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Timber Talk 6/24/13

Posted By John Dorka, Monday, June 24, 2013

Ohio Legislative and Policy News

SB 94 – Ohio Forest Products Awareness Week Passes House
Last week, the House voted nearly unanimously (97-2) to create the Ohio Forest Products Awareness Week the first week in October. It had already passed the Senate unanimously. Unless specifically granted special authority, a legislatively passed bill becomes effective 90 days following passage. That means once Governor Kasich signs the bill, the law will become effective near the end of September this year, enough time to work with announcing Ohio Forest Products Awareness Week before the Paul Bunyan Show.

Legislature Gets Slightly Better Revenue Projections for Budget Discussion
As the State Budget Conference Committee is meeting this week to finalize differences between House and Senate budget versions, the State Office of Budget and Management (OBM) advised the committee that revenues projections for the next two years are slightly better than previously reported. In addition, OBM is projecting spending reductions in Medicaid of nearly $100 million over the next 2 years. Due to the better budget projections, Governor Kasich said that he will continue to lobby the legislature to provide personal income tax reductions in this budget in addition to the small business tax cuts already included in the budget proposal.

Tax Overhaul Plan is Praised by Businesses but Gets Mixed Reviews from Local Governments and School Districts
A plan to overhaul the tax code was released by Republicans from both the House and Senate late last week for the House Ways and Means Committee which started hearings on the plan. It will go before the Senate Ways and Means Committee this week. The plan involves a total net tax cut of $2.6 billion. Here are some key points in the proposal:

  • A personal income tax cut of 8.5% the first year of the biennium, an additional 0.5% the second year, and an additional 1% in the third year, for a total reduction of 10%;
  • A scaled back version of the Kasich plan on small business tax reductions, cutting 50% of taxes on the first $250,000 of income, rather than the original $750,000 amount;
  • A new state Earned Income Tax Credit for low-income tax payers, patterned after the federal program;
  • Reductions would be paid by raising the state sales tax from 5.5% to 5.75%; eliminating the 12.5% property tax rollback on new local levies; means testing the homestead property tax exemption; and reducing the commercial activity tax exemption (a flat $150 fee) from the first $1 million of income to the first $500,000;
  • There would be new sales taxes applied to digital goods such as ebooks and music downloads; increase taxes on cigarillos to that of regular cigarettes; eliminate the gambling loss deduction; and repeal the $20 personal exemption credit.

The plan has received mixed reviews from constituent groups. Interestingly, two tax experts, Richard Vedder, professor emeritus from Ohio University and Michael Boskin, senior fellow at the Hoover Institution and professor of economics at Stanford University, both believe that the proposal is good for Ohio as a pro-growth tax reform package, especially with its shift away from income taxes.

Medicaid Hearings
Two bills to expand and reform Medicaid are now in front of the House Finance and Appropriations Committee, but it appears that neither would get passed before the end of the session on June 30. The legislation contains 3 major components: Medicaid reform, workforce development, and a joint legislative oversight committee. A substitute version will shape the goals and policies of the Medicaid Program and will include cost control measures and goals, payment innovation flexibility, continued workforce development linkages, and incentives to reward quality care.

Ohio Unemployment Rate Remains at 7%; Ohio Leads Nation in May Job Creation
The Ohio Department of Jobs and Family Services (ODJFS) reported last week that Ohio’s unemployment remained at 7%, down from the national average of 7.6%. Interestingly in the report, ODJFS stated "…employment increases were seen in the construction and manufacturing sectors, while mining and logging remained unchanged.” Of particular note, Ohio led the nation with new jobs created at 32,100. In second place and much farther behind was Texas at 19,500 jobs.

Constitutional Amendment Proposed to Overhaul Legislative Redistricting
A measure to reform how legislative redistricting, which takes place every 10 years, has bipartisan support is expected to be voted on the Senate State Government Oversight and Reform Committee this week. Currently the Ohio Apportionment Board, which consists of the governor, auditor, secretary of state, and two legislative appointees redraws the maps for the legislative districts. Under the proposal, a new seven-member Ohio Redistricting Commission would be created to re-draw boundary lines. The commission would be composed of the governor, auditor, secretary of state and one person appointed by each of the 4 caucus leaders in the House and Senate.

Committee Hears Debate on Bill to Block Reporters’ Access to Gun Ownership Records
The Senate Criminal Justice Committee is hearing testimony on SB 60 which would eliminate journalists’ access to concealed carry permit holder records. As expected the Ohio Newspaper Association is opposed to the bill while a number of gun advocacy groups including the Buckeye Firearms Association and Ohioans for Concealed Carry are in favor of the bill and restrictions.

