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Governor Unveils First Budget, With Priority On Kids And No Tax Hikes - Or Cuts

Mar 15, 2019

March 15 was the deadline for Governor Mike DeWine to release his two-year budget.

He’d already unveiled several proposals, but now more is known about his priorities in his 69 billion dollar state spending blueprint, and how he says he’ll pay for them. Ohio Public Radio's Karen Kasler and Andy Chow prepared this report.

DeWine had already announced several budget items – sometimes before groups that would be affected, such as public children services’ agencies and advocates he spoke to two days after his State of the State speech – that he wants to nearly double their state funding.

DeWine has also said he wants to triple the money for newborn home visits, add $7.5 million for 30 new drug courts, and set aside more money for county health and recovery boards and to help people remove lead paint and recover from related health issues, and his $900 million H2Ohio fund for Lake Erie.

But DeWine hadn’t previewed his K-12 spending. Public school districts will get the same money they got last year, but over two years, they’ll share $550 million targeted to the often expensive needs of at-risk students, who DeWine noted are in every school district.

“It’s only, 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.

There’s also a slight increase in the state’s share of higher education funding.

The budget expects overall Medicaid caseloads to drop in the first year and rise in the second, and it continues Medicaid expansion. Office of Budget and Management director Kimberly Murnieks said there are federal cuts coming to that and the children’s insurance program as well.

“The increase in Medicaid in Year Two that you’ll see is because of the share, the federal shares, especially SCHIP, are being reduced on the federal side so the state is making up that difference,” Murnieks said.

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 said counties wanted more money for indigent defense, which he’s tripling to $90 million. And he wants to raise the age to buy tobacco products from 18 to 21, which will mean that revenue 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.

DeWine says his two-year operating budget proposal does not include any new taxes or many major agency or program cuts. Instead, he plans to pay for his new spending increases with the economic growth estimated by his Office of Budget and Management, which describes its forecast as conservative.

Murnieks said the state is expecting to see revenue grow by 3.9% in fiscal year 2020 and 1.7% in fiscal year 2021: “Our forecast is built on continued slow but steady economic growth of Ohio’s existing revenue sources.”

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% more than the last one did. But it doesn’t include any tax cuts, something the state saw frequently with former Gov. John 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. 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," said DeWine.

House Minority Leader Emilia Sykes (D-Akron) said she’s encouraged by DeWine’s proposed budget. In fact she points out that many of DeWine’s recommendations touch on issues for which Democrats have been advocating.

But she said her caucus plans to look closely at the budget to get a better understanding of how exactly DeWine plans to make room for these increased investments.

“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," Sykes said.

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.