With hours left to the budget deadline on June 30th, the legislature made their final votes on the state biennial budget, sending it to Governor Mike DeWine for his signature. Late July 3rd, Governor DeWine issued his veto message of 44 items, followed by signing the $190 billion budget into law.
Notable vetoes include tobacco-related provisions including a preemption of local regulations on sales, provisions that allowed students to refuse vaccines required by higher education institutions, an expanded sales tax holiday, and a several other items deemed as legislative overreaches into the purview of the executive branch.
Provisions included in the finalized budget that the Ohio Business Roundtable engaged on include:
INCOME TAX - decreases the number of tax brackets to two, with those earning under $100,000 being taxed at 2.75% and those in excess of that number taxed at 3.5%, a provision supported by OBRT.
COMMERCIAL ACTIVITY TAX - significantly narrows the base of businesses who pay the tax, exempting medium and small businesses completely by 2025. OBRT voiced opposition to plan as it places a significant burden on a narrow segment of businesses and creates uncertainty for future budgets. While Gov. DeWine issued a technical veto around the CAT language, the exemptions were retained. Ohio Business Roundtable advocated against this change recognizing it would pick winners and losers.
MUNICIPAL NET PROFITS TAX - OBRT led the efforts to make permanent temporary law that allows business to designate their physical office location for the purposes of filing municipal net profits tax, rather than needing to track all of the jurisdictions where employees are working remotely. The final language, however, does not apply until after the 2023 tax year, so OBRT will work in the fall to make these provisions retroactive so business aren't liable for this reporting in the 2022 and 2023 tax years.
HOUSING- the legislature agreed to Governor DeWine's proposal of a state low income housing tax credit (LIHTC). The budget also remedied a property valuation issue enacted last year that jeopardized the success of Ohio's LIHTC program. Although OBRT was hoping for a more aggressive investment in housing, the provisions are a good step forward to helping us establish more workforce housing. Also included is language increasing the signature threshold to place zoning referendums on the ballot from 8% to 15%, which will help reduce zoning referendums from being used to block new housing developments.
K-12 EDUCATION- the budget continues the phase in of the Cupp-Patterson Fair School Funding Plan, increased funding for charters, creates universal vouchers for private schools, and overhauls the Department of Education by renaming it the Department of Education and Workforce (DEW) and placing the responsibilities of the State Board of Education under the new cabinet-level director. The bill also includes policies and funding to support science-based literacy education, a major priority of OBRT, as well as computer science curriculum.
HIGHER EDUCATION - contentious provisions pertaining to DEI initiatives and faculty strikes from SB 83 were removed from the budget before passage. Additionally, the Senate significantly increased funding for the Ohio College Opportunity Grant (OCOG) although not to the impactful level Governor DeWine had proposed in his budget. The budget also provides funding for the Governor's scholarship program for Ohio students in the top 5% of their graduating class and creates a new need-based aid program for students pursuing in-demand careers at community colleges.
MENTAL HEALTH- while not fulling meeting the mental health requests first proposed by Governor DeWine, the final document does make significant investments in pediatric behavioral health treatment, residential facilities, research, data collection and more to address mental health.
INNOVATION HUBS- $75 million is allocated to create new innovation hubs to compliment the three that have already been established in Cincinnati, Columbus, and Cleveland, which many OBRT members play a role in.
SHOVEL-READY ECONOMIC DEVELOPMENT SITES- when he announced his budget, the Governor called for $2.4 billion dollars to create "shovel-ready" economic development sites throughout the state to attract similar investments to other regions that Intel made in central Ohio. Ultimately, the legislature agreed to $667 million for this fund.
JOBSOHIO- allows JobsOhio’s franchise of the state liquor enterprise to be extended for an additional 15 years, upon agreement between JobsOhio and the State of Ohio. Once negotiated, this agreement would be subject to approval by the state Controlling Board. The current JobsOhio franchise agreement is set to expire in 2038.