COLUMBUS — State lawmakers appeared poised to pass a two-year, $190.7 billion state budget plan on Friday that, among hundreds of other things, slashes income and business taxes, dramatically expands the state’s school voucher program, and strips away most of the State Board of Education’s power.
The budget plan, which is expected to head to Gov. Mike DeWine next week, reflects how the state is flush with cash right now. State officials now expect hundreds of millions of dollars more in tax revenue than what they predicted just a few months ago. The legislature’s budget plan would use that money for tax cuts, school voucher expansion and K-12 funding, among other items.
However, the enormous budget bill also seeks to make a bevy of major policy changes that have little or nothing to do with state spending.
The final version of the budget bill, Senate Bill 33, was unveiled by a legislative conference committee just hours before the Republican-dominated House and Senate were expected to vote to approve the compromise plan. The budget would spend $95 billion in state and federal funds in the fiscal year that begins Saturday and $95.7 billion in the following fiscal year.
Lawmakers were expected to pass the new budget plan on the last day before the current two-year budget ends. As it will take staffers a few days to draft the formal language of the bill to present to DeWine, state lawmakers on Friday also were expected to pass a stopgap funding measure to keep state government operating until the governor signs the budget into law. DeWine now has to decide whether to use his line-item veto authority to strike out parts of the budget.
Here’s more on what in the legislature’s final budget plan, as well as what it left out:
Tax cuts
Both the House and Senate had tax cut plans, but the final bill favors the Senate’s comparably steeper, $3 billion income tax cut that would slash taxes across the board, particularly for wealthier Ohioans, and eliminate all but two tax brackets. That’s more than the House’s proposed $930 million cut that, by comparison, would have reduced income taxes only for lower- and middle-income residents.
The final budget would also dramatically reduce the number of Ohio businesses that have to pay the state’s commercial activity tax, or CAT, following the Senate’s proposal.
Right now, the CAT is assessed on almost all companies with gross receipts of over $150,000 in the state. The budget would change that by only charging the CAT on gross receipts beyond $6 million, starting in two years. If that becomes law, an estimated 90% of Ohio-based businesses that currently pay CAT – 145,000 of 163,000 – would no longer have to pay any amount of the tax, according to a Senate Finance Committee handout.
State Rep. Jay Edwards, chairman of the Ohio House Finance Committee, said he’s worried about whether the CAT cut will be sustainable over the long term.
“The fear I hear from the business community is if we ever have to raise the CAT tax, a smaller pool of people paying into that tax will have to be raised exponentially,” Edwards said.
The budget would further create a two-week “tax holiday” during the first two weeks of August 2024, during which shoppers would not be not charged state or local sales taxes for all items priced at $500 or less, except motor vehicles, watercraft, alcohol, marijuana, and tobacco and vapor products.
In Cuyahoga County, where customers pay a total of 8% state and local sales tax, that means anyone buying $100 worth of eligible school supplies would save $8. Local governments would be reimbursed by the state for revenue losses from the holiday.
School vouchers
The legislature’s budget plan offers universal eligibility for publicly funded K-12 vouchers for private schools. However, students in families making more than 450% of the federal poverty line would be eligible only for partial voucher scholarships of at least $650, with the exact amount they receive being based on their families’ income.
Income limits for Ohio’s voucher program are currently 250% of the poverty line, or $75,000 per year for a family of four.
In addition, any private charter school or private school participating in the Cleveland Scholarship Program would be allowed to charge tuition to students from lower-income families beyond what their voucher scholarship pays. Right now, such schools have to waive that tuition for those students.
Another budget provision would permit students receiving Cleveland Scholarship money to pay to attend private schools located outside of the Cleveland Municipal School District.
State Board of Education overhaul
The final budget includes a controversial proposal to strip the State Board of Education of most of its powers and give them instead to the governor’s administration.
Education will be under the governor’s office oversight by Oct. 1, said state Sen. Matt Dolan, a Chagrin Falls Republican who serves as chairman of the Senate Finance Committee.
Republicans claim the change is needed because the state board, which has been beset by infighting over hot-button proposals such as protections for LGBT students, has been slow to act in naming a new state superintendent of public instruction and has failed to adequately raise student test scores.
Critics, including Democrats, note that Republicans only advanced the proposal last November, shortly after three Democrats were elected to board seats previously held by Republicans The 19-member board includes 11 members elected by district and eight who are appointed by the governor.
DeWine has said he supports the plan.
School funding and other K-12 issues
The legislature’s compromise budget would kick in about $1.8 billion for K-12 education over the next two years as the next leg of the Cupp-Patterson school funding plan. That’s what the House’s budget called for; the Senate’s plan sought about $541 million less than what the House budget calls for.
