Ohio’s Operating Budget: One Month Later

Now that a month has passed since the state operating budget has been signed by Governor DeWine, we have had a chance to fully digest the contents. As you are probably aware, the major headline in the press was the 17-day delay in getting it passed. And while it may appear that the budget was kind of cluster (you know what), leaders in both the House and Senate agree that Ohioans were not adversely impacted by the delays and argue that the extra time helped improve the final product.

This budget process was kind of unique, in that, lawmakers were less concerned with the business impacts of the budget bill and more concerned with social programs and the impacts those resources have on everyday Ohioans.  In fact, Senate President Obhof stated “this budget is the first in a decade to focus on Ohio’s children, families and our future. I’m especially pleased with its investments in early childhood education and putting workers first as well as local projects that will help our communities thrive”. And, House Speaker Householder indicated that this budget had a lot to do with helping to rebuild families and communities that have been impacted by the opiate crisis.

SBCO does not disagree that the needs of constituents should be a top priority of lawmakers, but we do believe that the business community had to put up more of a fight than they probably should have. Call us old fashioned but we believe that employers, who bear the most risk in any economy should not have to be fearful of footing the bill for tax shifting. The fact is, republicans wanted to secure as many democratic votes as possible since they knew that all the spending on social programs would lose them votes from far-right republicans. And to be fair, they wanted minority party members at the table to help shape the spending, that in large part would be going back to democratic districts.

This blog would not be as much value to you if we didn’t mention at least a few budget provisions of interest to small businesses:

  • The $250,000 tax deduction for pass-through entities was restored (except for attorneys and lobbyists)
  • The unemployment base wage will decrease from $9,500 to $9,000
  • Once a new regulation is created, two existing regulations must be eliminated

In recent years (under the Kasich administration) the business community had to vigorously fight to prevent proposed taxes on a plethora of business services to pave the way for aggressive reductions in the personal income tax. A refreshing aspect of this budget is that it was actually a BUDGET which means it was less about policymaking and more about actual dollars and cents; unlike the previous four or more budgets. It was clear that Governor DeWine wanted to set himself apart from his predecessor.  In fact, several months ago, sources within a handful of state agencies informed SBCO that the new governor gave his staff instructions not to retain budget files and records from the previous administration. However, regardless of how much you try to create a budget from scratch, new governors have no choice but to inherit certain items.

Finally, the current two-year budget has some flaws but overall is a product that we can all agree was given a great deal of thought and consideration. At a time in which state revenues are up, budget spending remains responsible and barely increased from two years ago when the state coffers were not in nearly as good of a situation. We still need to wait until agencies write their rules on how appropriated funds will actually be spent but for now we merely wait until the legislature gets back to business next month.