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August 2015
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Dear Friends:
The last few months have been busy and productive in the public policy and economic development business. The coming months will be equally busy, albeit with more focus on politics over policy.
In this issue of our newsletter, we recap the first part of the 2015 state legislative session, outline economic development programs available, discuss progress of our foreign direct investment business, and look to future campaigns, conventions, and opportunities.
As always, please feel free to contact any of us at Hicks Partners if we can be of assistance.
Sincerely,
Brian K. Hicks
President & CEO
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From the Statehouse
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Legislative and Budget Overview
Introduction
 After months of debate, the Ohio General Assembly and Governor John Kasich implemented HB 64, the $71+ billion spending plan for the 2016-2017 fiscal years, effective July 1. The Governor outlined an ambitious budget plan in February, proposing a variety of changes to Ohio's tax policy, Medicaid, K-12 and higher education, as well as many other aspects of state government. Speaker of the House Cliff Rosenberger and Finance Chairman Ryan Smith, in their first budget cycle in their respective leadership roles, led the House through the policy revisions. Senate President Keith Faber and Finance Chairman Scott Oelslager directed the Ohio Senate as the chamber put its own touches on the measure. Governor Kasich had his final say on HB 64 by vetoing 44 different provisions in the bill. Below is a brief summary of some of the key items in the bill:
Tax Changes
Governor Kasich, Speaker Rosenberger, and President Faber worked to reduce Ohio's income tax rates for individuals and small businesses. The final version of the budget includes a 6.3% cut to personal income tax rates, bringing the top rate below 5% starting in 2015. The small business income tax deduction of 50% was increased to 75% for the first $250,000 of business income with a flat 3% tax on income thereafter. The severance tax on the oil and gas industry was not increased as the Governor proposed, however the tax rate on cigarettes was raised from $1.25 to $1.60 per pack.
 HB 64 created the Ohio 2020 Tax Policy Study Commission to review how to maximize the state's competitiveness by the year 2020. Items to be studied include how to reduce personal income taxes to a flat rate of 3.5-3.75% beginning in 2018 and how to make existing tax credits more efficient and effective. The panel's first charge will be to submit recommendations regarding Ohio's severance tax rate by October 1 of this year.
The Historic Rehabilitation Tax Credit received scrutiny during the budget process as consideration was given to replacing the program with a modest grant program. This proposal was not received well. The final budget language made a modification to extend through July 1, 2017 the ability to claim the tax credit against the Commercial Activity Tax (CAT) if the owner cannot claim the credit against another tax. However, the historic tax credit will be re-examined in the Ohio 2020 Tax Policy Study Commission process.
Health and Human Services
Medicaid accounts for over 50% of the total spending in the new state budget. A key issue that received extensive legislative debate was the Hospital Franchise Fee Assessment rate, previously set at 2.66%. This level was increased to 4% during HB 64 deliberations before ultimately being returned back to current levels. The fee is expected to generate about $580 million in FY16 and over $613 million in FY17.
The General Assembly and Kasich Administration have made battling addiction a key priority and will continue to do so in FY16-17. HB 64 includes reauthorization of the Addiction Treatment Pilot Program which works within the criminal justice setting to enroll non-violent offenders in medication assisted treatment programs. The success seen in the initial six counties has led to an expansion to 15 total counties: Allen, Clinton, Crawford, Cuyahoga, Franklin, Gallia, Hamilton, Hardin, Hocking, Jackson, Marion, Mercer, Montgomery, Summit, and Warren counties.
HB 64 also transferred the Department of Rehabilitation and Corrections Bureau of Recovery Services duties to the Department of Mental Health and Addiction Services. At this time there is little information available on the programmatic details and functionality of this transition, but accessibility of appropriate treatment for individuals transitioning from criminal justice settings remains the goal.
The legislature addressed another public health priority by permitting local health districts to establish blood borne infectious disease prevention programs to prevent the spread of diseases such as hepatitis and HIV. Local health departments must work with local officials and community service providers before establishing the program.
One issue that was strongly supported by legislators but ultimately vetoed by the Governor would have allowed physicians to prescribe non-controlled substances via telemedicine consultations without diagnostic medical equipment (ex., video) under certain conditions. Recognizing limitations of adequate broadband access in some parts of the state, the General Assembly wanted to ensure certain telemedicine services could be provided by phone, not only through video consultations. The Governor vetoed this section arguing that the State Medical Board should make such rules. Undoubtedly, this issue will continue to be closely monitored by interested parties as medical delivery models evolve.
