House Republicans voted 63-36 on Wednesday for a state budget bill that calls for spending the most money in Ohio history and tamping down the top personal income tax rate to its lowest level since 1982.
The House plan pushes the top rate to 4.99 percent, makes permanent tax breaks for small businesses, gives a 6.3 percent across-the-board income tax cut and spends $131.6 billion over two years, including $71.5 billion in the general fund.
Gov. John Kasich has been seeking a 23 percent across-the-board income tax cut, reducing the top rate to 4.1 percent and raising the sales, commercial activities, tobacco and oil and gas taxes to pay for the breaks. But his plan ran into heavy opposition from chambers of commerce, House Republicans and others.
The GOP-controlled House crafted the smaller, 6.3 percent income tax cut and eschewed the tax increases. The income tax cut will push the top rates down to the lowest in more than 30 years. (Lawmakers jacked up income taxes by 83.3 percent in 1983 and 90 percent in 1984.)
Kasich also sought changes to the funding formula used to calculate state aid to school districts. The governor proposed tweaking it to make wealthy districts pay a higher share than those less able to generate local money. The House, however, replaced that plan with one that guarantees no district will receive less in state funding in fiscal year 2017 than they did in the current fiscal year.
Kasich still has time to fight for his proposals in the General Assembly.
The governor’s press secretary Rob Nichols responded harshly to the House GOP budget.
“Restrained, responsible budgeting has helped get Ohio back on track, which is why the governor is so troubled by the House budget. Their spending increases and rosy budget projections threaten the progress Ohio has made in the past four years and the rejection of tax reform is a missed opportunity that, if allowed to remain, would erode our improving economic climate,” Nichols said.
After nearly six hours of floor debate, House Minority Leader Fred Strahorn, D-Dayton, said the budget plan doesn’t do enough to invest in K-12 education, make college affordable, restore funds to local governments, hold under-performing charter schools accountable, and support the middle class. He criticized plans to attach more strings for Medicaid recipients, such as requiring modest monthly premiums.
But House Finance Committee Chairman Ryan Smith, R-Bidwell, said of the budget: “It’s pro-growth, it’s pro-business and it’s going to take Ohio to a better place.”
“As a former congressional budget committee chairman, he’s (Kasich’s) seen this situation before: after the fiscal crisis subsides people think it’s okay to slip back to old habits. The governor will do everything possible to prevent that from happening.”
The 3,215-page now moves to the Ohio Senate for consideration and a final version isn’t expected to be hammered out until late June.
Not all Republicans in the Ohio House were on board with the budget bill. State Rep. Nino Vitale, R-Urbana, said he couldn’t support the spending plan because it includes Obamacare’s expanded Medicaid, which is the state and federally funded health care program for the poor and disabled. Vitale argued that by accepting the federal money to cover an additional 500,000 Ohioans on Medicaid, Ohio would be contributing to out of control federal spending.
Vitale was among five Republicans who opposed the budget. The others were John Becker, Tom Brinkman, Ron Hood, and Paul Zeltwanger. Three Cleveland area Democrats voted for the budget: John Barnes, Bill Patmon and Martin Sweeney.
Highlights of the House version
Medicaid: Spend $50 billion in state and federal money over two years. Require monthly premiums from Medicaid recipients who make more than 100 percent of the federal poverty level. Give the Legislature final say on Medicaid eligibility rules. Apply for federal permission to institute health care savings accounts for Medicaid recipients.
K-12 Education: Spend $15.9 billion over two years. Increase spending on K-12 by nearly $950 million in fiscal year 2017 over fiscal year 2015 and guarantee that districts won’t receive less in state funding than they did in the current fiscal year. Continue to reimburse districts for revenue losses sustained because the state eliminated the tangible personal property taxes on businesses. Give $20 per student for facility costs to online charter schools and spend nearly $1 billion a year on charters. Let exemplary charter school sponsors seek their own tax levies.
Higher Education: Limit tuition increases to 2 percent or $200 at four-year schools and 2 percent or $100 at two-year schools. Bar schools from charging overload fees for students taking more than the typical number of credit hours. Increase college opportunity grants for low-income students by $5 million a year.