2017 Legislative Session Nearing Completion, 2018 Session Preview

By Jason Warner, Manager of Government Affairs

The legislature has been back in session since mid-September working on a number of issues, including some which are still pending from earlier this year.

The most significant of these issues has been the ongoing work related to the state budget. In early July the Ohio House voted to override 11 of the vetoes issues by Governor John Kasich, including a provision which would provide a short-term funding mechanism to assist counties and transit agencies that are losing funding as a result of the elimination of the state sales tax on Medicaid Managed Care Organizations (MCO’s). When the Senate met for a rare summer voting session on August 22, they voted on only 6 of the overrides approved by the Ohio House, not including the MCO replacement funding. In September, the Senate introduced a proposal to compensate counties and transit agencies that does not include a risky request to the federal government to seek in increase in a previously approved fee that is generating revenue for the state.

Under the Senate proposal, $207 million in transitional aid will be paid to counties and transit agencies in two payments in November 2017 and January 2018 (this was previously approved in the budget bill in June). The Senate has proposed to add an additional $50 million to this pot of money in January 2018 and could add an additional $30 million in November 2018 if state generated tax receipts outperform their estimates between July 1, 2017 and October 31, 2018. All of the parties involved in the negotiations have agreed to this compromise, which is awaiting introduction into either bill form or an amendment to another piece of legislation. That is expected to occur before the legislature recesses for holiday break on December 13, as part of a larger piece of legislation intended to make corrections to the budget as a result of the other veto overrides which were approved by the legislature over the summer.

Non-budget related legislation that has seen action over the fall includes a number of bills introduced related to the expansion of broadband services in unserved or underserved areas of the state. Three bills have been introduced, including House Bill 281, sponsored by Rep. Rick Carfagna (R-Genoa Township) which would provide matching funds to municipalities or townships to support the expansion of broadband connectivity to unserved households across Ohio. In addition, two bills, House Bill 378, sponsored by Reps. Ryan Smith (R-Bidwell) and Jack Cera (D-Belmont)  and a companion Senate Bill, SB225, sponsored by Sens. Joe Schiavonni (D-Boardman) and John Eklund (R-Chardon) establish the Ohio Broadband Development Grant Program to build broadband infrastructure in unserved or underserved areas of the state.  Grants awarded under this program would have a maximum value of $5 million. Eligible recipients include businesses, non-profits, co-ops or political subdivisions (including municipalities, townships or counties). The grants cannot cover more than half of the cost of the project.

Also introduced and a priority piece of legislation for Greater Ohio is House Bill 368, sponsored by Rep. Michele Lepore-Hagan (D-Youngstown). Known as the Fair Lending Through Land Contracts Act, HB368 would make much needed changes to the state land contract statute. Land contracts are a form of seller financing. They are similar to a mortgage, but rather than borrowing money from a traditional lender or bank, to buyer makes payments to the real estate owner (or seller) until the purchase price is paid in full.

Land contracts have historically been marketed as an alternative path to homeownership for consumers who have limited income and/or have difficulty establishing traditional lines of credit that make in near impossible to qualify for a typical bank loan or mortgage. Today, these include not only people of color but also immigrant communities. While they do offer opportunity for some individuals to achieve the American Dream of homeownership, a recent increase in the prevalence of land contracts has created a crisis in communities across Ohio. In the wake of the subprime mortgage crisis of 2007-2010, millions of homes across the United States ended up in foreclosure. As a result of the crisis, the Federal National Mortgage Association (Fannie Mae) found itself with a large inventory of homes and a need to dispose of them in an expedited manner. Fannie Mae used the bulk sale program to rid itself of this inventory, and allowed large investment firms to purchase foreclosed homes for pennies on the dollar and turn around and offer them for sale at inflated prices through land contracts with terms that make in next to impossible for the buyers to meet the obligations of the contract.

Among the important changes incorporated into HB368 include requirements that sellers be required to purchase and maintain homeowners insurance policies through the duration of the land contract; requires sellers to be responsible for maintence and repair to the property during the length of the land contract, and that the seller be prevented from having a mortgage or taking out a mortgage on the property once it is subject to a land contract. Other requirements of the bill require home inspections to be carried out before a land contract can be executed in order to ensure that the home is in a livable quality before the buyer takes possession of the property, and that the seller be responsible for the payment of property taxes until the land contract is paid in full. These common sense reforms will ensure that home buyers through land contracts have the same consumer protections as other property buyers or renters under existing law and will do much to prevent the high rate of eviction and occurs under the existing law. HB368 has had a single hearing in the House Financial Institutions, Housing and Urban Development Committee and Greater Ohio, along with other advocates, are meeting with members of the committee to build support for the legislation ahead of any future hearings on the bill in 2018.

Other issues on the plate for 2018 include the introduction and legislative action on a new Capital Budget.

The capital budget provides funding for appropriates money for projects involving the acquisition, construction, equipment, or renovation of buildings and other facilities of state agencies. This does not include the Ohio Department of Transportation – those projects are funded through the state transportation budget that was approved earlier this year. The last capital budget approved in 2016 was valued at $2.62 billion - $337 million of which was cash (set aside from various general revenue funds in the state budget) while the remaining $2.28 billion was supported by state bonds which have been approved by voters in state referendums. The legislature will actually approve two capital budgets next spring – a reappropriations budget which will redirect the spending of monies approved in 2016 for projects that have not yet been completed, and an appropriations budget for new projects which will begin after July 1, 2018.

The legislature will have a busy first few months in 2018 as they work on these and other issues ahead of summer recess, when they will break to campaign for re-election. Voters will elect state legislators as well as a new Governor and other statewide officials in the November 6, 2018 General Election.