Education
Funding for education accounts for 26% of state and federal resources in the budget. Core per pupil state aid was increased by $100 per year to $5,900 per pupil FY16 and to $6,000 in FY17. Additionally, special education funding was increased to support programs such as the Autism and Jon Peterson Special Needs Scholarships (JPSNS). The Senate added a key provision that raised the Autism and JPSNS cap from $20,000 to $27,000 which will go a long way to assist families and students with special needs.
"Common Core" and mandated student testing have been hotly debated for months. As a result, the legislature has prohibited using state funds to further implement the Partnership for Assessment of Readiness for College and Careers (PARCC) testing assessment. The Ohio Department of Education will use alternative testing assessments beginning this school year.
On the higher education front, the Ohio Board of Regents has been renamed the Ohio Department of Higher Education. More substantively, HB 64 increases State Share of Instruction (SSI) funding while instituting a "5% challenge" to require state colleges and universities to develop plans to reduce costs for in-state undergraduate students by 5%. Moreover, HB 64 requires the Department of Higher Education to implement policies to enhance the transfer of college courses and degrees between state institutions in an attempt to further reduce student costs.
As can be easily demonstrated by the budget, activities around the Statehouse directly impact every business and person in Ohio. If you are interested in more information on budget items or any other key legislative initiatives please contact Zach Holzapfel or Tony Brigano.
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Ohio Economic Development
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State Programs
Development Services Agency
Ohio Development Services Agency (DSA) recently provided an update of the various agency programs. The following financial assistance is available through the DSA:
DSA is planning another round of the Ohio Incumbent Workforce Training Voucher Program this fall. Companies can apply for reimburseme nts for up to 50% of the costs to train an employee. Eligible training must relate to the employee's current position or for future advancement within the company. Each company can apply for up to $500,000. The program will be administered on a first-come, first-served basis until all of the available funds are committed so it is important a company prepare in advance.
DSA has opened a new round of funding for the Energy Loan Fund. The program provides financing for energy efficiency and advanced energy projects for businesses, colleges and universities, as well as public entities. A total of $11.25 million in funding is available for FY 2016. Letters of Intent were due by August 12 for this round of funding and another round is expected later this year. Loans will range between $250,000 to $1,250,000.
Ohio Third Frontier
The Third Frontier Internship Program assists companies within certain industry sectors with funding to support talented students. The program will reimburse up to  50% of the intern's wage, or no more than $3,000 for a 12-month period. The Third Frontier Internship Program is looking for participating businesses that can provide internships in the following categories: Advanced Energy; Advanced Manufacturing; Advanced Materials; Bioscience; Information Technology; Instruments, Controls and Electronics; and Power and Propulsion.
The Ohio Third Frontier Commission has allocated $60 million for its Pre-Seed/Seed Plus Fund Capitalization Program. The program is designed to provide loans for fund managers to invest in early stage Ohio technology companies. Awards range from $500,000 to $5 million. The goal of the program is to increase the availability of professionally managed capital and associated services to accelerate the growth of early-stage Ohio technology companies. Letters of Intent were due August 6 and final proposals are due September 15.
JobsOhio, the state's privatized economic development agency, held a quarterly meeting in June. According to reports to the board, JobsOhio completed 76 projects in Q1 2015 promising to create 3,980 new jobs and retain over 8,000 jobs. While the companies invested $1.5 billion through these projects, JobsOhio provided approximately $16.7 million in loans and grants for these companies. According to staff reports, JobsOhio is currently working on more than 500 projects. As of March 31, JobsOhio had approximately $315 million on hand to support economic development. Since its inception, they have committed almost $200 million to job creators. Approximately two-thirds or $135 million has been awarded in grants with about one-third in the form of loans.
If you are interested in learning more about these economic development initiatives or programs, please contact Keith Conroy.
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EB-5 Initiative
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MidAmerican Global Ventures Update
 MidAmerican Global Ventures, Hicks Partners' sister company, provides below market financing through the federal EB-5 program to developers, business owners, universities, and public entities.
MAG Ventures projects include a hospitality development in central Ohio, a medical complex in eastern Ohio, as well as a senior housing project and a large manufacturing expansion in northwestern Ohio.
MAG Ventures was created as a true public-private partnership with a number of longstanding partners, including Columbus 2020, Toledo-Lucas County Port Authority, Columbus-Franklin County Finance Authority, and the Finance Fund, among others. MAG Ventures is pleased to announce several new partners: Mahoning Valley Economic Development Corp., Economic Development & Finance Alliance of Tuscarawas County, and the Monroe County Port Authority.
