Ohio Senate passes $86 billion state budget plan. Here are the differences it will have to reconcile with the House (2023)

COLUMBUS, Ohio—The Ohio Senate on Thursday passed a two-year, $85.8 billion state budget plan that would slash state taxes, dramatically expand publicly funded school vouchers, and make major changes to the state’s K-12 and college systems, among many other things.

The 9,198-page legislation, which was passed by a party-line, 24-7 vote, is now likely to head to a conference committee of House and Senate negotiators who will hammer out differences between the Senate’s budget plan and the House’s version before sending a final bill to Gov. Mike DeWine.

Senate Republicans, who hold more than three-fourths of the chamber’s seats, praised their budget plan, saying it would stimulate economic growth in the state, return money to taxpayers, and improve the state’s education system.

However, Senate Democrats said the GOP-backed budget plan would make “extreme” changes to education policy and doesn’t do enough to help poorer Ohioans.

Lawmakers pass a state budget every two years to approve state government spending. The House’s budget plan calls for $88 billion in general-revenue spending.

However, as with the governor’s and the Ohio House’s budget proposals before it, the Senate’s budget bill includes many proposed policy changes that have little to do with state spending.

Overall, both budget proposals reflect the state’s positive financial position, with tax revenues so far this fiscal year outpacing projections by more than $840 million, and a large chunk of one-time federal coronavirus relief money sitting there to spend.

Here are the major issues raised in the Senate and House budgets, as well as the major disagreements that the legislative conference committee will now have to iron out.

Tax cuts

Both the Senate and House budget plans would cut state income taxes, as lawmakers have done in previous legislative sessions.

However, the Senate’s plan seeks a comparatively steeper, $1.65 billion income tax cut that would slash taxes across the board, particularly for wealthier Ohioans, and eliminate all but two tax brackets. The House’s proposed $930 million cut, by comparison, would reduce income taxes only for lower- and middle-income residents.

The Senate’s budget plan – but not the House’s plan – also would dramatically reduce the number of Ohio businesses that have to pay the state’s commercial activity tax, or CAT.

Right now, the CAT is assessed on almost all companies with gross receipts of over $150,000 in the state. The Senate plan would change that by only charging the CAT on gross receipts beyond $6 million, starting in two years. If that becomes law, an estimated 90% of Ohio-based businesses that currently pay CAT – 145,000 of 163,000 – would no longer have to pay any amount of the tax, according to a Senate Finance Committee handout.

School voucher expansion

Both the House and Senate budget bills would expand publicly funded school vouchers for K-12 private schools, though the Senate’s plan would go much further than the House’s proposal.

Right now, income limits for Ohio’s voucher program are 250% of the federal poverty line, or $75,000 per year for a family of four.

Under both the House and the Senate budgets, any Ohio K-12 student in a family making less than 450% of the federal poverty line – equal to $135,000 in annual income for a family of four – would be eligible for vouchers.

The Senate’s budget, though, also would extend voucher eligibility to every K-12 student in Ohio, regardless of income. However, students from families making more than 450% of the poverty line would be eligible only for partial voucher scholarships of $650 or more, with the exact amount they receive being based on their families’ income.

The Senate’s plan, if put into law, would increase state spending on vouchers by $372.5 million during the next two years, bringing total voucher spending to more than $1 billion by 2025, according to estimates from the nonpartisan Legislative Service Commission.

The Senate budget bill also would allow any private charter school or private school participating in the Cleveland Scholarship Program to charge tuition to students from lower-income families beyond what their voucher scholarship pays. Right now, such schools have to waive that tuition for those students.

Another Senate budget provision would permit students receiving Cleveland Scholarship money to pay to attend private schools located outside of the Cleveland Municipal School District.

Combatting liberal “bias” on campus

The Senate’s bill, unlike the House, contains a sweeping package of higher-education reforms designed to reduce liberal influence at Ohio colleges and universities. It would, among other things, outlaw the ability of college faculty and staff to strike, ban mandated diversity training, and require annual faculty performance evaluations and post-tenure reviews that include examining whether students believe they show “bias” in their teaching.

It also would prohibit faculty at public colleges and universities in Ohio from teaching a certain point of view about a number of “controversial beliefs or policies,” including that global warming is real and human-caused.

The Senate also inserted millions of dollars in funding to create “independent academic units” at Ohio State University and the University of Toledo with their own bylaws, hiring and tenure authority. Proponents of the idea say the centers would encourage political diversity on campus, though critics see it as another attempt by GOP lawmakers to bring more conservative views to Ohio universities.

State Board of Education overhaul

The Senate inserted a controversial proposal to strip the State Board of Education of most of its powers and give them instead to the governor’s administration.

Republicans claim the change is needed because the state board, which has been beset by infighting over hot-button proposals like protections for LGBT students, has been slow to act in naming a new state superintendent of public instruction and to raise student test scores.

Critics, including Democrats, note that Republicans only advanced the proposal last November, shortly after three Democrats were elected to board seats previously held by Republicans The 19-member board includes 11 members elected by district and eight who are appointed by the governor.

At the start of the current session, Senate Republicans introduced an overhaul bill as Senate Bill 1 – indicating the proposal’s importance – and passed it during a party-line vote in March. That bill then went to the House, where committee hearings have since been held on it, but no floor vote has yet been scheduled.

