Taxes, education key sticking points holding up $141B Ohio budget

Lawmakers blew through their constitutional deadline to adopt a state operating budget over the weekend as GOP leaders in the House and Senate fight over a handful of key issues involving taxes, K-12 and health care.

Gov. Mike DeWine signed a bill Sunday that keeps state government operating for the next 17 days, giving lawmakers time to work out their differences. Both the House and Senate have tentatively scheduled voting sessions on July 17.

The state budget bill lays out how Ohio will spend roughly $141 billion over two years.

There are more than 500 differences between the House and Senate version of the 3,000-plus page bill but the major issues center around three policy areas.


1. Business taxes

Currently, sole proprietorships, limited liability corporations and partnerships don’t pay state income tax on the first $250,000 in revenue. The Senate wants to leave that threshold while the House wants to reduce it to the first $100,000. The Ohio Business Roundtable and 20 other business groups came out in support of keeping the tax break threshold at $250,000.

2. Income taxes

The House is proposing a 6.6% across the board cut to state income tax rates, implemented in the first fiscal year. The Senate is backing an 8% cut — 4% the first year, 4% the second year. The breaks would trim the annual tax bill for someone making $35,000 a year by $48 to $58 a year; someone making $70,000 by $125 to $151 a year; and someone making $125,000 by $270 to $327, according to the Ohio Department of Taxation.


1. School takeovers

Lawmakers continue to wrestle with the issue of how the state should be involved in taking over troubled public schools. Rather than change the system via the budget bill, legislators are expected to agree to a moratorium on more districts being taken over. Meanwhile, lawmakers will continue to work on a stand alone bill that addresses the issue.

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2. Graduation requirements

The Senate inserted new graduation requirements into the budget bill but those may be removed. Again, lawmakers say they’ll work on it via a separate bill.

The three-prong plan would still require students to pass 20 credits. The first new prong would require them to earn two “diploma seals” from a long list, including job readiness, various test scores, community service and more. Many of those “seal” standards would be new.

The other prong would require students to score “competent” on the Algebra I and English II state exams, unless they enlist in the military, earn high-level career tech credentials, or earn college math and English credits.

3. Counselors, mental health services

DeWine proposed $550 million in state funds over two years for “wrap around services” in K-12 schools – additional counselors, outside mental health services and other supports. The House boosted that to $625 million. The Senate dropped back to $550 million and earmarked the extra money for expanding school vouchers and helping rapidly expanding school districts.

4. School funding

Overall, major reforms in the K-12 school funding formula are expected to wait.


1. Pharmacy benefits

The House wants Ohio Medicaid to pick one pharmacy benefit manager to administer benefits for managed care organizations. The single PBM would be responsible for negotiating the lowest drug prices. The Senate version of the budget doesn’t include this policy change.

2. ‘Surprise billing’

The two chambers each want to address the problem of “surprise billing” but have different approaches. When insurance companies and providers can’t agree on the right price, this can leave patients stuck with the difference between what an insurance company pays and what a provider bills — which is sometimes thousands of dollars.


In addition to the operating budget, lawmakers failed to reach agreement by June 30 for the Bureau of Workers’ Compensation budget bill.

The House wants to tighten the definitions of employee and independent contractor to assure that those required to pay into the system are doing so.

The House also included a provision to provide coverage of post traumatic stress disorder among police and firefighters as an on-the-job acquired condition but Senate leaders indicated they’d prefer to work on PTSD coverage in a separate bill.

The House also included a provision that would require injured workers to declare their immigration status to obtain benefits — something House Speaker Larry Housholder said has been dropped from BWC budget negotiations.

Staff Writer Jeremy Kelley contributed to this report.

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