December 21, 2007

ATTORNEY GENERAL FILES MOTION TO KEEP H.B. 694 ON THE BOOKS

On Tuesday, Attorney General Marc Dann, on behalf of the state, filed a motion with Judge John Bender (the presiding judge over the consolidated H.B. 694 cases) asking the Judge to reconsider his summary judgment ruling concerning certain parts of the campaign contributions law.

Earlier this month, Judge Bender granted the Plaintiffs’ motion for partial summary judgment, holding that H.B. 694 was not valid law because it was not enacted properly under the Constitution.

Included in the provisions Mr. Dann maintains are valid are the increased threshold for political subdivisions ($10,000) and the permission to obtain annual certification.

Mr. Dann contends that the portions of H.B. 694 that were amended in the biennial budget bill (H.B. 119) were in effect re-enacted in that legislation. He argues that because these provisions were re-enacted, the defects in enacting those provisions in H.B. 694 were cured. Consequently, even though H.B. 694 was not validly enacted according to Judge Bender’s ruling, the AG asserts that the portions of the law that were amended in H.B. 119 are still valid.

Don McTigue, who is legal counsel for the United Auto Workers (Plaintiffs in the case), filed a motion asking Judge Bender to deny Marc Dann’s request to reconsider. Mr. McTigue maintains that H.B. 119 did not re-enact portions of H.B. 694 because later legislation cannot re- enact a law that was never constitutionally valid.

Each party’s brief on this issue is due to Judge Bender on January 4. While this legal battle is ongoing, the legal status of the law is in limbo.

For questions concerning this issue, please contact CCAO Staffer Beth Tsvetkoff at 614-220- 7996 or [email protected].

STRICKLAND WON'T TAKE RAISE HE'S SLATED TO GET & LEADERSHIP EXPRESSES RESERVATIONS ON SALARY LEGISLATION

Following is a re-print of a story published by the Toledo Blade Newspaper.

BLADE COLUMBUS BUREAU

COLUMBUS - Gov. won't take the automatic pay raise that state law says he is entitled to.

1 "People in public office should attempt to lead by example," he said. "I made a difficult decision [early this year] that a lot of good people who work for the state and who may very well deserve a pay raise won't be getting one." As the governor enters his second year in office, a state law that is about to expire called for him, other statewide elected officials, judges, and county and township elected officials to receive annual raises based on the rate of inflation or 3 percent, whichever is less.

The raise for 2008 would be 2.8 percent. The governor currently is paid $144,831.

House Speaker (R., Kettering) said there are no plans to interfere with the last scheduled automatic pay raise for lawmakers to take effect on Jan. 1. But he said it would be unlikely that the General Assembly will move in the current economic environment to pass a bill to continue the raises into the future.

"These are always tough things to do, and I think it's a really tough thing to do at a time when we have a high unemployment rate," he said. "I think we're the fourth-highest in the nation. We lost 11,500 jobs in the last year, and the last thing I think elected officials should be doing is lobbying for a pay raise for themselves."

Lawmakers will be paid about $60,500 a year after the 2008 cost-of-living adjustment. Mr. Strickland said he will not offer advice to the legislative branch and other elected officers as to whether they should accept their pay raises.

A bill currently pending in the General Assembly would provide pay raises for judges, but that bill is unlikely to move.

Mr. Strickland said he has not threatened to veto it, but he added, "I can tell you I would be just as happy if it didn't reach my desk."

STREAMLINED SALES TAX INITIATIVE

An unexpected development at a governing board meeting of the Streamlined Sales Tax project in Dallas last week could pave the way for Ohio to increase its leverage over the multi-state effort toward a more uniform and effective tax system.

Ultimately, the goal of the seven year old project, a collaboration of states that have taken their own steps toward uniformity in a voluntary effort which is to capture revenue lost to Internet and catalogue sales, is to convince Congress to enact federal requirements on the collection and remission of interstate sales taxes by businesses.

