Gov. Mike DeWine is proposing a budget that he says invests in kids and includes no new taxes or tax cuts. The plan, released Friday, calls for spending $69 billion in state revenue over two years.
DeWine said Ohio for too long has "tinkered at the margins" rather than investing in "transformational changes" and must take a longer view to benefit future generations.
"Now is the time to tackle our unfinished business," he said.
DeWine already released some proposals that are in his budget – for instance, tripling money for a newborn home visit program, nearly doubling investment in children services and putting forward more money to deal with lead paint.
Family and children services would increase to $151 million a year, while DeWine would create a program giving schools $550 million over two years to support and encourage students through mental health counseling, mentoring, after-school programs and other efforts.
DeWine said his K-12 budget will target at-risk kids “who exist in every community.”
“It's only by doing this that these kids are going to be able to be at the starting line and have a chance to succeed," DeWine said.
The budget includes a slight increase in the state's share of higher education funding.
The proposal would preserve Ohio’s Medicaid expansion but eliminate the Office of Health Transformation, which was created by DeWine's predecessor, Gov. John Kasich, to overhaul the Medicaid program and recommend reorganization of state health and human-service agencies. That office has completed its work, said budget director Kim Murnieks.
The budget expects overall Medicaid caseloads to drop in its first year and rise in the second. Murnieks says there are federal cuts coming to both Medicaid expansion and CHIP, the children's health insurance program, as well.
Just hours after the budget was presented, the federal government allowed Ohio to start imposing work requirements, a move DeWine said during the campaign would make Medicaid expansion sustainable. But advocates for the program have said they have concerns whether the costs in administration will eat up any possible savings.
DeWine also noted $90 million in his budget for indigent defense, responding to a request from counties. DeWine never said he’d restore the Local Government Fund, but said he would be a partner with them.
DeWine wants to raise the age to buy tobacco products from 18 to 21, which mean that revenue from the tobacco tax will drop.
And the budget also includes a 10 percent income tax credit for investors in opportunity zones in economically distressed areas, something that DeWine talked about during the campaign as a potential job creator.
Murnieks said that all programs and initiatives can be paid for by projected economic growth, which she says is conservative. She said the state is expecting to see revenue grow by 3.9 percent in fiscal year 2020 and 1.7 percent in fiscal year 2021.
“Our forecast is built on continued slow but steady economic growth of Ohio’s existing revenue sources," Murniek says.
Murnieks said they’re seeing a steady increase in revenues from the sales and personal income tax while the commercial activities tax is expected to pace a little slower. That being said, Ohio’s tax revenue is expected to see an increase of $1.2 billion over the next two years compared to fiscal year 2019.
The budget spends 5 percent more than the last one did. But it doesn’t include any tax cuts, something the state saw frequently with former Kasich’s budgets. DeWine said you have to take the state as you find it.
“It seemed to us that we don’t want to raise taxes, we have things that we frankly need to invest in," DeWine said. "We need to invest in our citizens, we need to invest in our infrastructure. There’s a time and a place for everything, this is a time and a place to invest in Ohio and to invest in Ohioans."
DeWine noted that his plan doesn't count on any money from sports wagering, though a U.S. Supreme Court ruling opened that option for states, and lawmakers are considering a bill to legalize it in Ohio.
Democrats had hoped for a change or elimination of the small business deduction allowing the first $250,000 to be taken tax-free. However, lawmakers said they were encouraged by the governor's support for investing in children and families, cleaning up Lake Erie and maintaining access to affordable health care.
Democrats did question how the proposed spending increase of more than $1 billion annually would be funded, however.
“I am hopeful that it all balances, it has to balance, the constitution requires us to, but I’m not sure where that has happened so I look forward to seeing how that has occurred in the budget, in writing," said House Minority Leader Emilia Sykes (D-Akron).
Murnieks said the grand total of General Revenue Fund spending is $33.6 billion in the first year of the budget and $35.3 billion in the second year.
The budget covers the two-year period starting July 1. The budget is first introduced in the Ohio House then moves to the Senate, where its Republican leader has expressed interest in more income tax cuts.
More details on the budget are on the Office of Budget and Management website.
