Tax Cuts, Boost in School Funding Highlight Ohio Senate Budget

Sen. Larry Obhof (R-Medina), Sen. David Burke (R-Marysville), and Senate President Keith Faber (R-Celina) roll out Ohio Senate's budget proposal.
Credit Karen Kasler/Ohio Public Radio

Tax cuts are the big feature in the Ohio Senate’s newly proposed two year budget, along with more than a billion in new funding for higher education and K-12 schools.

President Keith Faber says the proposed Republican Senate budget is smaller than the plans proposed by Gov. John Kasich and the Ohio House. But he says his chamber’s plan has one key goal.

“We are continuing today to build on our commitment to fund what matters and return to the taxpayers what’s not essential,” Faber says.

And even though the Senate plan doesn’t include the 23 percent income tax cut proposed by Kasich, Faber says the proposed budget has many provisions to ease burdens on Ohio’s taxpayers.

“Our budget reduces Ohio’s income tax rate by 6.3 percent across the board, saving taxpayers $1.26 billion over the next two years,” Faber said. “It eliminates the entire state tax burden on small businesses for all income up to the first $250,000 and then creates an innovative new flat tax for small businesses above that income tax level.”

Faber said the proposed budget also removes a proposed state income tax on Social Security benefits that was in the Governor’s and the House versions, saving senior citizens more than $260 million. Our net tax reduction in this budget totals more than $1.7 billion, Faber said.  

One thing this plan doesn’t contain – proposed hikes in the state sales tax, the tax on gas and oil drilling and the commercial activities tax – are all part of Kasich's tax reform plan.

The senate’s proposed budget does include a 40 cent tax on each pack of cigarettes sold with the money raised going to smoking cessation programs. Kasich wanted a higher tax on tobacco, but the House stripped out that tax increase entirely. Since there are so few tax increases proposed along with the income tax cut, advocates for poor Ohioans are waiting to see the details of the plan that will come out soon. With all of this money going toward tax cuts, they worry the people they serve will pay the price. Faber didn’t share many details.

“We did funding reductions in agencies; we did funding reductions in various places; we pulled a lot of additional spend out that was added in various places, either the administration or other areas,” Faber said. “And so ultimately, what we did was focus on priorities. If it was a new program, it probably wasn’t funded.”

Advocates for those programs that are not funded as part of this proposed plan will have some recourse in the coming days as testimony on the plan will take place this week. A vote is likely next week.

Gov. John Kasich was at a farm two hours away from the Statehouse Monday, but said he’s mostly pleased with the Senate leaders, who he says have worked closely with him.

“This is a long process,” Kasich said. “And the little bit I’ve seen so far – I’ll be having more briefings over the next couple of days, let it roll out – they moved in a very positive direction. There’s going to continue to be tax cuts in this state.”

Kasich was speaking to 4-H kids about the state’s ban on poultry shows at fairs because of a deadly bird flu virus.

The Senate budget also puts $935 million toward K-12 education, freezes tuition at state universities, adds $240 million to higher education funding and restores Medicaid health coverage for certain pregnant women.

Senate President Keith Faber of Celina is happy with his caucus’ proposal – which he says has a smaller bottom line than the previous two budget plans.

“It spends less than any previous state budget plan introduced to date this year,” Faber said.

The Senate budget also includes some changes for low-income people on Medicaid. It restores benefits for pregnant women in households making up to 200 percent of the federal poverty level, which is $47,700 for a family of three.

And it brings back breast and cervical cancer screenings for women.  But the budget also reduces overall Medicaid spending by more than $1 billion.

There were few details offered on that at the budget unveiling, but some of the savings will come from a requirement that Medicaid recipients contribute to health-care accounts.

The Senate plan is scaled back from the House proposal, but Sen. Dave Burke of Marysville, the Medicaid Committee chairman, said the idea is appropriate to help people understand real-world expenses as they move off public assistance.

“That is a pathway that needs to be developed long-term,” Burke said. “And if it’s just two dollars or five dollars – it’s the act of actually participating that we’re looking for here, not some kind of fiscal recoupment.”

The Senate budget also includes $10 million for police training programs, $13 million for electronic poll books, and money for a loan program for lake-adjacent businesses facing economic distress, such as those near the troubled dam at Buckeye Lake.