Energy, Taxes, and Talent: A Look at Ohio's Business Environment

Episode Summary:

In this insightful episode of Chamber Amplified from the Findlay-Hancock County Chamber of Commerce, host Doug Jenkins is joined by Ohio Senate President Rob McColley to discuss legislative initiatives designed to improve the business climate in Ohio. The conversation delves into economic policies promoting natural gas development, reduction of state income taxes, and workforce issues like as housing and childcare. 

McColley highlights economic strategies, including the recent state budget's move toward a unified income tax rate of 2.75%, designed to Ohio more attractive to new businesses. 

McColley also talks about the Rural Development Revolving Loan Fund, designed to stimulate home development in underserved areas. 

Key Takeaways:

• The Ohio Senate has legislated to promote natural gas development, easing the pathway for investment and enhancing energy reliability.
• Ohio is transitioning to a single income tax bracket with a rate of 2.75% to increase economic competitiveness.
• The Rural Development Revolving Loan Fund is launched to address housing shortages and fuel economic growth in rural communities.
• Efforts to mitigate childcare and housing concerns are crucial to strengthening Ohio's labor market and supporting business operations.
• Reducing regulatory burdens on child care providers can increase supply, addressing the child care access issue more effectively.

Music and sound effects obtained from https://www.zapsplat.com

Transcript

0:00:02 - (Doug Jenkins): Hello and welcome to the show. I'm Doug Jenkins with the Findlay Hancock County Chamber of Commerce. On each episode of Chamber Amplified, we're examining issues impacting the local business community. Everything from employee recruitment and retention, marketing, IT issues. It's really anything that can impact your business or the business community as a whole. Our goal is to give the local business community tips each week on at least one way they can improve operations and thrive in the current business environment.
0:00:28 - (Doug Jenkins): In today's episode, I'm sitting down with Ohio Senate President Rob McCauley. We're going to be talking about legislative accomplishments that are designed to impact businesses not just locally, but all across the state. We'll dive into the details of new policies that are aimed at economic growth, including some initiatives to promote natural gas development. And also we'll talk some about a reduction in state income taxes and what that can mean for businesses.
0:00:52 - (Doug Jenkins): We also explore the state's efforts to address critical workforce issues this time around, talking about things like housing and childcare and what those changes could mean locally as well as concerns that local businesses have about education funding going forward. We cover a lot in about 20 minutes or so. Well worth your time listening to this edition of the podcast again. Remember, we are on Apple Podcasts, Spotify, wherever you can find podcasts, we're there if you can rate and review the show, wherever you listen to your podcast. That really does help spread the word. Now, now, let's get into it.
0:01:24 - (Doug Jenkins): Joined on the podcast this week by Senate President, Ohio Senate President Rob McCauley. Rob, thanks for joining us.
0:01:32 - (Rob McColley): Yeah, very happy to be here, Doug. Thank you.
0:01:34 - (Doug Jenkins): So we like to have elected officials on the podcast every now and then just to kind of check in on things that are happening at the either the local, the state or the federal level that can be impacting businesses and the things that we're seeing from area businesses. So again, appreciate your time on that. Before we get into, you know, just the things that I talk to businesses about on a daily basis around here, what do you see as being some of the larger accomplishments that the the legislature has done this year to help the business community?
0:02:07 - (Rob McColley): Yeah, well, we've touched on a few things in the legislation. Number one, any, anybody who spent a good amount of time and in economic development or business, especially if you're in the manufacturing industry, will understand that energy is a bottleneck through which a lot of our growth runs. And if we don't have a solid energy environment, if we don't have a predictable energy environment with dispatchable, low cost energy, it's very difficult to grow your economy local or broader without that. And so early on in the year, we ended up passing legislation through House Bill 15, Senate Bill 2 was the companion bill that is going to make it easier for companies to come in and invest in natural gas resources in the state of Ohio. And one thing we realized coming out of the previous presidential administration is that an awful lot of decisions were made that really put a damper on one of Ohio's greatest competitive advantages, that being our natural gas that's right underneath our own soil and made it very difficult with the regulatory burden and with the cost for anybody to come in and invest in natural gas resources anywhere in the country. Really, after that and after the change in administration after President Trump's election, we decided we were going to proceed boldly and aggressively in putting a sign up at our border saying we're open for business for more natural gas development here in the state of Ohio.
