COLUMBUS – The Ohio Senate unveiled its first draft of the state’s two-year operating budget Monday, closing a projected shortfall of roughly $1 billion, while preserving key tax reforms, maintaining historic levels of state aid for schools and investing in essential public services. The budget also includes a record level of investment in fighting the state’s opiate epidemic.
“Despite a daunting $1 billion shortfall, this budget protects and strengthens investments in key areas such as education and resources to combat the rampant addiction crisis, among others,” said State Senator Bill Beagle (R-Tipp City), who serves on the Senate Finance Committee charged with crafting the state’s balanced budget. “Our proposal also invests in higher education, while protecting tax reforms that play a vital role in promoting job creation. This budget embodies conservative principles of responsible governance through restrained spending and limiting the size and scope of government in the daily lives of Ohio families.”
“Despite continually shrinking revenues, the Senate has worked to create a balanced budget that succeeds in tightening the State’s belt while still funding essential agencies and services in Ohio,” said State Senator Matt Huffman (R-Lima). “As the budget process moves forward, I will continue to work with my colleagues to ensure the final product accurately addresses the needs of both my constituents and the state as a whole.”
“This is a difficult process, but this budget is balanced, it is fiscally responsible, and it invests in the citizens and key priorities of this great state,” said Senate President Larry Obhof (R-Medina).
The state faces a projected fiscal shortfall, which combined with other factors required substantial changes to the budget proposed by the Administration earlier this year. In April, President Obhof, Governor John Kasich and Speaker Clifford Rosenberger announced an $800 million shortfall. That number is expected to increase as new projections come out later this month.
“We expect the current gap to increase, and the Senate has budgeted accordingly. We assumed a gap of just over $1 billion, and this proposal closes that gap,” said Obhof. “I believe this bill reflects the right balance between funding our state’s priorities and doing more with less.”
Obhof announced that while the Senate reduced state spending, the chamber delivered a balanced budget that upholds its commitment to avoid raising taxes or spending the state’s “rainy day fund.”
Below is a summary of major provisions in the Senate’s plan to achieve cost savings and still invest in essential human services.
Reducing the Size of Government
The Senate’s budget generally reduces government overhead by cutting administrative costs for state agencies across the board by an average of three to four percent – or more in some cases – generating approximately $20 million in savings. The Senate is cutting its own budget by six percent.
On top of that, the governor’s administration worked with the Senate to identify other targeted agency cuts to specific programs that either had excess or unspent funds. In each of those cases, the Senate worked with the agencies to identify savings that are least harmful to public services. That effort saved more than $100 million.
The Senate eliminated tens of millions of dollars in earmarks; took roughly $85 million from programs in the last budget that had excess or unspent funds and by not renewing some of those programs in the new budget; worked with the Department of Rehabilitation and Corrections to identify about $20 million in savings; and worked with Medicaid to identify more than $200 million in reductions, while ensuring the reliable continuation of services for Ohio’s most vulnerable citizens.
Protecting Vital Services
The Senate restored funding cuts to foodbanks, breast and cervical cancer screening programs and clean water and food safety initiatives, among others.
The Senate also protected from deeper cuts programs such as local child support, health departments, AIDS prevention initiatives, services for people with disabilities, public transportation and schools for the deaf and blind.
The Senate protected funding for our nationally recognized public library system and increased the formula funding for libraries over the prior version of the bill.
Maintaining Our Investment in Education
The Senate has worked to support primary and secondary education with total increases in foundation aid of $1.7 billion in the past three budgets, including this one. This investment has resulted in overall state per pupil increases since 2013 of 30.5 percent.
The plan adds $154 million more in state aid for K-12 education in FY18 and then an additional $117 million in FY19.
In this budget, 535 school districts will receive either increases in state foundation aid or be otherwise protected from state cuts. In fact, the only districts to receive reductions in state foundation aid are those with more than five percent student population loss in the past two years. The budget establishes a base cap of three percent but then provides for additional funds for districts gaining students up to six percent by FY19.
The Senate maintained an increase in funding for early childhood programs and expanded eligibility for low-income families so that, where space is available, three-year-olds can access programs formerly limited to four-year-olds.
Listening to concerns from parents, teachers and school administrators, the Senate continued to reduce the over-testing burden on students by eliminating the requirement for state fourth and sixth grade social studies tests and relying on local development of history testing.
The Senate continued to prioritize college affordability, removing a provision that would have permitted unlimited increases in tuition under the Ohio Tuition Guarantee Program.
The Senate also increased funding for the Ohio College Opportunity Grant, which provides need-based financial aid to college students. Our OCOG investment of more than $208 million over the biennium is the largest since GRF-supported need-based financial aid was drastically cut in the 2009 budget bill.
Reducing Ohio’s Tax Burden
The Senate continues to make tax relief a core principle of our governing philosophy, not only maintaining in this bill tax cuts and reforms adopted over the last six years, but also including additional reforms.
The Senate’s budget doubles the tax deduction families can take for college savings, as well as for the ABLE program, which allows families of children with disabilities to save for expenses associated with caring for them; includes the Rural Jobs Act language passed by the Senate but not enacted in the prior General Assembly, which incentivizes agricultural job creation and economic development in rural underserved areas of the state; extends the Sales Tax Holiday to the 2018 calendar year, providing tax relief for families while encouraging retail sales and tourism; and retains provisions already included in the bill which eliminate the bottom two tax brackets and reform property tax valuation of agricultural land.
Fighting Ohio’s Opiate Epidemic
The Senate was able to take what the House did on the opiates issue and expand that funding to $176.4 million – on top of the nearly $1 billion already being spent by the state annually on drug abuse and addiction.
The Senate achieved about $100 million in savings overall by converting much of the House-allocated funding to non-GRF dollars. Working with state and federal partners, the Senate identified other resources that kept intact the $170 million made by the House and allowed us to add to it.
Among some of the highlights, the Senate included $60 million in funding for child protective services and programs to support children in drug-affected families; added $2 million dollars over the biennium to support criminal and forensic labs, as well as county coroners who are facing case overload issues because of drug fatalities; maintained the $20 million capital commitment for the expansion of treatment and recovery housing; invested $6 million in new detox facilities; included funding for a new pilot program that assists drug task forces with new investigative tools to combat trafficking; funded critical upgrades to the OARRS system, a statewide effort to track prescriptions and combat prescription abuse; included $1 million in additional funding to care for drug-addicted infants; made a $5 million investment in helping counties establish drug abuse response teams; included $5 million in funding to train teachers in identifying students who might be addicted; and created a pathway for county jails to be reimbursed by the state for costly mental health drugs.
The Senate’s version of the state budget, also known as Substitute House Bill 49, was officially introduced today in the Senate’s Finance Committee. Coverage of today’s news conference can be watched at OhioChannel.org. Follow @OhioSenateGOP on social media for more information and the latest updates.
