COLUMBUS, Ohio (WCMH) — Billions of dollars are going to be allocated within the state’s two-year operating budget over the next few months, which may also include three major tax increases.
How Does the Budget Process Work?
Every two years, the governor of the state of Ohio has to introduce what is known as an executive budget. That budget is crafted with the help of the Office of Budget Management.
Once the governor introduces an executive budget, it moves right away to the Ohio House for lawmakers to start hearing testimony. The Ohio House Finance committee will hear hours of testimony and negotiate behind closed doors before sending their version to the House floor for a vote.
Rep. Brian Stewart (R-Ashville), chairman of the House Finance Committee, said amendments from lawmakers to the operating budget will be due on March 14, to take the House floor vote on or about April 19.
Once the House takes its vote, the process will start over in the Ohio Senate. Senators will likely make more changes to the budget when it is in their chamber. So, once they pass it, it will go to something called Conference Committee.
Conference Committees convene with members from each chamber to negotiate a deal, mostly behind closed doors. Once that deal is reached, it will be voted on in the Ohio Statehouse and head to DeWine’s desk for signature.
DeWine can line-item veto in the budget, meaning he can pick certain parts not to sign into law, instead of approving a whole spending bill.
The budget must be passed and signed into law by July 1. If it is not passed and enacted on “or shortly after July 1,” lawmakers will need to pass “an interim appropriations bill” to provide for continued funding on an emergency basis.
What’s in the Executive Budget?
DeWine wanted to emphasize his focus on mental health and Ohio’s youth – among other issues — in his budget.
That’s why his budget includes a one-time payment of up to $10,000 for parents who adopt a child with special needs, allocate more than $130 million over the next two years to expand mobile youth mental health services and continues funding merit-based scholarships to encourage Ohio high school students to stay in state of college.
The budget also continues implementing what is knows as both the “Cupp-Patterson School Funding Formula” or “Fair-School Funding Program” for public K-12 schools.
“I’m not making any predictions on day one about school funding,” Stewart said. “I think the governor’s proposal has been well received by some of our members.”
Ohio House Finance Committee Ranking Member Bride Rose Sweeney (D-Westlake) said while she is glad that is in there, it still needs to be properly adjusted for inflation to address the schools’ needs.
“We also need to pay our fair share of our schools so we stop the continuing shifting onto our local governments,” she said.
The budget also includes a tobacco tax increase. It proposes that the tax for a pack of cigarettes go from $1.60 to $3.10 per pack. The current tax rate has not changed since 2015. DeWine also proposed taxing all other tobacco products, like vapes, being taxed at 42%, up from the 17% rate established in 1993.
What is all that money going to be used for if it passes? DeWine said to fund the state’s child tax credit.
“I think we all want to take care of children, I want to support families,” Stewart said. “I think there’s a legitimate question of whether cigarette taxes are the best way to do that.”
“I will not bite the hand that feeds me and the fact that we, the fact that [DeWine] introduced this, we have to find a way to fund it,” Sweeney said.
DeWine also proposed doubling the sports gaming tax for the second state budget in a row. It started at 10%, then was increased to 20% in 2023, and under this proposal, would jump up to 40%. Stewart said he is not sure how feasible that tax bump will be.
“We start out with a 10% tax on sports gaming, and we’ve not even finished two football seasons,” Stewart said. “So now we’re talking about quadrupling that tax.”
Sweeney said the state has not had enough time to even understand how the first increase impacted the industry.
“So, we have a lot more vetting,” she said.
If those taxes go up, it would fund, in part, a new Cleveland Browns stadium and other youth sports initiatives.
Finally, DeWine wants to double the excise tax on recreational marijuana to 20%. Voters approved a 10% tax in November 2023.
“This is mind-boggling to have a 100% tax increase,” Rep. Jamie Callender (R-Concord) said.
That tax increase would fund a number of services including support for expungement of marijuana possession offenses, a local drug task force, safe driving programs and a new peace officer training program. There is also an ongoing effort in the Ohio Senate to increase the marijuana tax by 5%.
In general, members of the Ohio House Finance Committee have concerns about the three tax hikes.
“What it seems like, from the, from the governor’s budget, is that we are relying increasingly on people’s vices to fund our government,” Rep. Dani Isaacsohn (D-Cincinatti) said.
“I don’t think anything’s dead on arrival,” Stewart said. “But I do think that anytime you’re talking about tax increases in a Republican Party, that’s going to get a skeptical eyebrow raise.”
The budget is extensive and already hundreds of pages long. Stewart did not say specifically if he thought anything was missing, but Sweeney said she wanted to see direct property tax relief in the governor’s version.
“You can make sure that people can lower the property taxes and you can have quality schools support our police and fire,” Sweeney said. “And we hope that that’s what we’re seeing going forward and it’s unfortunate that it was missing from the governor’s version of the budget.”
Stewart said the House has a “big ala carte menu on property taxes,” and referenced the report that was put out with several suggestions just last month. He said there is an “appetite to look at property taxes.”
“There is probably more appetite to look at property taxes than income taxes because we have really condensed tax brackets and that tax burden,” Stewart said. “We certainly hear more from our constituents about property taxes than we do income tax.”
The Ohio House Finance Committee has hearings Wednesday and Thursday, then will likely pick back up again next week.