0:03:39 - (Rob McColley): And the bill would make it easier for that to happen. And notably, one thing that it would do is it would allow and facilitate for more behind the meter generation. So obviously in, in Findlay, you guys have some behind the meter generation at the ball Whirlpool plants with the, with the wind turbines that are up there, but this would allow for it on a much larger scale in the form of natural gas facilities. And so, so the earliest adopters of this are going to be data centers who obviously use a ton of energy and they need it to be reliable and they need it to be there when they need it.
0:04:17 - (Rob McColley): And so they've already come to us and said that data center developers, for example, who are saying, look, we're going to build a natural gas plant and we're going to surround it with four, five, maybe even six data centers in one area, one concentrated area. And the beauty of that is if it's behind their own meter and they're generating their own power, they're not putting any stress on our grid. They're, they're completely self sufficient in that regard.
0:04:45 - (Rob McColley): And in all likelihood, they're purchasing Ohio extracted natural gas to be able to do it. So this could be a very transformative policy for the state of Ohio going forward. In addition to that, in our budget, we touched on a few things. Number one, income taxes. So when I joined the legislature in 2015, Ohio had seven income tax brackets. The highest was 7.5%. Of those income tax brackets, starting in 2026, we will have one income tax bracket at a rate of 2.75%. This is going to make Ohio Even more competitive for economic development and growth and investment, both from companies that are already here and from companies that are going to be looking to relocate here.
0:05:29 - (Rob McColley): They're going to be able to look at us and say that is the lowest tax rate in the Midwest. It's, I believe, the 11th lowest in the country. And that's going to make us even more competitive on that front.
0:05:40 - (Doug Jenkins): Yeah, let's, let's stay on that for a second. Because a lot of times when you have companies that do business in multiple states, the regulations are so much different from state to state that having an overburdensome regulatory condition, they'll just ignore Ohio. So is this part of kind of untangling that?
0:06:00 - (Rob McColley): Absolutely. So we're always looking for areas where we can make it easier to conduct business here. Because you're right. I mean, that's the beauty of having 50 separate states that all have their own sovereign ability, is that if you want to be a state that kind of takes the bull by the horns and decides to create a better environment for business, you can compete with your fellow states. And so we've sought to do that. We've reduced the regulatory burden on a variety of things over the last several years, over the last decade or so.
0:06:30 - (Rob McColley): And the tax burden as well goes hand in hand with that. The investments we're seeing right now from Andrew, from other companies that are looking at Ohio, from Honda, from many of those things, those likely do not happen if we don't have a good tax and regulatory environment. So we are seeing the dividends, if you will, of the decisions that we've.
0:06:49 - (Doug Jenkins): Made over the past decades going back to energy. For a second. I'm glad you brought it up and I'm glad that there's some proactiveness on this. We talk. It's just serendipitous. We talked about this earlier this week as we record this at our Fresh Brew business meeting with our members about everybody seeing increased energy prices across the board. In some ways, they can help mitigate that. But then that same day also had Senator John Hustead in. He talked a little bit about it.
0:07:12 - (Doug Jenkins): And going back to what you said about the data centers, which are by and large one of the largest consumers of energy, the behind the meter makes a ton of sense for that. And I know there's sometimes pushback on having data centers and maybe sometimes some pushback against the continued rollout of AI and that, but it's almost a catch 22. We have to have it, one, for economic development purposes. But two, it's a national security issue at this point. If we don't continue to invest in AI, China is going to, or Russia is going to, probably China to a larger degree. But we're almost in a position where we have to invest in that. So we better make it a good environment to do that.
