“What we’re unveiling today is a bold, transformative and balanced budget,” Senate President Rob McColley, R-Napoleon, told reporters. “It’s something we’ve spent an awful lot of time on in the last several weeks, something that we entered into knowing that it had to be a pro-growth, positive budget for the state of Ohio.”
The budget process starts with a draft from the governor (which is the office’s biggest opportunity to create a legislative wish-list). That draft is then sent to the Ohio House, which amends the governor’s draft and passes it along to the Senate.
What the Senate received this year from the Ohio House contained some substantial proposals: A plan to sell $600 million in public bonds to help fund the Cleveland Browns’ proposed stadium in Brook Park; a plan to refund property taxes by cutting down on many Ohio schools’ financial reserves; a much-contested change to how Ohio funds its public libraries; a late switch from a multi-year funding formula for Ohio’s K-12 public schools that has raised alarms for local school districts and much more.
Some of the Senate changes would:
- Create a flat, 2.75% income tax rate for all Ohioans who earn more than $26,050 annually. The proposal eliminates Ohio’s highest tax bracket for earners pulling over $100,000 per year, eliminating over a billion in state tax revenue over a two-year period.
- Expand access to Ohio’s “homestead exemption” property tax relief program by increasing income threshold from $40,000 to $42,000 and allowing slightly more of a qualifying participants’ home value to be tax exempt.
- Grant county budget commissions the authority to reduce property tax millage “if the commission finds it reasonably necessary or prudent to avoid unnecessary, excessive, or unneeded property tax collections.”
- Eliminate replacement and substitute property tax levies.
- Cap a school district’s financial reserves at 50% of the prior year’s operating expenses, as opposed to the House-proposed 30% carryover cap. General funds in excess of that 50% cap would then be portioned back out to the property taxpayers of that district.
- Direct $600 million of the state’s $3.7 billion in unclaimed funds to the Cleveland Browns new stadium project, instead of issuing public bonds.
- Require school boards to obtain a 2/3 vote from members before putting a property tax levy on the ballot.
- Add $633.9 million more to the state’s K-12 public schools than the current biennium, phased in largely through new “performance-based” incentives that will reward high-performing and improving districts with more cash.
- Establish a $100 million set-aside to potentially withhold from state universities that do not come under compliance of the newly-passed Senate Bill 1, which eliminates university-sanctioned diversity, equity and inclusion programs on public campuses.
The bill now awaits further hearings before the Senate Finance Committee, which is expected to approve a slate of amendments to the bill in the coming weeks.
Senate Democrats said the bill was unveiled to them only shortly before it was unveiled to the public, but that they already took issue with much of it. That includes the Senate’s flat tax proposal, which Democrats framed as policy that puts an outsized tax burden on lower earners.
“We talk about this every time we have a flat tax discussion,” Senate Minority Leader Nickie Antonio, D-Lakewood, said Tuesday. “They’re inequitable in that they fall short of a ‘flat’ tax — actually what ends up happening is that they pay off the folks at the top of the income brackets and the folks at the lower end are the losers.”
Local testimony
A variety of Dayton-area organizations and residents testified to senators in recent weeks about what they’d like to see in the state budget, particularly regarding education funding.
For example, Dayton Early College Academy asked the Senate to maintain the House’s provisions that would increase community school funding from $1,000 today to $1,500 per pupil over the biennium. The Senate’s proposal lowered the proposed rate to $1,100 in 2026 and $1,200 in 2027.
Meanwhile, the Clark Shawnee School District testified merely as an interested party, saying the district wanted the state to enact the third and final round of its so-called fair school funding plan, which would have pumped an additional $1.8 billion into public schools over 2026 and 2027 compared to the previous biennium.
Springfield City School District, meanwhile, testified in opposition to the House’s budget on the basis of the House’s provision that would cap districts from carrying financial reserves greater than 30% of the district’s operating cost in the previous year.
Superintendent Bob Hill argued that the provision takes away schools’ safety net and creates a system “penalizing fiscal responsibility rather than curbing waste.”
The Senate’s proposed change from a 30% cap to a 50% cap would address much of Hill’s concerns, but his district today is clocked with carrying a 66.6% year-over-year reserve and could therefore still be docked under the Senate’s plan.
Miami University encouraged the Senate to maintain House provisions that would route $14 million for the university to create the Ohio Institute for Quantum Computing Research, Talent, and Commercialization in partnership with the Cleveland Clinic. The two institutions will invest $70 million in the program over the next 10 years with the goal of making Ohio the “global epicenter of quantum computing medical research.”
The Senate eliminated the earmark entirely.
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Avery Kreemer can be reached at 614-981-1422, on X, via email, or you can drop him a comment/tip with the survey below.
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