Six state lawmakers on the conference committee are now going over the differences between the budgets approved by the House and Senate, with the deadline of June 30 looming. Among the big items: plans to use 30-year bonds or unclaimed funds for $600 million to go to the Cleveland Browns domed stadium in Brook Park, a cap on collected property taxes districts can hold, and a potential income tax cut for Ohioans making over $100,000 a year.
The committee's hearing began Tuesday with economic forecasts presented by the Office of Budget and Management and the Legislative Service Commission. The two agencies largely agree on their predictions and suggest little change from earlier forecasts.
OBM Director Kim Murnieks said there are signs of a decelerating economy, as well as higher unemployment and higher Medicaid caseloads. But she cautioned she's not projecting a recession and that overall, this fiscal year will end with a $281 million surplus. That’s $35 million more than her forecast in December, before Gov. Mike DeWine's initial budget was released.
Senate President Rob McColley (R-Napoleon) said last week his caucus stands firmly behind the 2.75% flat tax in that chamber's budget: “The flat tax is something that we feel pretty strongly about. That would be something where we're pretty committed to. Hopefully we don’t get a lot of pushback.”
After the first conference committee session, Chair Brian Stewart (R-Ashville) said both chambers passed balanced budgets, and suggested there’s interest in the Senate’s 2.75% flat income tax.
“Most of us have voted for income tax cuts before. We'd like to see some income tax relief," Stewart said. "I don't know if we have the same view today, that we need to get there entirely in this budget. But that's going to be part of the discussions we’re having over the next week."
But Rep. Bride Rose Sweeney (D-Cleveland) noted the decelerating economy and higher Medicaid caseloads in OBM's forecast.
“This is not the time to wipe out $1.4 billion of our revenues," Sweeney said. "I'm very concerned about the future of Ohio and a budget that is not preparing us to be the most fiscally responsible, the most prepared to take care of the people of Ohio."
Sweeney said she’d like to see other kinds of tax cuts such as for stay-at-home caregivers and for child care. A $1,000 tax credit for working parents with children 6 and under, funded by an increase in tobacco taxes, was cut from DeWine’s initial budget.
“I think the overarching look at the budget is not something that Democrats support,” Sweeney said. “Doesn't mean we're not going to continue to fix the things that we agree on. But it is our job to make sure people know what their state legislators are doing. I do not think they’re working for the vast majority of the people of Ohio.”
Lawmakers will also have to resolve the question of how to provide $600 million in funding for the Cleveland Browns domed stadium project in Brook Park. DeWine had proposed a doubling of tax on sports gambling operators. That was rejected by the House, which suggested 30-year state backed bonds. The Senate proposed a sports facilities fund created with unclaimed funds. House Speaker Matt Huffman (R-Lima) likes that idea, but said it’s vague.
“I don't think it should be restricted just to sports stadiums. There are a lot of other cultural and other significant things that would enhance the state of Ohio,” Huffman told reporters last week.
School funding is another area of difference. The House moved away from the bipartisan Fair School Funding Plan, saying some districts would lose funding, and opting instead for what was termed a “bridge formula”. The Senate reinstated the FAFP, but funded the final two years of implementation of the plan at 2021 levels.
Both budgets include limits on how much collected property tax that school districts can hold as a percentage of their operating budgets, with the rest refunded to homeowners. The House budget caps carryover cash balances at 30% - the Senate’s cap is 50%. Huffman said he could see 40% as a compromise. Republicans have said this would provide immediate property tax relief. But school districts have said either plan would create financial chaos, causing some districts to quickly go into the red and many to go to voters with levies.
DeWine has line-item veto power. He vetoed 44 budget items two years ago, 14 in the budget before that, and 25 in the first budget he signed.
