The New Two-Year Ohio Budget Contains Tax Breaks And More

Finally, Ohio almost has a new two-year operating budget. Lawmakers who failed to meet the constitutional June 30th deadline worked from a temporary budget while deadlocked over tax cuts, education spending and more. But on the last possible day to pass a budget or another extension, lawmakers came together to pass a new $69 billion two-year budget to send to Gov. Mike DeWine. 

The House version of the budget, which had a lot of support from Democrats when it passed in May, would have scrapped tax breaks given to many small business owners that earned more than $100,000 a year. But the Senate liked the current system which allows those businesses to take up to $250,000 tax free. 

In the end, the budget kept that tax break in place for everyone except lawyers and lobbyists.  Republican Senator Matt Huffman, an attorney, doesn’t think it’s constitutional to exempt those two professions. 

“Whoever ginned this up and thought it was a good idea just doesn’t like lawyers and lobbyists. Well, that’s a basis but under law, it’s not a rational basis so it’s going to get held unconstitutional. I think. What do I know…I’m just a lawyer, right? But who are these lawyers that we hold in contempt that we are going to do something like this to them?," Huffman asks.

Lawyers and lobbyists aside, eligible business owners will pay a 3% tax rate once they hit $250,000. And though they get a better tax deal, all working Ohioans will get a 4% break on their current income tax rate in this budget, with the lowest earners paying no taxes at all. But that’s a lower tax cut than was in either the House or Senate budgets. 

The new budget restores $125 million for wrap around services that the House targeted to low income students, and $120 million for children services, to help those impacted by Ohio’s opioid crisis. There’s also more money for mental health services in schools and more treatment for addicts. Gov. Mike DeWine has been pushing for those changes.

And the budget gives the state more power to control drug benefits for low income Ohioans who rely on Medicaid. For instance, the state will deal with one pharmacy benefit manager, as was in the House budget. Senators are concerned but agreed to the change.

Some of the heated debates over changes involves education. One sets new standards for high school graduation. Another puts a moratorium on the state takeover of schools that are in academic distress until 2020 to offer time to come up with a better solution for failing schools. But Democratic Leader Emilia Sykes, who ended up voting for the budget, says her members wanted lawmakers to scrap it entirely for the three school districts currently under the state’s control.

“That was a major failure of this administration as well as the majority to fix that issue. Obviously, the communities in Lorain, and Youngstown and East Cleveland really were hoping that the legislature would get to work for them. Unfortunately, that did not happen so they will remain in academic distress," Sykes says.

14 Democrats were among the 17 representatives who voted against the budget. Sykes says Democrats also don’t like the provision that gives $7.5 million to crisis pregnancy centers that steer women away from the option of abortion. She says the budget that was passed overwhelmingly by the House in June was much better. House Speaker Larry Householder also liked that version of the budget but says this spending plan will be good for Ohio.

“When you look at this as a total program, this entire two year state budget that we just passed, we do so much for communities, to rebuild communities and help rebuild our families here in Ohio and we know that that is actually truly the heart of Ohio….our families. It’s what makes Ohio great," Householder says.

Three conservative Republicans voted against the budget in the House. But the Senate was pretty happy with the finished budget bill. When it came to key sticking points, Republican Senate President Larry Obhof got much of what he wanted from the negotiations with Householder.

“We’re all focused on the same things, whether it is the House, the Senate or the Governor’s office. We’re focused on making Ohio as strong as it can be and that means providing the key services that the people expect and need, making sure that we are protecting and preserving Lake Erie and the waterways and our environment but also providing tax relief to the hard-working men and women of Ohio," Obhof says.

Senators voted unanimously for their version last month, and in the end, only one Democrat voted against this final compromise.

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