Teacher salary raise

Unlike the Senate’s budget plan, the House’s budget bill would raise minimum salaries for Ohio teachers, which are set based on teachers’ education level and years of experience.

Under the House’s plan, teachers with a bachelor’s degree would have to be paid at least $40,000 per year, up from an annual minimum of $30,000 right now. Teachers with a master’s degree and at least 11 years of experience would see a larger minimum increase, from $48,690 per year right now to $64,920 annually.

If the House’s proposal becomes law, an estimated 16,800 teachers would see an increase in salary and benefit, according to the LSC. The raises would cost a total of $79.5 million per year across traditional school districts, the LSC estimated.

The Senate’s budget contains no increase for minimum teacher salaries.

Other education changes

Both the Senate and House budgets would fund the next leg of the Cupp-Patterson school funding plan. The Senate’s plan would kick in $1.3 billion more in state education funding over the next two years, about $541 million less than what the House budget calls for.

Since 2012, Ohio has required kids to repeat third grade if they don’t pass a reading proficiency test. Lawmakers suspended that requirement during the coronavirus pandemic; now, the House-passed budget would eliminate that requirement permanently. However, the Senate’s version of the budget would keep the third grade reading guarantee.

The two budget plans also include funding for DeWine’s plan to promote the “science of reading” instructional approach in schools, which requires students to break down words into parts and sound them out and incorporate phonics and vocabulary lessons.

Social safety net programs

The Senate’s budget plan calls for rolling back the House’s proposal to spend more money on programs to feed, house, and cover health-care costs for some of the state’s poorest citizens. The Senate’s version would also remove hundreds of millions of dollars worth of childcare funding, compared to what DeWine and the House are seeking.

The Senate’s proposal would also, among other things, require a photo ID and phone number for most Ohioans to receive food stamps.

Both the House and Senate budget, however, includes DeWine proposals to provide tax incentives to build and pay for affordable housing, including $100 million in low-income housing tax credits (the House proposed $500 million), income-tax deductions for homeownership savings accounts, and $50 million in tax credits for single-family affordable housing.

Earmarks for Northeast Ohio

The House’s budget includes a number of spending proposals for specific projects around the state, many of which are from Northeast Ohio. Among them is a proposed $62 million for a “land bridge” connecting Cleveland’s downtown and lakefront.

However, the Senate removed those earmarks. Instead, senators stripped out $1 billion from the House’s budget to improve rural highways and offered it instead as grants around the state. Some of that money could potentially go toward the proposed land bridge and other Northeast Ohio projects, if lawmakers approve it down the line.

Summer sales tax holiday

For years, Ohio lawmakers have designated the first weekend in August as a “back-to-school tax holiday,” during which shoppers are not charged state or local sales taxes for items such as clothing and school supplies.

The Senate’s budget would expand that holiday in 2024 to last a full two weeks, starting on Aug. 1, and go far beyond school supplies. During that time, all items priced at $500 or less would be exempt from sales tax, except motor vehicles, watercraft, alcohol, marijuana, and tobacco and vapor products.

In Cuyahoga County, where customers pay a total of 8% state and local sales tax, that means anyone buying $100 worth of eligible school supplies would save $8. Local governments would be reimbursed by the state for revenue losses from the holiday.

After 2024, back-to-school tax holidays would automatically expand beyond a single weekend in years when there is more than $50 million in excess money in the state’s general revenue fund.

Other differences between the House and Senate budget plans include:

• The Senate inserted $11.3 million to pay for the Aug. 8 special election on State Issue 1, a Republican-backed proposed constitutional amendment that would make it harder to pass future amendments, including an anticipated abortion-rights amendment in November. However, the Senate bill would also give permission to spend an additional $4.7 million on the election if needed. Elections officials have publicly questioned whether the Senate’s proposal will provide enough to cover the cost of the election. The House’s version of the budget doesn’t appropriate any money for the special election.
• The Senate budget incorporates a bill that would allow many police departments around the state to lower their minimum age to become officers from 21 to 18. Proponents, including representatives of cities and townships, say such a change would help address a widespread hiring shortage and note that many city police departments already hire people younger than 21. Critics, including many law-enforcement officials, say teenagers don’t have the emotional or mental capacity to handle such a job.
• The House budget would allow Cuyahoga, Franklin and Hamilton counties to have seven sports-gaming facilities, rather than the five allowed under current law. That would provide an opportunity for sportsbook applicants in Cuyahoga County who were previously rejected, including Bobby George’s Harry Buffalo; Steve Rosen, co-CEO of a private equity firm called Resilience Capital Partners in Beachwood; and downtown developer Stark Enterprises.
• The Senate’s budget would prohibit student members of the Ohio State University Board of Trustees from having voting rights or being able to attend executive sessions. It would also reduce the terms of all non-student trustees at state universities from nine years to six years starting in 2024.
• The Senate budget bill would no longer require the Lorain City School District to be under the control of an academic distress commission, as it has been since 2017.
• The Senate’s plan would prohibit most state employees from working from home for more than 8 hours during a 40-hour workweek at any point between Oct. 1 and July 2025.
• Senators are seeking to prohibit local governments from passing any tobacco rules that are stricter than state rules. If passed, that would overrule existing bans on flavored tobacco in at least three cities -- Toledo, Columbus and the Columbus suburb of Bexley.