While that brass ring still appears to be years away, hearings last week in Washington, D.C. on legislation to that effect apparently added some urgency to the push to get more of the larger states, such as Ohio, into the mix as full SSTP members.

"I think that convinced a number of folks on the governing board that they needed to open things up," said Brad Cole, CCAO Senior Policy Analyst, who attended the meeting in Dallas. The rumor was people were told they needed to broaden the base of participating states in order to gain more support at the federal level.

2 Sen. Ron Amstuz (R-Wooster), a key architect of several state tax code changes enacted with an eye toward full conformation with SSTP, noted Ohio is so far the biggest state participating as an associate member.

"It's not going to be successful as a project unless a number of other large states get involved," he said in describing the action in Dallas as "a positive."

The SSTP governing board amended the agreement this week to the satisfaction of CCAO, the Department of Taxation, the National Federation of Small Business-Ohio, and other stakeholders. The change addressed a key problem for Ohio, which, unlike most of the full member states, taxes sales based on the rates where the transaction originates rather than the shipping destination of goods.

"The agreement has been amended in a way that Ohio can eventually become a full member in a way that changes will not have to be made to how sales taxes are collected in Ohio," an ODT spokesman said.

Under the change, Ohio could become a full "origin state" member with a seat at the governing board in 2010 if four other states get as far along the process by then in otherwise attaining statutory conformity with SSTP.

Tennessee and Utah are among current associate members that could make the grade by that time, and participants are hopeful that and Virginia also will be in the mix.

Over the last several years, the General Assembly, in an effort to conform with SSTP has enacted changes that have impacted various aspects of law, such as how "rounding" is computed and how chewing gum and bottled water are taxed.

To fit in with the latest standard, Sen. Amstutz said there might be further "minimal" legislative action required in Ohio that would impact retailers with $30 million or more a year in sales. But, the SSTP amendment addresses the main hurdle by eliminating the "destination sourcing" mandate on businesses for all sales tax transactions, he said.

Citing cost concerns and other issues. Senator Amstutz and Representative Bob Gibbs (R- Lakeville), along with small businesses led the charge in opposition to such a move earlier this year in successfully backing legislation to maintain the status quo in terms of Ohio's sales tax methodology. That move was finalized after the SSTP board refused to adopt an amended version of Tax Commissioner Rich Levin's plan to exempt most small businesses in the state from the destination-sourcing requirement.

The new SSTP amendment allows Ohio to gain full membership while continuing with origin- based sourcing on intrastate sales. Destination sourcing would apply on interstate sales.

During public testimony before the SSTP Board, Cole testified in support of the amendment, noting that the amendment to the agreement was an improvement over an amendment supported by CCAO and considered at the previous meeting in Kansas City in September. Also speaking in support of the SSTP amendment from Ohio were Commissioner Ray Feikert (Holmes), National Federation of Independent Business Executive Director Roger Geiger, and Bill Riesenberger, Chief Counsel, Ohio Department of Taxation.

A new development at the meeting was the emergence of local governments as a major force in the deliberations of the SSTP Board. In addition to Ohio, local government representatives from

3 Alabama, California, Florida, Texas, Virginia, the US Conference of Mayors, and NACo all testified or actively worked to secure passage of the amendment. CCAO would like to provide special thanks to Alysoun McLaughlin, Associate Legislative Director for Finance and Intergovernmental Affairs at NACO, and Sonny Brasfield, Assistant Director for Association of County Commissions of Alabama, for organizing local governments into a cohesive force to address origin sourcing and other sales tax matters of interest to local governments nationally.

CCAO also wishes to recognize and thank Joan Wagnon, Secretary of Revenue for the State of Kansas and SSTP Board Chairperson, and Jerry Johnson, Vice Chairman, Tax Commission, for their tireless efforts in drafting the origin sourcing amendment and mustering the votes to pass it. The origin sourcing amendment was approved without opposition by the Governing Board on December 12. Lastly, CCAO thanks Bill Riesenberger of the Department of Taxation for his able representation of Ohio’s interests before the Governing Board.

