Just Over A Day Before Deadline, Two-Year Ohio Budget Passes, Heads To Governor
With a little over a day till the deadline on Wednesday, the new two-year state budget is on its way to Gov. Mike DeWine after overwhelmingly bipartisan votes in the House and Senate late Monday evening.
Dueling income tax cuts
A surprise surplus of $3 billion more than budget forecasters predicted led to a compromise on dueling income tax cuts in two versions of the budget. The House had proposed a 2% income tax cut, with the Senate boosting that to 5%.
Senate President Matt Huffman (R-Lima) said they settled on a $1.6 billion, 3% across the board tax cut. The budget also eliminates all income taxes for people making under $25,000 a year and lowers the top tax bracket, plus it drops down the tax rate on the wealthiest Ohioans – those making over $110,000 a year.
“I think this is the largest personal income tax cut in the history of Ohio," Huffman said before the Senate voted. "There was the 21% tax cut that started in 2005, was a tax cut over five years. So in that first two-year biennium, the dollar amount was smaller than it is now.”
There would be four tax brackets in Ohio, down from nine brackets six years ago.
The surplus comes largely from federal COVID stimulus money, and Gov. Mike DeWine had cautioned lawmakers against using that one-time funding for a long-term obligation.
But Senate Republicans said the federal money is going to infrastructure investments such as water quality and brownfields improvement, demolition of blighted buildings, and $250 million to broadband. The budget also eliminates the ban on municipal broadband programs that the Senate had added.
A major sticking point was two different plans for school funding – a House overhaul versus the Senate’s tweaking of the current formula.
The budget settles on the Fair School Funding Plan from the House, which – simply put – would calculate state aid with 60% local property taxes, 40% income and would add $367 million to K-12 education over two years – though the full phase-in of the plan over six years was estimated to be at least $2 billion.
Though there were lingering questions about its cost, school groups and education advocates had pushed for the House plan, which Democrats largely has supported, including Sen. Vernon Sykes (D-Akron).
“As we look back on this time, one of the most significant improvements that we’ll be making to education is what we’re voting on today in this Fair School Funding Plan," Sykes said on the Senate floor.
The only Democrat in the Senate who voted against the budget was Teresa Fedor (D-Toledo), who said in a statement that reads in part: "the conference committee report did not commit to fully funding a fair public education system with the six year phase-in. This budget only includes the Fair School Funding Formula for the 2022 and 2023 school years and continues to expand vouchers and charter schools."
In the House, Rep. Jamie Callender (R-Concord) pushed for the school funding overhaul that he had sponsored along with Rep. Bride Rose Sweeney (D-Cleveland). It's a plan that House Speaker Bob Cupp (R-Lima) had spent years working on with former Rep. John Patterson (D-Jefferson) and that passed overwhelmingly last year, but was dead on arrival in the Senate.
“This bill does something that is, I think a lot of folks thought was impossible a few years ago. This bill is a victory for every child in the state of Ohio," Callender said. "This bill takes the flaws of our antiquidated, band-aided, broken, outdated, unpredictable, untransparent public district school funding formula and replaces it with what’s become known as the Cupp-Patterson plan.”
Opposition in the Ohio House
The budget scored a bipartisan win in the House too, but it wasn’t as big.
More than a dozen Democrats voted against it, including Rep. Brigid Kelly (D-Cincinnati), who spoke out against several things, including the tax cut.
“If we really want to ensure that all Ohioans feel valued and included in our state, then we cannot continue to look out for the people at the top at the expense – literally – of everyone at the bottom and in the middle," Kelly said on the House floor.
Rep. Erica Crawley (D-Columbus) was the ranking Democratic House member on the conference committee. This was her final House vote as she leaves to fill a seat on the Franklin County Commission.
Also bipartisan ovation for @EricaCCrawley, who’s leaving the House for the Franklin County Commission. She’s the ranking member on House Finance and on the budget conference committee - chair @Scott_Oelslager praised her while she looked on pic.twitter.com/t5soarFhGn— Karen Kasler (@karenkasler) June 28, 2021
Crawley voted for the budget because of the school funding plan and the extension of Medicaid coverage to mothers from 60 days postpartum to a year. But like her Democratic colleagues, Crawley was concerned about a clause allowing medical professionals to refuse to provide treatment that would violate their beliefs.
“This is why people are leaving Ohio. We are not a progressive state," Crawley said, hinting at a statement DeWine made when he introduced his budget, which included a $50 million ad campaign to lure people back to Ohio or keep them here. "We are a regressive state and this continues to discriminate.”
What else is out, in
In conference committee, Democrats had tried to make some changes, including eliminating a provision in the House version that would prevent doctors who work with those clinics that receive variances from practicing medicine in hospitals that get state dollars. But those changes were shot down.
The final budget also scrapped the Senate’s plan to gut the Step Up To Quality program, which requires child care providers serving families getting state assistance to earn one star now and three stars by 2025. The budget keeps the minimum at one star, and creates a committee to study the program.
The budget also says remote workers won’t be able to apply for municipal income tax refunds from their work city if they worked from another city last year. It makes clear the information in the Vax-A-Million database is confidential and not public record.
And it creates Juneteenth as a state holiday. That became a federal holiday this month, and Democratic state lawmakers were hoping to pass it in Ohio - even as they push back against two Republican-sponsored bills that would ban the teaching of "divisive concepts" or "critical race theory".
It also incorporates the executive order signed by DeWine a few hours earlier, allowing college athletes to benefit from their name, image and likeness.
The budget deadline is Wednesday, and DeWine has line-item veto power when he signs it. He struck 25 items from the budget during his first year in office in 2019.
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