Governor DeWine Outlines His First State Operating Budget

Last Friday we saw the first outlines of Gov. DeWine’s proposed two-year operating budget, which contains over $70 billion in annual spending authority for all of state government (except Transportation, which is handled in a separate budget. At first glance, it appears to offer small, but needed spending increases while failing to make significant investments in the things that suffered the most during the Kasich years; K-12 education, Higher Education and support for Ohio counties, cities, townships and villages through the Local Government Fund.

The lack of meaningful investment is not surprising given that it is funded in the DeWine proposal exclusively through growth in the larger economy, and not with any new sources of revenue. No effort was made to close the unproven $1 billion LLC loophole, to apply a reasonable tax to oil and gas drilling or to restore the top tax rates on Ohio’s highest-earning individuals. The DeWine budget does make commitments to spend more in certain, targeted areas, including children’s services, opioid treatment and enforcement, restoration efforts for Lake Erie, in-school services for at-risk youth, kinship care programs and home visits for new moms and babies. In the absence of new revenue, the Medicaid program is tapped to pay for many of these priorities, raising questions about its impact on the traditional Medicaid population.

Of the budget priorities we outlined last week, we are pleased to see the proposal includes wraparound services for school children, a small increase in child care, the preservation of the Medicaid expansion (paired with federal approval of Ohio’s proposed work requirements make this one bittersweet), a slight increase in funding for Ohio College Opportunity Grants . But, overall, the budget fell short of our expectations because it, unlike the Governor’s proposal for dealing with the state’s transportation funding shortfall, failed to fully solve the state’s problems created by years of tax cutting and underinvestment.