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Terra Goodnight · March 26, 2019

Gas Tax Crunch Time and A School Funding Plan

A budget update for the week of March 25:

Final Week of Work on Governor DeWine’s Transportation Proposals

The transportation budget—and with it, an increase in Ohio’s gas tax to fund roadwork and a boost for public transit—goes into the homestretch this week. A House-Senate conference committee will be appointed to work out differences between the DeWine proposal and the House and Senate versions of the bill. The 6-member conference committee will be made up of 4 Republican and 2 Democrats (2 of the former and 1 of the latter from each legislative chamber), with Reps Oelslager, Greenspan and Cera likely to be joined by Senators Hottinger, Dolan and Antonio.

Unlikely Allies?

Typically, such a lopsided committee makeup leads to many items being approved on a 4-2 vote along party lines. This time could be different. The House version of the budget, which reduced DeWine’s 18-cent gas tax increase to 10.7-cents and increased transit funding to $100 million was approved by a wide, bipartisan margin. The Senate version, with its 6-cent gas tax increase and $55 million for transit, passed largely along party lines. There’s a not-insignificant chance we could see House Republicans team up with both Democrats to push through a final package that looks closer to the House version. Whatever they come up with, it must be approved by both chambers by the end of the week in order to get a final package to Governor DeWine in time for the March 31 signing deadline.

Testimony Begins on DeWine’s Two-Year Operating Budget

The operating budget had its first week of testimony in the House Finance committee last week. The biggest news of the week was the $700 million gap between the revenue estimate produced by the DeWine budget office and that of the General Assembly. If lawmakers stick with their own estimate, DeWine’s spending proposals – already too modest in our opinion – will need to be trimmed by $700 million, and that’ before any new spending is added.

Sources of New Revenue

Unsurprisingly, this week we heard Finance committee members asking the DeWine administration about its decision to preserve the $1.3 billion small-business tax break known as the “LLC Loophole.” The gimmick, created by Gov. Kasich in 2013, allows certain pass-through business owners take home their first $250,000 in earnings tax free, but has not been shown to have any impact on job creation. Another revenue-raiser the House may consider is applying Ohio’s sales tax to internet sales from out-of-state shippers. The Tax Department told committee members last week that this proposal could generate $350 million or more in annual revenue for the state.

Agencies Defend Their Budgets

We still don’t have a bill number (or bill language!) for the DeWine budget, but that doesn’t stop it from moving to the subcommittees of House Finance, where various licensing boards and commissions will make their funding pitches to lawmakers this week. Among those testifying will be representatives from the Governor’s Office, Attorney General, Secretary of State, Auditor and Treasurer, as well as the Ethics Commission, Commission on Minority Health and the Department of Insurance. Subcommittees will continue hearing agency testimony next week, then move on to public testimony the week before the legislative Spring Break (April 15-19).

New School Funding Formula Debut

Representatives Cupp and Patterson rolled out a new school funding proposal this week. The most-watched subcommittee hearings this week are likley to be those of the House Finance Primary Secondary Education, where members will hear the long-awaited details of the Fair School Funding Plan developed by a working group led by co-chairs Representatives Cupp and Patterson. Read more details about the plan, which was released at a news conference (watch online) earlier today.

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Tagged in these Policy Areas: K-12 Education | Ohio State Budget | Statehouse Update