Since 2012, Ohio has required kids to repeat third grade if they don’t pass a reading proficiency test. Lawmakers suspended that requirement during the coronavirus pandemic; the final budget plan eliminates it permanently.
The final budget plan also includes funding for DeWine’s plan to promote the “science of reading” instructional approach in schools, which requires students to break down words into parts and sound them out and incorporate phonics and vocabulary lessons. It funds the science of reading proposal at the level proposed by DeWine: $162 million over the next two years.
The two chambers disagreed on minimum teachers’ salaries, but ultimately split the difference. The House originally wanted an increase to $40,000 for around 16,800 teachers around Ohio and the Senate didn’t include any increase.
Under the plan, teachers with a bachelor’s degree would have to be paid at least $35,000 a year, up from the current annual minimum of $30,000.
Child care, family funding
The House and Senate disagreed on spending in grants to existing childcare centers to expand capacity. In the end, the House’s proposal prevailed, at $30 million.
However, the Senate’s version of subsidized child care prevailed in the negotiations, making families at 145% of the federal poverty limit eligible. That’s $43,500 for a family of four. Currently, families at 142% of the federal poverty level are eligible for subsidized daycare and the budget plan could help more families.
While the Senate wanted to require a photo ID and phone number for most Ohioans who receive food stamps, the final budget bill ultimately nixed that plan.
Both the House and Senate budget includes DeWine proposals to provide tax incentives to build and pay for affordable housing, including $100 million in low-income housing tax credits (the House proposed $500 million), income-tax deductions for homeownership savings accounts, and $50 million in tax credits for single-family affordable housing.
Other parts of the budget agreement include:
Approving $11.3 million to pay for the Aug. 8 special election on State Issue 1, a Republican-backed proposed constitutional amendment that would make it harder to pass future amendments, including an anticipated abortion-rights amendment in November. However, the Senate bill would also give permission to spend an additional $4.7 million on the election if needed. Elections officials have publicly questioned whether the Senate’s proposal will provide enough to cover the cost of the election.
A request by Gov. Mike DeWine and Lt. Gov. Jon Husted to require parents to sign off on social media accounts for children under age 16 and not emancipated. The budget, however, delays implementation of this provision until Jan. 15, 2024.
Banning local governments from passing any tobacco rules that are stricter than state rules. If passed, that would overrule existing bans on flavored tobacco in at least three cities: Toledo, Columbus and the Columbus suburb of Bexley.
Allowing many police departments around the state to lower their minimum age to become officers from 21 to 18. Proponents, including representatives of cities and townships, say such a change would help address a widespread hiring shortage and note that many city police departments already hire people younger than 21. Critics, including many law-enforcement officials, say teenagers don’t have the emotional or mental capacity to handle such a job.
Prohibiting student members of the Ohio State University Board of Trustees from having voting rights or being able to attend executive sessions. It would also reduce the terms of all non-student trustees at state universities from nine years to six years starting in 2024.
No longer requiring the Lorain City School District to be under the control of an academic distress commission, as it has been since 2017.
What’s not in the budget
A proposed $62 million for a “land bridge” connecting Cleveland’s downtown and lakefront was ultimately removed from the budget, Dolan said.
A proposal prohibiting most state employees from working from home for more than 8 hours during a 40-hour workweek also was removed.
The legislature’s final budget plan does not include two proposals from Senate Republicans designed to promote “academic diversity” at public universities in Ohio, which conservative lawmakers say are too liberal.
One, originally introduced as Senate Bill 83, contained a sweeping package of higher-education reforms, including outlawing the ability of college faculty and staff to strike, banning mandated diversity training, and requiring annual faculty performance evaluations and post-tenure reviews that include examining whether students believe their instructors show “bias” in their teaching.
The other proposal would have provided millions of dollars in funding to create “independent academic units” at Ohio State University and the University of Toledo with their own bylaws, hiring and tenure authority. Proponents of the idea say the centers would encourage political diversity on campus, though critics see it as another attempt by GOP lawmakers to bring more conservative views to Ohio universities.
As a backup plan, the Senate on Wednesday passed a similar measure after expanding it to provide $24 million over two years to create think tanks at five public universities: Cleveland State University, Miami University, Ohio State University, the University of Cincinnati, and the University of Toledo. Huffman said the Senate passed that bill in case the earlier measure is left out of the final budget bill.
A short-lived proposal to give Cuyahoga, Franklin and Hamilton counties seven sports-gaming facilities, rather than the five allowed under current law, also was removed from the final bill. That would have provided an opportunity for sportsbook applicants in Cuyahoga County who were previously rejected, including Bobby George’s Harry Buffalo; Steve Rosen, co-CEO of a private equity firm called Resilience Capital Partners in Beachwood; and downtown developer Stark Enterprises.
