Tax cuts, education policy, health care key issues in state budget debate

Deadline to approve a 2-year state budget is Wednesday.

Lawmakers in the Ohio House got word late Monday to plan for a long day on Wednesday — the deadline for adopting a new, two-year $141 billion operating budget — signaling that legislative leaders are close to reaching a deal on more than 500 points of contention including on major issues such as education, taxes and health care.

The House and Senate blew through a June 30 deadline to adopt a budget bill and passed measures to keep state government open through July 17. While legislative leaders have been meeting over the past two weeks, they continue to squabble over tax cuts, education policy, health care issues and more.

Both chambers are scheduled to meet Wednesday when they’ll either vote on a compromise budget or pass a second interim measure to keep state government open.

The bill, which runs 3,200 pages, lays out how the state will spend $141 billion over two years.

“Generally, we continue to negotiate and things seem to be going well,” said Senate Finance Chairman Matt Dolan, R-Chagrin Falls, one of six lawmakers on the budget conference committee.

The House and Senate remain divided over health care, tax and education policy matters, including whether to change how the state can take control of failing public schools.

Here’s a look at some of the key sticking points:


Under a law adopted in 2015, school districts face state takeovers if they’ve gone three years earning an overall F on their report cards. Dayton Public Schools is facing that risk if it gets an F in September. But the takeover process is heavily criticized by local school officials and some lawmakers who want to revamp it.

Some lawmakers want to change Ohio’s high school graduation requirements — reforms that are currently in the budget bill but may be removed and considered in stand alone bill.

Also, the Senate and Gov. Mike DeWine’s administration want to stop community colleges from using state funds to help pay for the education for out-of-state, online students. The House version of the budget would allow that practice to continue.

And there has been a disagreement over how much money Ohio should earmark for “wrap around services,” such as school counselors and mental health programs, for K-12 students. The House wants to set aside $625 million while DeWine and the Senate favor spending $500 million.

Related: Ohio college giving free classes to union members causing hitch in state budget talks


One of the biggest fights is over a $250,000 business tax deduction currently in state law. House Speaker Larry Householder, R-Glenford, wants to reduce it to $100,000 and to raise the 3% limit on income over $250,000. Senate President Larry Obhof, R-Medina, would keep the deduction at $250,000 but also raise the 3% limit.

Gov. DeWine, a Republican, favors keeping existing law, saying the “status quo” position on taxes gives businesses needed predictability. One Senate source said a deal is being hammered out to keep existing law.

The Senate proposed an 8% income tax cut while the House voted for a 6.6% break. The two sides reached agreement on a smaller tax cut so that money is available for other priorities, the Senate source said.

Health Care:

The House wants Ohio Medicaid to pick one pharmacy benefit manger to handle the $2.5 billion prescription drug program. The PBM system has come under fire for a lack of transparency and high costs. Lawmakers are working on details to protect against a single PBM becoming a monopoly, the Senate source said.

They are also working out differences between the chambers over how to address “surprise billing” — when patients are hit with big medical bills incurred out of network.


State leaders agree the tobacco and vaping purchase age should be increased to 21, from 18. But the Senate is considering a plan to tax vaping products by volume while the House and DeWine administration have not moved to tax the products.

Information from the Associated Press is included in this report.


Laura Bischoff in our Columbus Bureau will be covering the latest developments in the state budget this week. Follow her on Twitter at @lbischoff

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