The Republican-dominated Ohio Senate on Wednesday thwarted Democratic efforts to get a Medicaid expansion freeze taken out of the proposed budget and to repeal a tax break for small businesses.
The Senate passed a $132.7 billion, two-year state budget that closes a $1.05 billion annual revenue shortfall by making cuts.
The budget passed, 24-8. The House already passed its version of the budget and voted late Wednesday to reject the Senate version.
Today a conference committee made up of members from both houses will iron out differences between the two. One of the main sticking points will center around how to fund the state’s fight against opioid addiction.
A final vote will occur next week and a balanced 2018-2019 budget must be on Gov. John Kasich’s desk by June 30.
The Senate budget proposes freezing new enrollment in the expanded Medicaid program starting on July 1, 2018. The bill also adds work requirements for Medicaid recipients.
Democrats on Wednesday tried to get the Medicaid changes taken out of the bill.
“We must do more to protect this life-saving coverage,” said Assistant Minority Charleta Tavares, D-Columbus. “Health care is essential to making sure that someone is ready to learn and ready to earn.”
In urging defeat of the Democrats’ amendment, Sen. Scott Oelslager, R-North Canton, said, “We had long discussions on how to deal with this issue and how to be fair to those who are covered and the taxpayers of Ohio.”
He said people would have a year to sign up before the freeze takes effect.
“The freeze will help us evaluate where the budget is a year from now (and) let us see what’s happening in Washington with this program,” said Oelslager, who chairs the Senate Finance Committee. “Nobody knows what’s happening in Washington, period.”
Currently the federal government pays 90 percent of the cost of the Medicaid expansion but the U.S. House-passed American Health Care Act cuts Medicaid funding. Republican leaders in the U.S. Senate are working on their version of health care reform behind closed doors so it is unknown what their plans are for Medicaid.
The Ohio Department of Medicaid is reviewing the Ohio Senate freeze proposal, said Brittany Warner, spokeswoman.
The state’s Medicaid expansion covered 725,504 people in May, up from 707,762 in May 2016, Warner said.
Monthly enrollment fluctuates but in some months enrollment has increased by 1,000 to 3,000 people, according to data provided by Warner.
Tax cut for small businesses
The Senate budget also includes an amendment limiting the state Controlling Board’s ability to authorize a “significant expenditure” that has not been approved by the legislature.
Kasich sidestepped the legislature in 2013 by using a Controlling Board vote to expand Medicaid under the provisions of the federal Affordable Care Act. The change took effect Jan. 1, 2014.
Kasich declined to comment directly on the Senate’s proposed changes to Medicaid and the Controlling Board’s authority.
Democrats also failed to get into the state budget an amendment repealing a small business tax exemption.
The tax break at issue is an exemption that allows certain small businesses to avoid taxes on the first $250,000 of earnings. Those businesses also pay a maximum of 3 percent on additional income, rather than the 4.9 percent other businesses pay. Enacted in 2013 and 2015, the exemption covers businesses that organize as partnerships, sole proprietors or limited liability corporations.
RELATED: State may reduce a tax break for small businessesThe non-partisan Ohio Legislative Service Commission has said that Ohio would gain $1.1 billion annually if the tax break were not in place.
The tax break is “irresponsible tax policy,” Sen. Cecil Thomas, D-Cincinnati, said during the Senate budget hearing.
RELATED: Ohio Senate leaders say state facing $1B budget gapHe said not only does the budget proposal ignore the tax break as the chief source of the shortfall, but it also makes cuts even though the state has a $2 billion rainy day fund.
Oelslager said Democrats are calling for a tax increase on businesses, including some owned by middle class people. He said the tax should not be repealed and that he’s heard stories about businesses creating jobs and making capital improvements because of the tax.
“We have lifted the spirits of these people, given them confidence to open the doors every day,” Oelslager said at the hearing.
The Senate on Wednesday tabled a Democratic proposal to repeal the tax break and use the revenue to balance the budget without cuts while spending the remaining additional revenue on schools, local governments, health care, higher education and to fight the opioid crisis.
The Senate also tabled a second Democratic amendment that would have repealed the tax break used the revenue to balance the budget and to increase a variety of tax credits for the elderly, parents and others.
RELATED: Democratic leader says state tax cuts lead to higher local taxesSome Republicans also are reconsidering the tax. State Sen. Peggy Lehner, R-Kettering, said it is possible the tax repeal could be revived in the conference committee. There is talk of changing the tax break threshold to $100,000, down from $250,000.
She said the legislature ought to look to see if the tax break is being abused or being used more than intended or expected.
House Majority Floor Leader Bill Seitz, R-Cincinnati, said too many businesses are getting the tax break but not creating jobs or investing in equipment. And he said the state’s proposed budget is being balanced using “substantial, painful cuts” of about 3 percent for “just about everybody.” He’s said scaling back the tax break would free up revenue to keep from cutting so deeply.
Kasich and Ohio Senate President Larry Obhof, R-Medina, both oppose repealing the tax.
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