REVIEW OF ELECTION SYSTEM REPORT CONTINUES

Review of the report and recommendations released by Secretary of State on the risks associated with Ohio’s current voting system continues by individuals. Below are excerpts from a story that appeared in Gongwer News Service.

Gov. Ted Strickland said he agrees with the need to address the problems outlined in the report while acknowledging it could add fiscal pressures to an already-tight budget that has been squeezed further by shrinking revenues and rising Medicaid expenses.

Secretary Brunner's findings are "of great concern to me," Gov. Strickland said Monday.

The Governor said he didn't anticipate having to spend money on voting machine upgrades when the biennial spending bill was in the planning stages last spring. "I didn't build any fat into the budget," he said.

Rather than having to make funding decisions among competing priorities, Gov. Strickland said he now finds himself "having to choose between necessities."

How soon the state should act to correct the problems with voting machines "is in question," he added.

"But I certainly think it should be in time for the presidential election," Gov. Strickland said, noting the 2000 and 2004 elections in Ohio involved allegations of voting irregularities. "I don't think we should go through a third presidential election and have those questions out there."

While the Governor continues to review the report and its budget implications, doubts have been raised about the wisdom of seeking a quick solution to the so-called EVEREST report findings.

The Cuyahoga County Board of Elections is split on whether to implement the optical scan voting equipment in time for the March 4 primary election, as the report suggested given past practice issues. The expense is estimated to be $2 -$2.5 million and the question is whether the state will assist with this cost.

4 Brunner spokesman Jeff Ortega said at this point the Secretary of State has determined federal money will not be available for that fix and other related expenses.

"If that option is pursued, we would be seeking reimbursement from the General Assembly for the Cuyahoga County equipment purchases," he said.

Secretary of State Brunner is expected to break the tie vote of the Cuyahoga Board of Elections on this voting equipment decision.

The Cuyahoga County board was warned in a meeting on Monday by the American Civil Liberties Union of Ohio that the use of optical scan technology in the county "may contribute to votes being lost due to over-voting and under-voting, particularly in communities with people of color," the group stated in a news release.

"While the concerns Secretary Brunner outlined in her report should be carefully considered, the recommendations to switch technologies only months before the March primary could have disastrous effects," said Daniel Tokaji, referred to in the release as an ACLU "cooperating attorney."

Former Secretary of State Ken Blackwell was taken to court by Cuyahoga County and other boards of elections in 2005 over a directive to purchase optical scan devices. Then-Attorney General issued an opinion at the time that found the Secretary could not mandate what type of machines to buy. Currently, only 31 of Ohio’s 88 counties use optical scan machines versus the DREs deemed by the study to be problematic.

In terms of other costs, he said Secretary Brunner's office would conduct a comprehensive review based on what EVEREST recommendations are implemented.

"Part of that study will identify all available voting systems equipment by county," Mr. Ortega said. "The information gleaned from this study will be needed to clearly identify the anticipated equipment and operational expenses and savings associated with the various recommended changes."

Initial reports have estimated the cost for the November 2008 election based on the Secretary’s recommendations to be around $31 million. On is an excerpt from that breaks this estimate down. However, other individuals, including elections officials, believe the $31 million figure is a “low-ball at best.”

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SPEAKER PROPOSES PLAN TO ENCOURAGE STATE INVESTMENT IN RENEWABLE ENERGY

At a Columbus press conference Tuesday, Speaker Jon Husted (R- Kettering) released a plan designed to boost the states investment in renewable energy initiatives. Under the Speaker’s plan, state income tax revenues generated by the renewable energy industry would be redirected back into the research and development of green energy initiatives to the tune of $10 million a year.

Husted offered the plan as a response to those critics who have panned the renewable energy provisions included in the Governor's energy bill. Said Husted, "They stopped looking at Ohio because they don't believe the legislation, as it stands, would provide the basis for a renewable energy investment here."

