While many Ohioans were sleeping Friday night, Gov. John Kasich signed a two-year state budget that will impact everything from high school graduation requirements to Medicaid enrollment.
Kasich vetoed a proposed freeze on enrollment in the state’s expanded Medicaid program and lawmakers are prepared to come back to Columbus this week and may vote to override the governor. If that happens, the freez then has to get approved by the Trump Administration.
Kasich on Friday said the freeze violates federal law and that getting rid of it would halt broad improvements in health care and damage the economy.
Also tucked in to the two-year, $133 billion budget are a variety of provisions and funding that will effect private citizens, local governments, schools, businesses and others across the state. Some will be winners. Others will lose.
Opinions of it break mostly along party lines with Republicans and the business community praising the budget and Democrats and progressives denouncing the budget that was drawn up by Republicans, who control the State legislature by a wide margin.
The budget “continues to not only simplify the tax code for Ohioans and reduce the rate of spending, but initiates a full frontal assault on the heroin epidemic in Ohio,” said State Rep. Kyle Koehler, R-Springfield. “We have also begun to help move able-bodied individuals off Medicaid by freezing enrollment and allowing Ohioans to work their way off government assistance and towards self-sustainment.”
“We’ve heard from taxpayers – Republicans, Democrats and Independents – that they’re working harder than ever before but they’re not getting ahead. Yet this budget continues to unfairly pressure middle class taxpayers, schools, local communities and our economy,” said House Minority Leader Fred Strahorn, D-Dayton. “More of the same simply isn’t working for working Ohioans.”
The budget closes a two-year $1.05 billion revenue shortfall using cuts. Democrats were unsuccessful in eliminating a business tax break and targeting the $1.01 billion in additional annual revenue it would bring to cover the shortfall and spend more on schools, local governments and human services.
“We were happy to see these critical tax reductions preserved for current and future small businesses in Ohio,” said Chris Kershner, vice president for public policy and economic development at the Dayton Area Chamber of Commerce.
Kasich vetoed a provision providing county government and transit systems with new revenue to replace a sales tax on Medicaid managed care plans that ends July 1. The fix, which involved a franchise fee for Medicaid managed care plans, would have provided about $207 million annually for six years to offset the loss of 8.25 percent of county sales tax revenues statewide. For Montgomery County the loss is estimated at $8 million in 2017 and officials say they will have to cut to cover the loss if the legislature doesn’t come up with another plan.
“In the absence of a revenue replacement mechanism, counties will have to reduce or eliminate funding for programs that invest in economic growth and exacerbate the growing pressure on important systems like criminal justice, public safety, and child protection. The demand on these services is only growing in the wake of the opiate epidemic,” said Suzanne Dulaney, executive director of the County Commission Association of Ohio.
Municipal government officials are upset that the budget diverts $35 million from the Local Government Fund to state opioid addiction programs.
The state also will keep a half-percent of the money cities would have gotten in municipal taxes from businesses that choose to file those taxes through the state rather than the cities.
And the budget eliminates a complex business tax known as the “throwback” tax, which will cost municipalities tens of millions in lost revenue, said Kent Scarrett, executive director of the Ohio Municipal League.
“All these things continue to undercut our ability to create more economic development and to respond to the opiate crisis,” Scarrett said. “That means that communities all over the state that are financially challenged are going to be even more challenged. Do we reduce services? Or do we raise taxes?”
The issue that brought the most heated debate is Medicaid, the health insurance program for lower income and disabled people as well as elderly Ohioans in nursing homes.
Republicans put into the budget a freeze on enrollment in the expanded Medicaid program starting July 1, 2018. It would affect only the people who were eligible through the Affordable Care Act that allows coverage for incomes up to 138 percent of the federal poverty level - about $33,600 for a family of four. The only people exempted from the freeze are those who are drug addicted or mentally ill.
“That coverage is important for everyone in this population regardless of whether you are addicted to a substance or if you have cancer or heart disease,” said Nikki Reiss, co-leader of the Ohio Medicaid Coalition, which opposes the freeze.
Kasich’s office projects the freeze will cause 500,000 people to lose health insurance in the first 18 months.
“Taking health care away from our most vulnerable citizens right now is absolutely the worst thing that can happen,” said State Senate Minority Leader Kenny Yuko, D-Richmond Heights.
State Rep. Peggy Lehner, R-Kettering, also opposes the freeze and said she will vote to sustain Kasich’s veto.
“Most people do not choose when they might be in need of public assistance for their health needs,” Lehner said. “While I believe that areas for potential cost-savings within our Medicaid system still do exist, I believe that this change is deserving of further discussion.”
