Ohioans would get 8% income tax cut as part of Senate’s budget plan

The state’s new fiscal year begins July 1

The Ohio Senate voted on Thursday voted in favor of a two-year state operating budget bill that includes income tax cuts, $550 million more for mental health services in K-12 schools and a $172 million to protect Lake Erie and other waterways.

Senators passed the budget unanimously, 33-0.

Senators backed a plan to give Ohioans an 8 percent income tax break over two years, eliminate the bottom two tax brackets and retain a law that allows certain small businesses to avoid paying taxes on the first $250,000 in revenues. The net tax cut would add up to nearly $700 million over two years, according to Senate President Larry Obhof, R-Medina.

Overall, lawmakers are giving Gov. Mike DeWine much of what he wanted to invest in children and families.

“This budget reflects the idea that additional dollars going to children is a necessary, substantial investment,” said Senate Finance Committee Chairman Matt Dolan, R-Chagrin Falls. “Gov. DeWine, we met you there and we agree with you.”

Related: State Budget: DeWine wants money for kids, environment

State Sen. Jay Hottinger, R-Newark, a legislator for more than two decades, called it the most child-focused budget he’s ever seen.

The budget increases funding to address infant mortality, childhood lead poisoning, quality child care and early education programming, kinship care, and home health visits for at-risk pregnant women and new moms.

It also seeks to funnel more state funding to food banks, public libraries and indigent defense — attorneys who represent defendants too poor to hire their own lawyers.

Democrats objected to the income and business tax breaks and to earmarking $5 million for pregnancy crisis centers, which they argue fail to provide scientifically-based medical information to clients. But they expressed support for funding for programs that help families and children.

Senate Finance Ranking Member Vern Sykes, D-Akron, said overall, the good in the budget outweighs the bad.

The legislation also calls for:

  • changes to the high school graduation requirements starting with the class of 2023,
  • allowing Montgomery County to levy an additional 3 percent hotel bed tax to help renovate the Dayton Convention Center,
  • raising the tobacco and vaping purchase age to 21 for anyone born after Oct. 1, 2001.

Related: Ohio moves step closer to raising tobacco purchase age to 21

Senators also added a provision to hold the 2020 presidential primary elections a week later than in 2016. Under the plan it would move from March 10 to March 17.

The Senate version also directs state occupational licensing agencies to issue temporary licenses or certificates to active duty military and their spouses when they move to Ohio and held similar licenses in other states. It mirrors a bill that cleared the Ohio House earlier this week.

Despite dozens of last-minute amendments, more changes could be added to the bill next week when the House and Senate hammer out a compromise version in conference committee. Senate Education Committee Chairwoman Peggy Lehner, R-Kettering, said language could be added to change how the state helps troubled school districts turn around.

This is crucial to Dayton Public Schools, the only district in the state currently at risk of a September takeover if its overall report card grade stays an “F.”

Related: State leaders rip Ohio school takeover law, process so far called 'a disaster'

Related: Ohio Senate wants 8 percent income tax break in budget bill

Related: Ohio House budget includes tax cuts, boost in minimum teacher pay

House Bill 166 describes how the state plans to spent $141.7 billion over two years. Medicaid, the state and federally funded health care program for 2.8 million disabled and low-income Ohioans, represents the largest chunk of the state budget: more than $50 billion over two years.

The House and Senate disagree over tax policy — the size of an income tax cut, the amount certain businesses should be able to earn without paying taxes, whether vaping products should be taxed, and if Ohio should continue a motion picture tax credit program.

Other points of contention: how much money should be earmarked for K-12 support services, for the new H2Ohio Fund to protect water quality, and for suicide prevention programs. The House rejected the Senate changes on an 89-1 vote Thursday, sending the budget bill to a conference committee to come up with a compromise version for DeWine to consider. The governor has line item veto authority on budget bills.

The state’s new fiscal year begins July 1 so the new budget needs to be in place by June 30.

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