0:07:50 - (Rob McColley): Yeah, absolutely. And why not have it in Ohio at the end of the day? Think about it, if you will. If, if you are one of those areas that has the. And I think the data centers are going to be popping up even more frequently now that we pass this legislation based on the feedback I'm getting. But think about it. If you're one of those school districts as well that has a cluster of four or five data centers in it with a natural gas plant, the taxpayers of that school district, as we talk about rising property tax revenue or property tax obligations, the taxpayers of that school district are going to be benefited greatly by the presence of that in their area. And the beauty of it is that now that we're allowing them to go behind their own meter, it's not as much of a catch 22 anymore because it can now be a win win. And that we're putting more Ohio natural resources into the pipelines. Basically anywhere with a major pipeline is now a potential area for these things to locate. If you have the fiber, you have the pipelines and you don't even really need the built out electric grid anymore as much as you used to.
0:09:03 - (Rob McColley): This could very well be something that is a major win for all involved. And you're absolutely right. You hit the nail on the head. Data centers and AI and everything. As much as people might be a little bit reticent about it, it is the way of the future. We have to be able to welcome this to the state of Ohio. We have to be a leader on this. It's going to welcome even more industry to our state if we are. But we have to figure out a way to do it responsibly and that's what we've done with this energy policy.
0:09:31 - (Doug Jenkins): You mentioned the schools. I do want to talk about education a little bit. Obviously education funding is always a topic of concern at the state level. The city of Findlay and more specifically businesses in the city. Findlay came out pretty pro for the, the, the latest levy for the city of Findlay or for Findlay city schools back in May. So there's obviously the business, local businesses very much in support of, of public schools here.
0:09:56 - (Doug Jenkins): When you look at the funding of public schools, there's been a lot of consternation about it. What Stands out to you. What? How would you reassure people who are concerned about the ongoing funding of, of public schools in, in Hancock county, we're pretty blessed with the solid schools. It's a really good city school system and our county schools are really robust as well.
0:10:16 - (Rob McColley): Yeah. I would say when we look at the funding of our public schools in the state of Ohio, when you look at the investment that we've made in the legislature over the course of the last three general Assemblies, So over the course of a four year period in, in the form of the budget we passed back in 2021, 2023 and now 2025, we've made record investments in public education. In each one of those, each one of those budgets, public education funding over the course of that timeframe has increased.
0:10:46 - (Rob McColley): I believe, if I remember the numbers correctly, about 26% over the course of that time. That's just public schools. That's not all education. So anybody who says, well, yeah, but it went to vouchers, that's not true, this is the 26% just for the public schools. That number has gone up significantly and it's to the tune of billions of dollars. And so I understand that there are people who would like to have more.
0:11:12 - (Rob McColley): I get it. I understand that they'd always like to have more. But really, when we look at the formula that we have in place, that was a formula that was agreed to by educators and their trade associations and administrators and their trade associations alike for four years ago or so, when we look at that formula that's in place, we have to acknowledge that the formula, it has upside, it has some downside, and that's because we wanted it to be sustainable over the course of time. And that's what you're seeing happen right now. You're going to see some districts that are not going to see increases because they're on what's called the fiscal year 21 guarantee, meaning they are guaranteed to not receive any less than they did in fiscal year 21.
0:11:59 - (Rob McColley): But if they're still on the fiscal year 21 guarantee five years later or so, it's because their formula output and that agreed upon formula is so much, it's probably very much below what they were receiving in fiscal year 21. And oftentimes we see it, especially in some of these rural areas, it's because of a decline in enrollment over the course of that timeframe. We've seen school districts all over Ohio, it's not just rural areas, but all over Ohio State, who have seen their enrollment over a five year period, sometimes decrease by as much as 10% or more.
0:12:33 - (Rob McColley): And so the question has to become at that point, are we going to continue to fund schools at the same level when on as we were the years before or give them an increase when their enrollment is actually going down? If you actually looked at per pupil funding amounts, that paints a, I think, a more accurate story of what we've done with education funding funding in this state.