The EB-5 program is a federal program that allows foreign nationals to receive permanent resident status in exchange for investing in job-creating projects in the US. MAG Ventures is a federally designated EB-5 Regional Center that covers many counties across Ohio. If you would like to explore how EB-5 can help your project with low-cost financing, please contact Brian Hicks or Keith Conroy at (614) 914-7076.
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Announcement
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Chinese Chamber of Commerce Founded
China is Ohio's third largest market with exports nearing $4 billi  on in 2014. With an increasing number of Chinese firms exploring the Midwest, it is evident that China offers great opportunity for Ohio's future economy.
To take advantage of this trend, Hicks Partners has taken a leading role, along with Columbus 2020 and several other local firms to launch the Greater Columbus Chinese Chamber of Commerce. Its mission is to foster, promote, and support business, educational, and cultural relationships among three core groups:
- Local businesses that are already doing business with China;
- Local Chinese American businesses; and
- Chinese companies that have already invested or may be investing in central Ohio.
The Chinese Chamber's goal is to foster networking, information sharing, ideas exchange, and leverage existing resources. In the past few months, the Chinese Chamber has hosted three networking events and one seminar on Chinese supply chain. All of the events have been well attended by representatives from various companies, including large corporations in town, such as L Brands, AEP, Chase, Cardinal Health, A&F, and Big Lots.
The Chinese Chamber has planned a number of programs for the remainder of the year, including seminars on tapping into the Chinese market and understanding Chinese consumers.
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Asian Business Workshops
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DSA and MAG Ventures to Host Asian Workshops
MidAmerican Global Ventures and the Chinese Chamber of Commerce will partner with the Ohio Development Services Agency to conduct workshops introducing Asian markets and promoting export opportunities in the fall. The workshops will touch on immigrant investors from China, business-culture issues, as well as a brief overview of legal and tax issues when selling goods to China.
Workshops will be held in Columbus, Dayton, Bowling Green, and Akron between September 21-October 2. Details will be announced in the coming weeks. For information contact Keith Conroy or Bonnie Hou.
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Politics
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And so it begins...
With the first Republican presidential debate now over, attention turns to which of the 17 GO P candidates can break from the shadow of Donald Trump and build momentum going into the fall. Governor John Kasich, who earned the coveted last spot on the main debate stage, had a solid performance and is beginning to emerge as a top tier candidate. The Governor's record of accomplishment as congressman and governor of a major state, coupled with a disciplined positive message and respectable fundraising to date, offers Kasich a narrow, but achievable path to the GOP nomination. The next GOP debate, hosted by CNN, is scheduled for September 16.
RNC in CLE
The eyes of the world will be on Cleveland, Ohio  next July when it hosts the Republican National Convention. As veterans of many political conventions, Hicks Partners knows these gatherings provide a great chance to connect with officeholders, policymakers, business leaders, media, clients, consultants, and friends of all kinds. Companies need to begin preparing now to take advantage of convention opportunities next year.
The team at Hicks Partners has extensive convention experience. We can help with a wide array of convention related tasks, including:
- Event planning, booking, and implementation
- Receptions
- Charity Events
- Fundraising
- Networking
- Media introductions
- VIP introductions
- Corporate strategic convention planning
- On-the-ground operations implementation
- Source for convention information
- Communications and social media
- Attendee reservation services
- Coordinate transportation services
- Coordinate lodging
- Coalition building
- Grassroots Advocacy & project management
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Client Spotlight
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Teladoc
Founded in 2002, Teladoc is the first and largest provider of telemedicine ser vices in the United States. Teladoc has the industry's deepest experience in telemedicine and partners with employers, insurers, hospital systems, clinicians, and regulatory professionals to provide affordable, high-quality virtual medical consultations conveniently to patients.
Teladoc is the only telemedicine company to be certified by the National Committee for Quality Assurance. Teladoc's physicians performed more than 260,000 telemedicine consults in 2014 while maintaining an exceptional safety record. Typical consultations are for sinusitis, urinary tract infections, bronchitis, upper respiratory infections, pink eye and other common ailments.
Nearly 500 Ohio companies, representing more than 190,000 Ohioans, are Teladoc clients. These companies have found Teladoc to be a safe and reliable partner to provide convenient, affordable, basic telemedicine services to their employees and families.
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Hicks Partners, LLC www.hickspartners.com 800-556-0227
 
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