The Department of Taxation would establish the base amount that the industry currently generates in state income tax revenues and any future additional revenue generated by new job 6 creation in green energy companies would be directed to the Ohio Renewable Energy Authority, which would help fund increased investment in new technologies and businesses.

To guarantee that $10 million would be available for investment each year, the state would initially have to invest a small portion of the kilowatt-hour tax in order to launch the program, explained the Speaker. "I believe that it can come from the growth (in the kilowatt-hour tax), but we'll need to work through that in the committee process."

Despite the use of the kilowatt-hour tax, Husted made assurances that the proposal won't result in higher electricity rates or increased taxes or fees.

"We are seriously going to be focused on trying to not only have a renewable energy portfolio, but also to make sure that we are going to take that change and turn it into real job growth in the state of Ohio," he said. "We're sending a strong message to the renewable energy industry that if you come to Ohio and you create jobs here and you invest in this state that we're going to use the resources you generate to reinvest in growing those businesses."

While Gov. Ted Strickland hadn't yet reviewed details of the proposal, he "applauds the speaker's focus on renewable and advanced energy technologies," said spokesman Keith Dailey. "The governor has long advocated for investments in these advanced energy technologies, which can help fund Ohio's economic renaissance.”

However Gov. Strickland’s current plan included language in his energy proposal that would benefit "advanced energy" technologies that include clean coal and nuclear, while Speaker Husted said such companies would not be eligible for his proposal. The Speaker’s proposal would limit the program to companies and institutions involved in developing and manufacturing components for wind, solar, fuel cell, bioenergy, and energy efficiency technology.

While numerous environmental activists have repeatedly expressed concern that the renewable energy standard portfolio would be removed from the electric regulation bill (SB 221), Speaker Husted alleviated some concerns by noting that he's anxious to pass the proposal "as a package" with the governor's energy bill as soon as possible.

PUCO ISSUES MORATORIUM ON DISCONNECTING HEAT FOR MOST VULNERABLE CITIZENS

As reported in Have a Heart Ohio, the Public Utilities Commission of Ohio (PUCO) issued a 90- day moratorium (effective Thursday) on the disconnection of residential electric and natural gas services. The moratorium applies only to residential customers whose household income is at or below 175% of the federal poverty level (“FPL”).

Governor Strickland released a letter to PUCO Chairman Alan R. Schriber on Tuesday explaining the importance of remembering those who are unable to heat their homes this winter and asking the PUCO to consider issuing a moratorium on the disconnection of electric and natural gas services.

The Commission found that current economic conditions and the scarcity of federal government financial assistance imposes a hardship on many Ohioans that could result in difficulty in paying

7 utility bills this winter. The Commission believes that those households at or below 175 % of the FPL are at the greatest risk.

Each natural gas and electric utility subject to the Commission’s jurisdiction is prohibited from disconnecting residential natural gas or electric service for nonpayment of bills for a 90-day period where the residential household income is at or below 175% of the FPL. The moratorium is valid as long as the customer is on an extended payment plan with the utility or the customer agrees to enroll in the Percentage of Income Payment Plan (PIPP) or other Commission- ordered payment plans.

However, the moratorium is not a forgiveness of the utility bill and the customer is ultimately responsible for payment of the entire amount owed on the natural gas or electric bill. PUCO strongly encourages customers to continue to pay their natural gas or electric bill each month when the bill is due or make the monthly payments on any alternative payment plan they have entered into with the utility company.

NEW BILLS:

SB 267 PERS LAW ENFORCEMENT (Faber) Regarding the Public Employee Retirement System law enforcement division. Am. & En. 145.01, 145.19, 145.191, 145.33, 145.35, 145.49 and 145.2914

HB 415 ANIMAL FIGHTING (Blessing) To increase the penalty for animal fighting, including cockfighting and dogfighting. Am. 959.99

HB 416 WATER COMPACT (Dolan) To ratify the Great Lakes-St. Lawrence River Basin Water Resources Compact and to establish related requirements. En. 1522.01, 1522.02, 1522.03, 1522.04, 1522.05, 1522.06, 1522.07, and 1522.08

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