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Weekly News 2.18.13

Posted By John Dorka, Tuesday, February 19, 2013

Ohio Forestry Association

Weekly News 2.19.13
In this issue:

  • Additional Services to be Taxed Under New Budget Proposal Here is a list of services that are proposed to be taxed under Governor Kasich’s tax reform proposals in the biennium budget package. The proposal is to reduce the state sales tax from 5.5% to 5% but to start taxing a number of services that are currently not taxed or exempt. At first glance, there appear to be no specific forestry services that are included in this list (consulting services, logging, timber stand improvement, etc.). However, as they say, the ‘devil is in the details” and some of the services listed are vague at best. For example, new services to be taxed include professional services including "architectural, engineering, and related services. It is unclear whether these professional services could include forestry consulting and other forestry related items . We need to find out what related services include. In addition other newly taxed services would include financial, insurance and real estate services such as service charges of banking institutions and real estate fees, as well as business services such as accounting and bookkeeping and legal. Professional services include land surveying fees. Please look at this list and provide me feedback on how you see this list of proposed services affecting you in forestry and our industry. Overall, it is a mixed bag of changes. Some services that were exempt from state sales tax remain so. Some that were 5.5% go down to 5%. The most impact will be for the new services that had no sales tax but will now go to 5%. If you care to do so, you can find HB 59, the State Biennium Budget posted on-line at the state legislature website. Be careful. It is incredibly long at more than 4,200 pages (10.8 MB of space).Ohio Shale Gas Employment Up 17% Last Year. The Ohio Department of Jobs and Family Services issued an Ohio Shale Report (see page 3 for highlights) which showed that during 2012, employment in shale gas companies in Ohio increased from 6,263 to 7,329 (+17%) with the number of businesses increasing from 585 to 624 (+7%). Employment in related industries also increased 3.1%. The average salary for employees in core shale industries was $73,934.
  • House Agriculture Committee Stresses Importance of Agriculture. Last week several members of the House Agriculture Committee addressed the Ohio Farm Bureau and talked about the importance of agriculture in Ohio. Rep. David Hall (R-Millersburg), Chairman of the Committee advised that they expect the committee to be very busy this session and is expected to address issues involving water quality, oil and gas development, and the overall environment for job development.
  • House Removes Managed Care Measure from the BWC Budget Bill - Upon submission of the BWC Budget Bill to the House Insurance Committee, the Committee removed the proposed Managed Care Measure from the bill to deal with it separately in discussion and potential legislation. The controversial proposal which had been discussed in the previous session involves requiring injured workers to use a physician in BWC’s managed care organization network if no improvement is shown 45 days after the injury. In the previous session, the proposal met a lot of resistance from trial lawyers and labor unions.
  • Administration Budget Proposes 10% Cut in General Revenue Fund to Division of Forestry - According to the Budget "Blue Book” for the 2014-2015 State Budget, the Division of Forestry is scheduled to get a 10% reduction in General Revenue Funds for the FY 2014 and the same amount in funding for FY 2015. Currently DOF receives $4.88 million in GRF funds (34% of total funding). The reduction will amount to a reduction of $488,000. For the entire DOF budget including all funds, there is expected to be a 5.8% reduction in FY 2014 and a slight reduction in FY 2015. The largest source of funding for DOF is the State Forest Fund and timber sales. You can see more on the DOF and ODNR operating budget in the Blue Bookstarting on pages D-377.
  • Senate Priority Bills and Issues - Senate Republicans and Democrats separately released their legislative priorities this past week for the 130th legislative session. The Senate Republicans appear to be synced with House Republicans on the priorities. Senate President Keith Faber advised that "job creation and workforce development” would form the basis of their agenda for this legislative session.
    • Senate Republicans have the following priorities
    • SB 1 – Workforce Development Revolving Loan Fund
    • SB 2 – Workforce Development Improvement Act
    • SB 3 – Job Creation Empowerment Act
    • SB 4 – Newborn Healthy Hearts Bill
    • SB 5 – Kelsey’s Law
    • SB 6 – Fiscal Officer Integrity Act
    • SB 7 – Law Enforcement Protection Act
    • SB 8 – Military Employment Assistance Bill
    • SB 9 – Health Insurance Accountability Bill
    • SB 10 - Polling Access & Integrity Act

    • Senate Democrats have the following list of priorities
    • SB 11 - Childhood Hunger & Nutrition
    • SB 12 - Oil & Gas Workforce Development
    • SB 13 - Veteran's Opportunity Bill
    • SB 14 - Forward Ohio
    • SB 15 - Education Funding Plan
    • SB 16 - Blighted Property Rehabilitation
    • SB 17 - Medical Right to Know
    • SB 18 - Firearms Regulation
    • SB 19 - Family Stability Commission
    • SB 20 - Voter Protection Act

You can find information about each bill by going to the Ohio Legislative website and putting in the bill number in different locations.