0:12:56 - (Doug Jenkins): Yeah, it's interesting you mentioned declining enrollment. We've talked a little bit about the population cliff that colleges are going to see all across the nation, but I hadn't really thought about that in terms of what that just means for existing high schools and everything down below. So that's definitely something to keep an eye on and probably a big driver there. One last point or one last topic to cover today is when we work with the Ohio Chamber, we always try and figure out what are the biggest obstacles employers are having in getting people to work.
0:13:29 - (Doug Jenkins): Labor concerns remain top of mind for, for all of our area employers. And the, the big topics that keep coming up are housing, child care and transportation. On those three topics, have you seen anything through the legislature that you think will help get people back to work or help address maybe those three issues?
0:13:49 - (Rob McColley): Well, as it concerns housing, let's start with that. There was a program that I worked on in the budget that actually had several very good conversations with Mayor Christina Mirren about what would possibly work in that area. Really designed at trying to bring more development to rural areas in Ohio. It's called the Rural Development Revolving Loan Fund program that is designed to go to counties with 75,000 or less as of the last census, which includes Hancock county by about 100 people right there.
0:14:20 - (Rob McColley): So they squeaked in right underneath the number. But also it's designed to go to counties that have seen less than the statewide average of new home building permits pulled in the most recent year. And so really designed at paying, helping these municipalities in these counties pay for publicly owned infrastructure. Because when you talk with developers and you're asking them, hey, what, why aren't you coming to Findlay? Why aren't you coming to Napoleon? Why aren't you coming to Ottawa or wherever it would be and building homes like you were, you know, 15, 20 years ago, and in many cases they'll tell you, look, 15, 20 years ago, due to the cost structure, the regulatory structure, etc, I could build subdivisions and phases at 15 or 20 homes at a time and still make money, still, still do well on that subdivision.
0:15:10 - (Rob McColley): Now I need to sell 60 to 80 homes at a time in order to do well and in order to make my money back and break even on a subdivision investment. And I simply can't do that in some of these smaller markets. And then you dig deeper and you ask them why. And oftentimes it's because, look, we as the developer, we got to pick up the cost for the sewer, for the streets, for the sidewalks, for a lot of things that are going to be publicly owned and maintained after this is all said and done.
0:15:37 - (Rob McColley): But they got to front that cost at the beginning of the investment. And that's something where we looked at it, we said, look, this isn't something that is necessarily going to be owned by the owners. This is something that's going to be owned by the municipality, whoever the local subdivision, political subdivision is. And so let's find a way to get that political subdivision, give them the ability to play a more active role in developing housing by giving them access to some of these funds they can put into a project to help create a more favorable environment for these developers to come look at more of these rural areas rather than staying exclusively in the suburbs of their urban areas. So that's one thing that we're doing. There's also more money for programs near mega sites as they come forward that we put in the budget as well. But the Rural Development Revolving Loan Fund program is $100 million that will be available here very shortly.
0:16:30 - (Doug Jenkins): Well, I tell you what, that is right. Not to interrupt, but that's right in line with the conversation I had with a construction firm earlier this week after one of our events is that they would. They're. They're interested and it's a younger builder. And this is another issue that we have is a lot of the people who have built subdivisions have now retired out. But younger construction companies are interested.
0:16:49 - (Doug Jenkins): But it's so cost prohibitive because of what you highlighted. And another part of that is it's the difference between building a home that's affordable for most people and not is a lot of times those infrastructure costs. So it's good to see that being addressed at the state level.
0:17:03 - (Rob McColley): Yeah, yeah. And so. And that every single developer I talked to from across the state had that same feeling, is that, you know, we need to somehow address this cost as it concerns transportation. We've invested money over the years in. In county transportation networks, the various things some counties have taken advantage of more than others. So that's been something that is. That has been invested in primarily in the transportation budget, child care. We increased the cap for publicly available child care in the, in the last operating budget to allow for more people to have access to that now.
