Under the Ohio Constitution, the General Assembly must pass a balanced budget every two years. The operating budget not only funds the many functions of government, but it also makes investments in our schools, communities and businesses. Over the course of my legislative career, I have worked on numerous budgets, each presenting their own unique policy issues and challenges.
Crafting a state budget can be a complex process, and typically takes approximately six months. Just like you have to balance your budget at home, the state must also pass a balanced budget and allocate funding wisely. As there are always greater needs than available resources, I often say that it is a process of allocating disappointment. Because there are so many demands for resources, the operating budget is a reflection of the state’s priorities.
Currently, the Ohio Senate is considering House Bill 110, the state operating budget for fiscal years 2022-2023. House Bill 110 will allocate approximately $163 billion in total state and federal funds. Within state General Revenue Funds (GRF) only, Kindergarten - 12th grade education costs make up the biggest part of the budget. Factoring in federal dollars, Medicaid becomes the largest portion of the budget, making up nearly half of the total appropriations.
The Administration presented its budget proposal earlier this year, and the Ohio House is required to be the first chamber to consider the legislation. The Senate received the bill from the House in April and we are now working on recommendations and receiving testimony from the public to make the bill even better.
The budget process requires many difficult decisions to be made. Nonetheless, we have a responsibility to spend all tax money judiciously and whenever feasible, to provide tax relief. For instance, in the 2012-2013 budget bill, I authored the repeal of Ohio’s estate tax, saving Ohio’s families from being taxed on the transfer of assets after the death of a loved one.
Over the past several decades, the Ohio Legislature has significantly cut taxes, oftentimes in the operating budget. To illustrate this, the highest personal income tax rate in 1984 was an astounding 9.5%. As of tax year 2020, Ohio’s highest personal income tax rate is 4.79%. Additionally, Ohio has reduced the number of overall income tax brackets from 9 to 5, resulting in the fewest number of tax brackets since the creation of the state income tax. In fact, Ohioans making less than $22,150 pay no state income tax. In 2019, the Ohio Senate implemented a 4% across-the-board income tax reduction for the remaining five brackets. In the budget currently being considered, the Ohio House has proposed another 2 percent income tax cut.
Stewardship of your tax dollars is my job and returning money to you wherever possible is my responsibility as your state Senator. As the legislature continues to consider this complex and vast piece of legislation, I am confident that we will craft a responsible, balanced budget that will be finalized by July 1. I look forward to working with my colleagues in the final months of this process.
Please do not hesitate to reach out to my office at Hottinger@OhioSenate.gov
to discuss issues important to you and your family.