Following passage of the state operating budget by the Ohio Senate just barely a week ago, members of the Ohio House-Senate Conference Committee reached agreement on changes to House Bill 64 and both houses of the General Assembly moved forward to adopt the Conference Committee’s changes. The $71B plus operating budget adopted most of Governor Kasich’s top priorities but the General Assembly set their own path with less tax cuts, fewer tax increases and stronger spending priorities around K-12 and higher education than Kasich proposed. The General Assembly also piled on what many think are a record number of spending earmarks which designate funds in multiple agencies to specific organizations.
Major Ohio budget priorities for the state of Ohio in FY 2016-17 include:
- Tax Policy- HB 64 made substantial changes to state tax policy including multiple tax cuts and one tax increase—
- Provides a 6.3% personal income tax cut;
- Provides a 75% tax exemption this tax year, followed by a 100% exemption next tax year, for business owners on their first $250,000 of net income. Business owners would pay a 3% flat tax on income beyond that; and
- Enacts a 35-cents-per-pack cigarette tax increase with no tax hike on other tobacco products.
- Workforce- HB 64 devotes a substantial amount of state resources to Ohio’s workforce development efforts starting with K-12 education continuing onto higher education and finishing in targeted workforce development efforts—
- Increases spending beyond the $10B in Governor’s Kasich’s K-12 education budget proposal by over $900M, continued the Governor’s Straight A Fund and continued the state’s controversial approach of guaranteeing no school district will receive less state funding than they did in the previous budget even if they have fewer students;
- Increases spending for the state’s prime public higher education subsidy by over double the increase proposed by the Governor, increased funding for the state’s need based scholarship program, continued funding the Ohio Board of Regents Co-Op and Internship Program and froze tuition and fees for two years at Ohio’s public colleges and universities;
- Creates the Montgomery County Workforce Study Committee to study workforce development issues and trends in the Montgomery County Region, including workforce development system options for in-demand jobs and identifying supply and demand of in-demand job areas.
- Provides $500,000 for the Ohio Career Exploration Internship Fund; and
- Requires the Third Frontier Commission to operate the Third Frontier Internship Program in FY 2016 and FY 2017 to contribute to the expansion of a technologically proficient workforce in Ohio, and to encourage the retention in Ohio of highly knowledgeable and talented students through employing them upon graduation at for-profit companies doing business in Ohio.
- Health Care- The majority of the state of Ohio budget is spent on providing health care services for Ohio’s poor residents through the Medicaid program and changes to Ohio’s health care policy include:
- Adopts of the continued expansion of Medicaid services as funded by the federal government’s Affordable Care Act which provides Medicaid health insurance for the unemployed as well as the working poor;
- Requires the Kasich administration to seek a Medicaid waiver from the federal government to create health savings accounts with exclusions for certain program recipients;
- Expands Ohio’s Medicaid managed care program to include the growing field of behavioral health services into Medicaid managed care while going along with several Senate provisions on managed care;
- Supports the House’s Healthier Buckeye Grant Program and appropriates $11.5M over the biennium for the initiative;
- Requires that the Medicaid payment rate for medical transportation services include a component paying for providers’ fuel costs and that the rate for the fuel component be at least 5% higher than the national average for fuel prices;
- Sets the Medicaid rate for nursing facility services provided to low resource utilization residents at (1) $115 per Medicaid day if ODM is satisfied that the nursing facility is cooperating with the Long-Term Care Ombudsman Program in efforts to help the nursing facility’s low resource utilization residents receive the services that are most appropriate for their level of care, or (2) $91.70 per Medicaid day if ODM is not satisfied;
- Requires a Medicaid managed care organization to provide enhanced care management services to pregnant women and women capable of becoming pregnant in ODH-identified communities with high infant mortality; and
- Requires the Medicaid rates for ambulette services provided during FY 2016 and FY 2017 to be at least 10% higher than the rates in effect on June 30, 2015.
The General Assembly ultimately rejected controversial Ohio Senate programs that would have cut in half funding for the Ohio Housing Finance Agency by redirecting housing awards to specific counties and effectively killing the Ohio Historic Preservation Tax Credit Program. Another state operating budget is done and members of the General Assembly will head for a well-deserved summer recess. Governor Kasich is expected to sign the bill but as the bill contains appropriations, he has the power of the pen and is expected to use his line-item veto on several provisions.