0:17:41 - (Rob McColley): And we also increased investment in it in this budget. Now, I will say this, though, one of the biggest things, and you know, this is one area where government isn't always the solution to the problem. When you and I were growing up, if we went to a babysitter, there wasn't certainly wasn't a mountain of regulations on that babysitter. And you know, oftentimes it was just make sure they get a snack, make sure they're safe, make sure they have a good environment, and then go play at night. That's good. And it was up to the parents to take care of it, but to take care of the rest.
0:18:12 - (Rob McColley): But now in order in this state for, for these groups to qualify, in many cases, they're being forced to go through a mountain of onerous regulations. And I'll give you an example of how foolish some of this stuff is. It's called the Step up to Quality program. And in some cases we actually have school districts in the 1st Senate district that are wanting to qualify for the Step up to Quality program to offer child care to young, very young kids, preschool age kids at their facility.
0:18:46 - (Rob McColley): And they're being told, well, you have to go through a whole new separate building inspection and new building regulations in order to do that. So this building is good enough for these kids during the school hours, but it's not good enough during the child care hours. That's the type of stupidity that we're talking about. So, long story short, what I think we need to do to solve this child care issue isn't throw more money at the problem.
0:19:12 - (Rob McColley): I think we need to loosen regulations for those who are participating to increase the supply of child care providers in the system.
0:19:21 - (Doug Jenkins): That is a crazy regulation that I was kind of vaguely aware that it existed, but not to that degree. So I guess it's okay to send some of our kids to this school and then apparently not for the same families to send their younger kids to.
0:19:35 - (Rob McColley): Yeah, all of a sudden when that bell rings, it becomes real unsafe.
0:19:41 - (Doug Jenkins): That's. That's a bizarre one. Well, Rob, we appreciate your time and joining us here on the podcast today. If people want to just follow along anything that's happening in the Ohio Senate or in the legislature in general, what are the best ways to do that?
0:19:54 - (Rob McColley): Yeah, we're on social media. We have a presence in the Ohio Senate Republican Caucus on social media, both Facebook and, and on X, formerly Twitter. I'm also on X. And Facebook with my own pages. So feel free to give me a search on there and give me a follow and keep up with what we're doing down in Columbus for the people of Northwest Ohio.
0:20:16 - (Doug Jenkins): All right, Ohio Senate President Rob McCauley, thanks for joining us today.
0:20:18 - (Rob McColley): Thanks, Doug.
0:20:20 - (Doug Jenkins): There's a couple of key takeaways from our conversation. Again, we really do appreciate Senator McCauley joining us on the program. I'm really interested in efforts to increase natural gas development, especially from that behind the meter perspective. You know me, I'm a gadget person. I'm a technology person, AI and data processing centers, they're here to stay. And that's not just me. That's just the way things are going.
0:20:43 - (Doug Jenkins): But the energy consumption that they use, that creates a burden on the local business community because of increased energy costs. And it's good to see that being addressed. That'll be interesting to follow. I'm also interested in that Loeb program to help with rural housing development. I think that could be a very interesting and creative thing that can be done. If it can help newer construction firms develop subdivisions, that could be a big boost to local housing stock and that would help area businesses as well as their employees could have more affordable places to live. So we'll continue to watch those issues and see how they developed in the meantime. That'll do it for this week's episode. Chamber Amplify is a free podcast for the community, thanks to the investment of members in the Findlay Hancock County Chamber of Commerce.
0:21:25 - (Doug Jenkins): Because of our robust membership, we're able to focus on providing timely information to the Findlay and Hancock county business community, run leadership programs for adults and teenagers, and to be an advocate for the area. That's all while providing tools to help local businesses succeed. And if that sounds like something you'd like to be a part of, just let me know and we can talk about how an investment in the Chamber helps strengthen the community.
0:21:46 - (Doug Jenkins): If you have any ideas for topics that we should cover on future editions, send me an email. Djenkinsindleyhancockchamber.com thanks again for listening and we'll see you next time on Chamber Amplified from the Findlay Hancock County Chamber of Commerce.