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State Budget Passed and Signed into Law

(Columbus) – This week, the Ohio Legislature finally reached a deal and passed Ohio’s two-year biennial state operating budget bill (Am. Sub. H.B. 166, Oelslager) with a price tag of nearly $69 billion per year. The Governor quickly issued some line-item vetoes and signed it into law. As the deadline was fast approaching, again, the two houses and governor finally came together and made a deal at the last minute. If you recall, state lawmakers failed to reach a deal on the budget by the end of the fiscal year, June 30th, which is constitutionally required. So, to prevent any disruption in government services, they passed a 17-day interim Budget (S.B. 171) during that time, which expired at midnight on Wednesday, July 17, 2019. During the impasse the past couple of weeks, the conference committee and leadership from both chambers have been working and negotiating behind closed doors to come up with a plan, which finally the conference committee finalized on Tuesday, July 16th.

There were around 95 areas of difference between the House and Senate, which caused the stalemate. Most notably, the areas of disagreement centered around 3 major areas – taxes, health care and education. Specifically, the tax issues dealt with personal income tax reductions and an increase in business taxes for owners of “pass-through entities.” Also, regarding the health care issues, those dealt with some major reforms of Ohio’s Medicaid Pharmacy Benefit Manager (PBM) system, telemedicine insurance coverage, and imposing additional rules on drug costs and pricing transparency. And then most of the education issues centered around high school graduation requirements. Many folks, including the Governor, were advocating for these controversial issues to be stripped out of the budget and considered in separate pieces of legislation, to be dealt with later in the fall, when the Legislature returns after summer break. But in the end, some compromises were made, and they churned out a budget bill that most could agree on – the Governor, House and Senate.

Among the many provisions in the budget, below are a few highlights:

  • Keeps the current small business income tax deduction but excludes lawyers and lobbyists.

  • Keeps the motion picture tax credit but it must go to Ohio companies.

  • Eliminating the income tax checkoff for the Ohio Political Party Fund and the state income tax credit for campaign contributions.

  • Repealing the sales tax exemptions for investment bullion and coins and for sales of qualified property to motor racing teams, as proposed by the House, but maintaining other sales tax exemptions the House had targeted, including for aviation repair and maintenance, sales of flight simulators and fractional aircraft ownership.

  • Keeps the tax on vapor products.

  • Increasing the legal age to purchase tobacco products from 18 to 21.

  • Increasing county recorder fees by an additional $1 beyond the $2 proposed by the Senate, thus boosting funding for the Housing Trust Fund for homelessness and affordable housing grants.

  • Puts a moratorium on academic distress commissions until October 2020 and another one of student success funding.

  • Language adopting the "Solemn Covenant of the States," an interstate compact intended to award prizes for curing diseases that had been supported by Rep. Jim Butler (R-Dayton).

  • Rule restrictions for certain agencies and the Ohio College Opportunity Grant program.

  • Accepts language on the Local Government and Library funds.

  • Accepts reduction in precinct officials.

  • Establishing funding for Lt. Gov. Jon Husted's InnovateOhio initiative of $9 million per year.

  • Stripping the executive proposal to boost fair ride inspection fees, instead giving the Ohio Department of Agriculture $400,000 in GRF funding per fiscal year for ride safety efforts.

  • Adopting House-added language giving Ohio Government Television permission to broadcast and record legislative committee hearings at the direction of a chamber's presiding officer, as well as Senate language increasing the appropriation for OGT by $25,000 in FY20 and $100,000 in FY21.

  • Elimination of the Joint Education Oversight Committee, as proposed in the Senate version, effective Oct. 1; but creates two additional study committees.

  • Maintaining the Senate's provision moving the Ohio presidential primary election to the third Tuesday after the first Monday in March, which next year will mean it coincides with St. Patrick's Day on March 17. The conference committee added an amendment creating protections for people who already filed candidacy declarations and nominating petitions based on the previous March 10 date.

Before signing his first Budget into law, Governor DeWine issued 25 line-item vetoes this morning as he signed the FY20-21 operating budget, HB166. The majority of the vetoes focused primarily on Medicaid and health care policy, including the elimination of the mandate for a single pharmacy benefit manager in Medicaid (but he wrote that he plans to implement this policy administratively, which he did soon thereafter, as he filed an Executive Order to accomplish that goal). Among other vetoes, to name a few:

  • The elimination of a minimum funding guarantee for high wealth schools.

  • A provision in the state budget will raise the age at which Ohioans can buy tobacco and vaping products to 21 on Oct. 1, 2019. A line-item veto removed a grandfather clause in the provision, such that all individuals under 21 would not be able to buy tobacco on its effective date.

  • The current fee at Ohio BMVs assessed on all transactions, including driver's license and license plate renewals, will increase from $3.50 to $5.00 under the state budget.

For more information on the Governor’s vetoes, click here

And for a copy of the final bill, as enrolled, please click here

It has been a long budget season, especially this year as it went into overtime. The ZHF Consulting team has been fully engaged throughout this entire process. We were very successful in achieving results for many of our clients. If you need additional information or if our team can be of any assistance to you or your business/association, please don’t hesitate to contact us. Please see our link for more details about us:

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