizontal wells:

Years 0-2 : 1.0 percent of total gross receipts

Years 2-20: 2.25 percent of total gross receipts

Years 20+: 1.0 percent of total gross receipts

For vertical wells:

Years 0-3: No tax

Years 3-20: 0.25 percent of total gross receipts

Years 20+: 0.1 percent of total gross receipts

A look at how the current version of the bill’s provisions address OFBF policy:

OFBF policy: The regulatory costs related to drilling should be funded through drilling permits and the severance tax.

What HB 375 does: Severance tax revenue directly funds ODNR’s Oil and Gas Regulatory Program.

OFBF policy: We oppose an increase in the severance tax solely to fund an income tax reduction. If there is an increase in the severance tax, revenue generated should be organized along the following priorities:

1. Support for ODNR oil and gas regulatory and enforcement programs.

What HB 375 does: Before any other allocation is made using revenue from the severance tax, the bill creates an appropriation to fund ODNR Oil and Gas Regulatory Programs.

The initial appropriation is $15 million, an increase of over $2 million from the current $13 million appropriated today.

Another $3 million is appropriated for ODNR’s Geological Mapping Program

2. Support for enhancement in the Ohio Orphan Well Program.

What HB 375 does: It appropriates $3 million for the program, double its current appropriation of $1.5 million.

3. Support for programs addressing local infrastructure, economic and community development.

What HB 375 does: Provides that 10 percent of the total severance tax revenue be distributed for local reinvestment to counties impacted by oil and gas drilling.

Provides a hold harmless provision for the Local Government Fund for any decrease that fund incurs from tax credits and exemptions included in the bill.

Of the remainder, half would be proportionally allocated to counties where active oil and gas development is occurring and the rest allocated to the Ohio Shale Gas Regional Commission, created by this bill.

4. Support for reduction of income tax.

What HB 375 does: After these above appropriations are made, remaining revenue goes to a fund used to provide a statewide income tax cut.

OFBF policy: Any proposal that provides tax credits in relation to severance tax payments should proportionally benefit producers and landowners with royalty interests.

What HB 375 does: Provides Ohio resident landowners a non-refundable income tax credit for their severance tax liability up to 12.5 percent of the total severance tax due attributable to their lands.