Transportation Budget Bill Signed by Governor DeWine

Governor DeWine signed the largest biennial transportation budget in Ohio’s history.  Totaling $13 billion in spending, House Bill 23 was approved in both chambers of the Ohio General Assembly and signed by the Governor on Friday, March 31.

Of the total amount, $11.4 billion is directed to ODOT. ODOT’s fiscal year 2024 budget amount is $8.3 billion, for fiscal year 2025 funding is set at $5.1 billion. The Brent Spence Bridge project accounts for nearly $3 billion of the amount allocated for fiscal year 2024.

In addition, the Ohio Public Works Commission will receive $60 million and $64 million, respectively for the biennium. The other gas tax funding in the bill is directed to other programs at the Department of Development, Department of Natural Resources, and Ohio Turnpike, and local governments for roadway improvements. The bill also includes $37 million in general revenue funds for public transit.

The House included $1 billion in general revenue funds for a new Rural Roads program, however that program was removed by the Senate. Consideration of this program will likely continue in the general revenue budget bill currently pending in the House.

Beyond setting spending levels, HB 23 also includes changes to transportation related policy issues. For ODOT, the only policy issue of interest to OCA is a change to surety bond requirements. Language was added to allow for multiple surety bonds on projects that exceed $500 million. The change was necessitated for the Brent Spence Bridge project. The bill also included many provisions on rail safety in response to the recent Norfolk Southern derailment in East Palestine, OH.

The policy issue that caused significant disagreement between the House and Senate was force account limits for local governments. As a bit of background, force account limits are monetary limits on the amount of work local government employees can do. Projects estimated to exceed these monetary thresholds must be competitively bid. OCA routinely opposes increases to force account limits and was successful in removing attempts to triple the amounts in the last transportation budget.

Hoping to resolve the issue outside of the legislative process we began meeting with representatives from the County Engineers Association (CEAO) in December of last year to reach an agreement. Instead of simply focusing on threshold dollar amounts, the discussion focused on moving towards a “scope of work” model where limits are based on project size – length of bridge, size of culvert, etc. The House included language adopting the scope of work model for county engineers. The parameters recommended by the House were based on negotiations between OCA and CEAO though, there was an unresolved issue with the limitations for culverts. Despite the disagreement on culverts, the bill was approved by a vote of 74-21.

The bill was then sent to the Senate for its changes. After multiple hearings and discussion, the scope of work provisions for force accounts was scrapped entirely. Instead, current monetary amounts were increased by 252 percent or local government governing bodies (city council, boards of township trustees, county commissioners) could set their own limits with no cap. Also, the current inflation index for force accounts would change from using the ODOT Construction Cost Index capped at 3 percent biennially to an annual increase using the National Highway Cost Index without a cap. The Senate approved the bill unanimously.

With the significant differences on the force account issue, the bill was sent to a conference committee for resolution. OCA worked with representatives from the local government groups and reached agreement on increasing the monetary thresholds. While higher than we would have liked, this compromise removed the ability of local authorities to set limits and ensures any inflationary increases are based on Ohio construction costs, not national costs. The current limits, Senate proposed limits, and final compromise for each group are as follows:

The thresholds will be adjusted annually based on the ODOT Construction Cost Index capped at five percent. Hopefully, the increased thresholds and inflation index will end the debate on this issue. While these limits are not ideal, we were able to defeat the proposal to allow local governments to set their own limits which would have been disastrous, and keep inflation adjustments based on Ohio costs not costs in Hawaii, New York, California, as included in the national index. Despite many attempts from local government groups, this is the first increase in the limits since 2003. A twenty year streak of defeating this issue is tremendous and we knew our luck would run out at some point. We did our best to keep the limits from increasing too dramatically and keep some safeguards in place for any adjustments. Again, not ideal but the best we could do considering inflation affects and the influence of some legislative leaders.

Bottomline for this budget, spending levels are increased considerably overall. The issue of force account limits is resolved (hopefully for good), and a transformative project for Ohio will proceed after many years of delay. During the legislative process, our partnership with our labor and other partners remained strong. Members of the Ohio General Assembly recognize and appreciate the important role of the heavy/highway industry and continue to lend their support on issues of importance.

Thank you to everyone that helped out during the budget process. If you have any questions please reach out to [email protected] or Michelle Holdgreve, OCA Legislative Director.