07/20/2011

Legislative Update

Prepared by John T. McGough

STATE BUDGET REPEALS OHIO ESTATE TAX

On June 30, 2011, Governor John Kasich signed into lawOhio’s biennial budget which funds state government from July 1, 2011 through June 30, 2013.  The Governor touted that he and the Legislature were able to close a projected $8 billion deficit without raising taxes. Many Statehouse observers have stated that this budget made some of the most far reaching changes to how state and local governments are funded including increased privatization of government services.

From OFDA’s perspective, the most significant change affecting owners of funeral homes is the repeal ofOhio’s estate tax.  The repeal has a delayed implementation date of applying to any estates with dates of death on or after January 1, 2013. This delayed effective date means that local governments will not likely feel much impact during the current biennium but may in the future.

OFDA’s position on this issue has been that in order to recognize and preserve the heritage and strength of small businesses including funeral homes, it is critical that Ohio’s estate tax not penalize or otherwise prevent the tax-free transfer of family business ownership at death to other family members. Moreover, the significant dollars many funeral home owners spend in estate planning to avoid estate taxes or in the purchase of insurance policies to cover their potential estate tax liability could be better spent on business operations, salaries and other employee benefits and community outreach programs.

Ohio is one of only 20 states that has an estate tax and also has the lowest dollar exemption ($338,333) in the country.  Currently, 80% of state estate tax proceeds go to local governments and 20% to the state.  In fiscal year 2010, the estate tax generated $230.8 million for local governments and $55 million for the state; however, the estate tax only provides an average of 2% of local government funding and does not go to county governments or schools.

As you may know, during the past two years OFDA has supported the efforts of Citizens United to EndOhio’s Estate Tax, a grassroots organization who has been collecting signatures to place the estate tax repeal issue on theOhioballot.  Many OFDA members made contributions to support placing the issue on the ballot. 

As a result of this grassroots effort two bills were introduced in the Ohio Legislature to repeal the estate tax. After significant legislative activity on both bills (including testimony by OFDA), the House decided to insert the estate tax repeal language into the budget bill.  The Senate version of the budget bill also included the repeal language as did the final version of the bill that was signed by Governor Kasich. 

Formaldehyde Language Removed from State Budget

Towards the end of the budget process, Senator Shirley Smith (D-Cleveland) was successful in inserting an amendment in the Senate version of the budget that classified formaldehyde as a Schedule II controlled substance. The problem with the language is that funeral homes would not have been able to possess formaldehyde without a prescription.  OFDA conveyed our concerns to Senator Smith and to Senate leadership. OFDA suggested language that would have exempted funeral homes, funeral directors and embalmers from the requirement. Ultimately, the Joint House-Senate Budget Conference Committee Report (which was the final version of the budget) removed the formaldehyde language in its entirety.

 OFDA Legislative Priorities

The Ohio Legislature is now on recess and likely won’t be back in session much, if any, until after Labor Day.  It is my expectation that the majority of the legislative work for the remainder of this legislative session that ends on 12/31/2012, will likely occur between September 2011 and June of 2012.  OFDA has started the process of drafting our priority legislation and talking to possible sponsors of the legislation.  Here are the priority legislative issues we are working on:

• Legislation to authorize the State Board of Embalmers & Funeral Directors to license hydrolysis facilities.
• Legislation to provide a process for funeral homes to receive life insurance information at the time of an insured’s death.  This information will enable a funeral home to better assist family members planning to use life insurance proceeds to pay the funeral and disposition (burial/cremation) costs.
• Legislation which would authorize a funeral director to receive a courtesy card that would allow the funeral director to conduct certain funeral related activities in a border state. The courtesy card would authorize a funeral director to do the following:
  • Complete the funeral director portions of a death certificate and file the death certificate;
  • Complete other forms, including the burial transit permit, incident to the disposition process;
  • Transport the deceased for final disposition to or from a border state without assistance or under the direction of a licensed funeral director from the border state ;
  • Supervise and conduct funeral ceremonies without the assistance or under the direction of a licensed funeral director from the border state.
• OFDA is considering introducing legislation to better protect the safety of persons participating in funeral processions.  Funeral processions are very unique in that vehicles in a procession are authorized by Ohio law to enter an intersection on a red light if the lead funeral car enters on a green light.  OFDA is looking at the laws of several other states that authorize the use of purple lights by funeral procession lead and/or escort vehicles to provide better safety to those in a procession.