Every two years, