House approves $68.9 billion, two-year state spending plan, but Sykes warns Senate will ‘mess it up’

The Ohio House on Thursday overwhelmingly approved a nearly $68.9 billion, two-year state spending plan, one that garnered bipartisan praise for school spending and a reduction of the income tax on Ohio’s lowest earners.

The measure includes a pay increase for direct service providers, eliminates a corporate jet timeshare tax exemption and increases the minimum age to buy tobacco in the state from 18 to 21 years old.

The House voted 85-9 to pass the bill. It now heads to the state Senate for consideration, “and they’re likely going to mess it up,” Ohio House Democratic Leader Emilia Strong Sykes, D-Akron, said during remarks on the House floor before the vote.

“This budget is absolutely and unequivocally an investment in Ohio, an investment in Ohio’s future and an opportunity to renew Ohio’s promise,” Sykes said.

The spending plan eliminates the income tax for Ohioans who earn less than $22,250 per year. It also reduces income tax rates by 6.6 percent for the remainder of Ohio’s residents.

The budget lowers the so-called “LLC Loophole” to $100,000. The loophole previously exempted some small business owners from paying income tax on their first $250,000 in earnings.

“We believe this is a fiscally sound budget,” state Rep. Jack Cera, D-Bellaire, said. “… Taking a more cautious approach as we’ve done here in this budget is a wise move. As we move forward, I would caution the House and our friends in the Senate to be careful about our spending for both additional tax cuts and spending.”

The plan also creates a single pharmacy benefit manager (PBM) contract for Medicaid-managed care in Ohio. Under the bill, the PBM will be required to disclose any conflicts of interest to the state and prohibits them from steering Medicaid recipients to PBM-owned pharmacies, state Rep. Scott Oelslager, R-North Canton, said.

The bill also freezes tuition and general fees for incoming first-year students at public four-year universities this fall, so first-year students to Ohio’s public higher education institutions will pay the same tuition all four years.

“This budget represents historic across the board investments in post-secondary opportunities,” state Rep. Rick Carfagna, R-Genoa Township, said. “From short-term certificates to our medical schools, we are putting the supports in this budget for all individuals, no matter their pathway in life.”

The spending plan increases funding to public schools in Ohio. But a formula that will overhaul how the state funds public schools proposed by a group co-chaired by state Reps. John Patterson, D-Jefferson, and Bob Cupp, R-Lima, did not make the final cut.

“There is still more work to be done in the area of funding our schools,” Patterson said.

The nonprofit Buckeye Institute, a public policy organization, argued that while some aspects of the budget were worthy of praise, overall it would raise government spending to unsustainable levels.

“Although this budget advances good tax policy by eliminating some tax credits and loopholes for private jets and movie studios, the budget increases taxes on Ohio’s entrepreneurs and small businesses, which will slow economic growth and job creation,” said Rea Hederman Jr., the institute’s vice president of policy, in a statement. “Given the budget comes at a time of economic expansion, policymakers have the perfect opportunity to pursue meaningful, sustainable pro-growth reforms that will make Ohio a national economic leader.”

The state legislature must approve the budget by June 30.