As we advocate to state officials the importance of our members’ priorities, we take a close look at the two-year state budget signed by Gov. DeWine on July 1. Here are the highlights, as well as updates on key issues.
- Maintains the small business income tax deduction
- $3 million to support the Cleveland Water Alliance Sustainable Water Technologies Initiative
- Multi-million-dollar new investments, policy, and evaluation enhancements to Ohio’s workforce training ecosystem
- $350 million in new brownfield funding
- $600,000 investment in Chain Reaction – a collaborative program co-led by COSE
- Creation of a megaproject tax credit for larger-scale economic development projects (GCP provided key feedback on this provision during the development phase)
- Several provisions were consistent with our mission or will benefit our members. For example, school funding increases and tax cuts (3% rate cut and a reduction in the number of state income-tax brackets)
Municipal Income Tax Withholding
The temporary rule governing the municipal income taxation of employees who are working at a temporary worksite—including their home—due to the COVID-19 pandemic was set expire in mid-July. The rule specified that if an individual must work at a temporary worksite because of the COVID-19 pandemic, that employee is still considered to be working at his or her regular place of employment or principal place of work. The state budget included a provision that extends the temporary rule—allowing employers to continue withholding as if employees were working at their regular workplace—until December 31, 2021. The provision also allows employees to request a refund of any taxes withheld under the temporary rule during 2021.
The GCP Government Affairs Council voted in late April to support moving the expiration date of the temporary rule to the end of 2021 to help ensure simplicity and predictability for employers. The council also voted to oppose an earlier provision that would have allowed retroactive refunds back to 2020, a move that could have created unnecessary burdens on the employers and municipalities that support northeast Ohio’s economy. In addition to moving the expiration date to the end of 2021, the final budget bill confined individual refunds to 2021, aligning with our positions on the issue.
Minority Business Development
In our 2021 – 2022 Public Policy Agenda, we called out the need to reshape minority business development programs so minority businesses can navigate them easily, quickly and affordably. Businesses often face an onerous process when it comes to navigating state programs, spending enormous amounts of time to maneuver through government bureaucracy for certification purposes. The final budget bill took a major first step toward giving businesses an efficient, straightforward process when applying for the Minority Business Enterprise (MBE) and Encouraging Diversity, Growth and Equity (EDGE) programs.
The bill transfers responsibility for administering the programs to the Department of Development’s Minority Business Development Division, an office that supports the growth and sustainability of small, minority, and disadvantaged businesses in Ohio. The certification programs will now be administered by the same office that offers technical and professional assistance, access to capital and bonding, and connection to business opportunities through Minority Business Assistance Centers. To support this process, the budget bill increased funding levels for the Minority Business Development Division. In mid-2023, the Department of Development will submit a report to the Governor and General Assembly that includes data comparing the efficiency of the MBE and EDGE programs before and after the transfer process.
New Business Loan Programs
The final budget bill also established two new loan programs: Women Owned Business Loans and Micro-Enterprise Loans. Both programs are designed to stimulate the growth of new and existing businesses in the state at market or below-market rates. Applicants can use loan proceeds for working capital, machinery and equipment purchases, leasehold improvements, inventory, rolling stock, and the refinance of existing business debt. The bill allocated $20 million over the biennium to these new programs, which will be administered by the Minority Business Development Division.
Broadband and the Digital Divide
Over the course of 2020 and 2021, GCP members have continued to elevate the importance of broadband access and affordability, culminating in a resolution by the Board of Directors to prioritize and accelerate the closure of our region’s digital divide. In partnership with leading member companies, our organization advanced an advocacy agenda to incentivize innovative, low-cost solutions to the problem that could catalyze widespread home internet adoption. The State of Ohio was a critical partner in this work, and GCP strongly supported Governor DeWine’s proposal to invest $250 million to expand access to broadband.
However, the Ohio Senate passed its version of the budget bill with an eleventh-hour provision that would have stripped all 2022 – 2023 funding for broadband access programs while adding problematic language regarding “government-owned networks” that would undermine the efforts of our region to promote broadband access, affordability and adoption. As the Senate’s version was sent to a conference committee made up of representatives from both chambers, we helped to mobilize the Greater Cleveland Digital Equity Coalition, a collective initiative by Cleveland’s corporate, philanthropic, local government, K-12 and higher education, health care, workforce, and community-based and advocacy organizations to narrow the digital divide in greater Cleveland.
Ultimately, nearly 40 organizations signed onto a letter that called on leadership in the General Assembly to remove language added in a last-minute amendment to restrict broadband funding, restore funding for the 2022 – 2023 Ohio Residential Broadband Expansion Program, and add funding for BroadbandOhio to support efforts across the state to close the digital divide. The final budget bill both removed the broadband funding restriction and included $250 million in funding for broadband initiatives.
More work is needed on minority business capital, Third Frontier and state American Rescue Plan (ARP) funding determinations. For example, during budget negotiations, we began discussing an access to capital program called the Small Business Line of Credit Pilot Program that was developed as part of a local initiative, Building Equitable Communities. The program’s design would allow businesses with weak or no credit profiles to access small lines of credit, helping to establish more “bank-ready” small businesses. While funding for this pilot program was not included in the final budget bill, we will continue to advance conversations about the concept with legislators.
Looking forward, the GCP Advocacy team will continue to engage in policy conversations at the state level to advance priorities that drive the economic vitality of our region and build a strong and thriving climate for the broad business community.