Every spring our Ohio Soft Drink Advocacy Day brings over 100 leaders to Columbus to meet with legislators. House and Senate members, and their very capable legislative aides, make time to hear about industry leadership and concerns. Some years we have specific requests or concerns, but every year we tell our story of economic and community leadership.
And this year, a few months after our state lobby day, I want to take a moment to reflect on our message and to thank legislators for their leadership on issues that make a difference to us and many other Ohio businesses.
No matter the topic or concern, our member companies always emphasize their role as stable employers. With nearly 10,000 Ohioans directly employed by the non-alcoholic beverage industry—and another 33,000+ workers in restaurants, grocery stores, convenience stores, movie theaters and other retail establishments tied to beverage sales—we have impact.
Members, including Coca-Cola, Pepsi and Dr Pepper Snapple, manufacture and distribute some of the most popular non-alcoholic beverages in the world. From products in your favorite corner store to support for local community events, our presence is felt in every community across Ohio. We play an important role in Ohio’s economy by providing good-paying jobs, paying significant taxes and making generous charitable contributions to organizations across the state.
In fact, with a direct economic impact of $6.4 billion, our industry provides $752.4 million in wages, pays $516.9 million in state taxes and $866.6 million in federal taxes—every year! We invest heavily in our communities not just by providing great jobs, but by contributing $61 million to charitable causes across Ohio.
We love to tell this story and legislators always seem happy to hear it. But as significant employers in Ohio, we also face challenges. To keep nearly 10,000 Ohioans working, our members carefully control costs anyway they can. Whether they use dynamic truck routing to ensure maximum efficiency or reuse “gray water” from the manufacturing process, this industry works in fractions of pennies and every cost cutting measure helps.
Controlling or decreasing costs of water, electricity and fuel are always a challenge. Market forces drive much of these costs, but our leadership battles back with win / win ideas that save money and often benefit the environment. For example, one member replaced all of their old lighting and saved enough electricity, per month, to power a small subdivision. And that’s just one member and one facility.
There are dozens more examples of our bottlers using innovative ideas to push back on rising costs. But many cost inputs are out of their control. This spring, a few weeks after our successful advocacy day, the Ohio General Assembly passed a bill with three key provisions that will help our members manage and contain costs.
Sub. HB 390, which is awaiting Governor Kasich’s signature, will remove uncertainty over possible county utility excise taxes, create a helpful alternative fuel vehicle conversion grant and pay off Ohio’s unemployment compensation debt.
By erasing authority for a county “piggy back” tax on utility services, Sub HB 390 gives our members peace of mind that their electric or gas bills won’t skyrocket due to added government taxes. Right now, county commissioners can pass a resolution to add a tax to existing utility bills—without a vote of the people. And any additional tax they choose to add, up to 2% of the existing utility charge, is inflated for business customers—at a rate of 150% of the rate for residential customers.
Although this authority has not been used to date, there was a large Ohio county ready to add a tax. This particular county is home to two large beverage production facilities employing hundreds of people. Any added utility cost would have been very burdensome and jeopardized ongoing investments in those plants. Thankfully, this will be averted once Sub HB 390 is enacted.
Another beneficial provision in Sub HB 390 is creation of an alternative fuel vehicle conversion grant. Ohio EPA will manage the program which will help businesses purchase new or convert existing vehicles to an “alt” fuel. The bill defines “alt” fuel as one which runs on compressed natural gas, liquefied natural gas or a liquid petroleum product like propane.
One of our members has the largest fleet of hybrid trucks on the road. Other Ohio bottlers are looking at adding or converting delivery trucks to an alternative fuel, and this program could help support that effort. This is a great example of a program that will help business and the environment.
The third helpful item in Sub HB 390 is authority and funding for Ohio to repay its unemployment compensation debt to the federal government in a lump sum, saving millions in interest payments and ending unpredictable FUTA rates for employers.
Since 2009, Ohio employers have paid “extra” FUTA tax (through lost tax credits) to help repay this debt. Thanks to bipartisan leadership in the Ohio House and Senate, with strong support from Governor Kasich, the debt will be repaid from state funds. To replenish state funds, employers will pay a one- time surcharge per employee, but then enjoy a more reasonable, and predictable FUTA tax rate for calendar year 2017 and beyond. The 2017 FUTA tax rate will be, according to state sources, $500 million lower than previous years. This will quickly add up for large Ohio employers, like our members.
Any money not poured into additional taxes, is money our members can use to reinvest in necessary facility upgrades, fleet replacement, employee benefits, product innovation and community giving. Our members are grateful to our elected state legislators, hardworking policy staff in the Ohio House and Senate and Governor Kasich for recognizing employer struggles.
So as I reflect back on the April day we spent with the Ohio General Assembly and all of the times our members tell their story to legislators, I know this makes a difference. I know these efforts join the hundreds of other employer stories that our leaders hear in Columbus and in their districts. I know that these stories and struggles matter. And I know that time and effort spent educating legislators and key staff on our industry is an important and ongoing conversation. But today, I want to say thank you and well done to the Ohio General Assembly for gutting out difficult work that will help Ohio employers like our grateful members.
In the coming months, we will tell more stories of our industry’s leadership and innovation. We also want to have some fun highlighting history, people and products that all make this industry such a joy to represent.