Oil and Gas Drilling Waste Penalties May Increase; Democrats Pitch Severance Tax Increase
A bipartisan group of Senators is seeking to increase penalties on companies that illegally dump drilling waste. The penalties could substantially increase in cases where companies knowingly dispose of waste, with fines up to $50,000 and 3 years in jail, and doubling of such penalties in repeat violations. Sen. Bob Hagan (D-Youngstown) is proposing to increase the severance tax to 7.5%, a measure which could generate nearly $1 billion per year by 2018. It appears neither bill has much chance of passing the General Assembly, at least in the near future.

Logging Road Permit Exemption Included in Farm Bill; Farm Bill Fails to Pass House
Last week, the House Agriculture Committee voted to include an amendment in the Farm Bill that would create a permanent exemption for logging roads from Clean Water Act point-source permitting (NPDES). Many considered that an outstanding victory for forestry interests against unnecessary federal regulation of forestry activities. Unfortunately, before the end of the week, the House voted against the Farm Bill 234-195 and all the good work on the amendment was for no immediate gain. This points out the need to continue work, both on keeping the amendment in any future Farm Bill package that will eventually be passed as well as continue working to pass the Silviculture Regulatory Consistency Act (H.R. 2026) which would accomplish the same objective. We will continue working to get passage of both proposals until one is successful.

Thousand Cankers Disease (TCD) of Walnut News
Some questions came up about TCD last week and possible quarantine restrictions in Ohio and other states. The latest on TCD in Ohio is that there have been additional confirmed findings of the Walnut Twig Beetle recently in SW Ohio. However, as of this date there has been no confirmation that the twig beetles were carrying the TCD fungus. The Ohio Department of Agriculture is preparing rules for a quarantine of Butler County. Rules are not yet prepared but will be filed soon. They take effect 90 days after being approved. OFA was told we will have a chance to review them before any actions are taken to submit them as official. Meanwhile, other states are taking actions to regulate the disease on their own and are likely to quarantine any logs from Ohio whether or not they come from Butler County. (Because TCD is a pest "native” to the US, APHIS does not regulate the pest, and each state is free to take action as it determines.) Currently, Indiana is requiring walnut logs shipped from Ohio to have an agreement or phytosanitary certificate. Other states may require the same. Dan Kenny, Asst. Chief of the Division of Plant Health at ODA advised OFA that he can offer assistance to any of our members who needs to get an agreement or certificate. Members can contact Dan at 614-728-6399.

Beware of a Forestry Standard Monopoly
This is the title of an article from Forbes on-line this past week discussing the results of an economic analysis looking at the viability of forestry certification programs and the unintended consequences of policies that effectively create monopolistic approaches with the programs. The analysis, prepared by economists from EconoSTATS, an economic non-profit at George Mason University, essentially concludes that policies dictating specific certification programs, such as what the LEED building standard does with FSC wood, create perverse incentives that can cause a host of unintended consequences that can have far ranging economic and other impacts. The authors conclude that is what happens with the ill-advised selection of FSC over other forest certification programs. Interestingly the authors conclude that FSC overly restricts the amount of output that can be produced from the same amount of acreage under other certification programs, such as the Sustainable Forestry Initiative (SFI) and the American Tree Farm System (ATFS). The reduced output leads to income losses that result in lost employment and tax revenues. You can see the 31-page report on the EconoSTATS website. The Executive Summary on pages 6-7 will give you a good understanding of the study and results.

AHEC Reports Expanding Hardwood Exports to China and Southeast Asia
Here is an article that talks about expanding hardwood exports to China and Southeast Asia. Michael Snow, Executive Director of the American Hardwood Export Council (AHEC) is quoted in this article, talking about how US hardwood exports to that part of the world have fared well over the last several years. More than half of US hardwood exports ($1.2 billion) in 2012 were shipped to the China and Southeast Asia Market (China, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam). A significant part of the demand in China is coming from an expanding housing market due to wealth creation in the country and many residents opting for hardwood materials in their homes. The hardwood is chosen both for aesthetic and environmental reasons. China plans to build 1 billion square meters of "green” buildings between 2011 and 2015, and hardwoods will be a key strategy in meeting green standards. AHEC plans to play a key role in providing information on hardwood products for the Chinese markets. The information will include identity of US suppliers, product descriptions, quality of the wood, commercial and scientific species names, place of harvest, and documents to indicate low risk as illegal products.

45th Annual Hardwood Dry Kiln Operator’s Workshop
On July 16-19, 2013, North Carolina State University, Wood Products Extension will host the 45th Annual Hardwood Dry Kiln Operator’s Short Course at Haywood Community College in Clyde, North Carolina. Sponsored by the Southeast Dry Kiln Club, the course is designed for beginner operators as well as more experienced operators interested in staying current in the business. For specific registration and course information you can download the registration brochure. Registration for the three and a half day course is $375.

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