  • Forest Products Fairness Act - Once again, a bill to give forest products full-recognition under the Farm Bill and other federal laws as a bio-based product has been introduced in both the House and Senate. OFA has signed on to a letter from a national coalition of forestry interests as supporters of this legislation. Both pieces of legislation are currently "open” for taking on co-sponsors through February 25.
  • Truck Weights - Representatives Reid Ribble (R-WI) and Mike Michaud (D-ME) have once again introduced HR 612, the Safe and Efficient Transportation Act of 2013 (SETA), a bill to increase truck vehicle weights with the addition of a 6th axle. And as expected, railroad interests have started campaigning against the proposed legislation.
  • Federal Carbon Tax Legislation Introduced - This past week, Senator Barbara Boxer (D-CA) introduced legislation that would impose a "fee” on carbon. It would impose a fee on "upstream” fossil fuel manufacturers (oil refiners, coal mines, and natural gas processors) and importers of fossil fuel energy. Biomass is not included. The price of carbon starts at $20/ton in 2014 with annual increases of 5.6%. The forest products industry would be affected by increased fuel prices passed down from the upstream manufacturers. Importers of carbon=pollution intensive goods which by definition the pulp and paper industry would get hit with an "equivalency fee” to prevent competitiveness and leakage issues. The funds raised would go towards a number of programs including home weatherization, incentives for alternative energy development, with excess paying down the national debt.
  • Postal Service - The American Forest and Paper Association has a significant interest in the viability of the US Postal Service as US paper and package production provides is the mainstay of the products the postal service delivers. Here is testimony from AF&PA on a recent hearing indicates the importance of the forest products industry to the Postal Service. The Postal Service is the key component of a $1 trillion mailing industry and a large part of the mailing relies on paper and packaging. One third of America’s demand for printing and writing paper, or $6 billion, is delivered through the Postal Service. The outcome of the Postal Service crisis is obviously critical to the nation’s forest products industry.
  • Selling Timber Workshop for NW Ohio Woodland Owners - OSU Extension is hosting a Selling Timber? Consider This… workshop on February 27, 2013 from 6:30 – 9:00 pm at the Auglaize County Administration Building in Wapakoneta. Here is a flyer on the workshop. Registration is $15 which includes a package of material on selling timber and includes the BMP Handbook for Logging in Ohio. The class will be taught by OSU Extension staff Dr. Eric McConnell, Forest Products Specialist and Kathy Smith, Program Director in Forestry. You can register on-line here.
  • Hardwood Leader Notes - Following are notes gleaned from the March 2013 issue of the Hardwood Leader, produced by Hardwood Publishing:
    • Total 2012 hardwood exports were 0.4% below the 2006 export record. It is expected that hardwood exports will set a new record in 2013 as Asian and Mexican demand are moving higher and the Chinese economic growth appears to be back on track. Hardwood exports were 1.318 billion BF, with exports to China, Vietnam, and Indonesia setting all-time highs.
    • 2012 imports grew by 7% over 2011 fueled by increases in Canadian Aspen and Hard maple. Wood flooring imports jumped 15% in 2012 with China supplying 77% of all US wood flooring imports.
    • Rising home construction and remodeling will help fuel rising domestic hardwood markets for furniture, moulding, cabinets and millwork. Sawmills will struggle to produce to meet the increased demand due to tight credit and high log costs.
    • 2012 single family home starts increased 24% over 2011. Multi-family starts were even higher at 37% above 2011.
    • The Leader is reporting the opening of several new mills over the last several months and believes there will be more openings and restarts in the near future.
    • Homeowner improvement spending is expected to increase 20% in 2013 according to the Leading Indicator of Remodeling Activity report from the Harvard Joint Center Housing Studies. Domestic hardwood moulding manufacturing is expected to benefit from the increased demand but will have to fight off stronger competition from imports, especially from Pacific rim countries.
    • Economic forecasters in a Federal Reserve survey believe that inflation will be 2.1% for 2013 and 2014.
    • US residential furniture factory shipments were up 6% YTD through November, 2012.
    • December 2012 was a difficult month for home sales. Single family housing starts declined in December, 2012, but seasonal adjusted factors pushed the annual rate to 616,000 starts, the highest since June 2008.
    • Single-family existing home sales declined 1.4% in December 2012. However, total home sales for 2012 were 9.0% higher than 2011.
    • Mortgage rates trended upward through January 2013 due to a "recovering housing market.”
    • Employment in durable wood products for January 2013 was up 4% from the low point in July 2011.
    • The US population aged 25-64 grew by 625,000 during 2012, but only 39% of the "net new” people entered the workforce.
  • OFA Board Ballot Due - If you have not had a chance to send in your Board ballots yet, you still have time to get it sent to the OFA office. Ballots will be received until Friday, February 22, 2013.
  • 2013 OFA Annual Meeting - Just a reminder for those wishing to attend the Legislative Reception on Wednesday, March 6 at the Annual Meeting, if you haven’t done so, it helps greatly to extend personal invitations from consitiuents to legislators to attend a reception like this. You should call the office of your State Senator and Representative to advise them you will be at the reception, and you would appreciate the opportunity to meet them in person. Contact information for legislators and talking points have been mailed to members already. But you can find the same information on the OFA website under the Find Your Legislator page.Registration for the meeting can also be done at the OFA website.

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