Supporters of the freeze say it would help address unsustainable growth in Medicaid funding
“We really don’t want people on Medicaid on a permanent basis, except for the aged and disabled,” said Greg Lawson, research fellow at the conservative Buckeye Institute for Public Policy Solutions.
“I strongly believe that there’s not enough money on the planet to pay for medical care at the full listed rate for all Ohioans or for all people,” said State Sen. William P. Coley, R-West Chester, “So we have always contemplated that there would have to be some charity care (from medical providers.)”
K-12 education issues
Two K-12 education issues stand out in the budget – state funding levels will change for many local schools, and Class of 2018 students get more options to earn a diploma.
Total state funding for K-12 schools will rise by $76.8 million in the first year of the budget (17-18), then go up by another $86.9 million the second year (18-19), according to the Legislative Service Commission analysis of the budget.
Any budget revisions resulting from Kasich’s vetoes have not yet been released.
It’s not a uniform change – in the first year, 258 school districts will see funding increase, 203 will have no change, and 149 will get less. The second year is roughly similar, but with more districts staying flat.
In southwest Ohio, growing districts such as Beavercreek and Bethel will see state funding rise more than 5 percent each year, putting them among the top 10 gainers in the state. Funding will rise by 3 to 4 percent each year for a majority of Butler County schools. The Springfield area will be largely flat-funded, with only gainers Tecumseh and Springfield seeing any change of more than 2 percent.
Fairfield Schools Treasurer Nancy Lane said her district will use its 3 percent state increase each year “to increase opportunities for our students.”
“The system still needs to be fixed, but for our purposes, any additional funding we receive will be accepted and used accordingly,” she said.
Only 10 percent of Ohio’s school districts will get reduced state funding in back-to-back years. Vandalia-Butler, Mason and Kettering are the regional schools on that list, losing hundreds of thousands of dollars over two years.
Most of those losses are from the continuing phase-out of tangible personal property tax reimbursements. That tax on machinery and equipment that companies use to do business ended last decade, and schools’ payments have been gradually dwindling.
“We were told to plan for this and we did,” said Kettering Treasurer Dan Schall. “But Kettering City Schools is collecting millions of dollars less per year than we once were. The loss that local taxpayers have had to make up over the years is huge.”
State funding is only one factor in school district finances, along with local levies and federal money. State-level changes have a bigger impact on poorer districts, which rely much more heavily on state funding than wealthier suburban districts do.
The budget bill includes alternate pathways to graduation for Class of 2018 students who don’t pass state tests.
Those students could graduate by meeting two of nine standards, such as 93 percent senior-year attendance, a 2.5 senior-year GPA, 120 hours of work or community service, or a special senior-year project.
“I do believe it’s a good thing for kids,” Springfield City Schools Superintendent Bob Hill said. “ This change provides students with an opportunity to demonstrate their proficiency in different ways.”
Other budget items
Wright-Patterson Air Force Base.
The budget allocates $500,000 to Wright-Patterson Air Force Base to help pay for infrastructure improvements in preparation for possible Base Closure and Realignment Commission actions.
The budget postpones property tax payments on former Department of Energy properties being redeveloped in Miamisburg by the Mound Development Corp., saving the group about $360,000 annually. Once the properties are sold or 75 percent developed they will become taxable, said consultant Bob Doyle, a former state representative working with the group.
The budget allows community college to award four-year degrees, something both Sinclair Community College in Dayton and Clark State Community College in Springfield are interested in.
The new budget allows businesses to use a “personal delivery device” that is electrically powered and “intended to transport property on sidewalks and crosswalks.” Known as a PDD, the device cannot weigh more than 90 pounds or go faster than 10 miles per hour, quite a bit slower than those pizza delivery cars you sometimes see tearing down your street. Robots made by London-based Starship Technologies are already delivering pizzas in Washington D.C. and other states are looking at making it legal for them to be on public sidewalks
Business groups got a compromise on a plan to make businesses and property owners liable in civil court for alleged violations of a new law that lets concealed carry permit holders bring guns onto private property, as long as the gun is kept locked in the permit holder’s vehicle. The budget retains the civil liability but grants only injunctive relief, not monetary damages.
Staff writers Michael Clark and Max Filby contributed to this report
BUDGET BY THE NUMBERS
Covers fiscal years 2018-2019
$65.47 billion in general revenue fund expenditures
$132.8 billion in all fund expenditures
Closes $1.05 billion revenue shortfall over two years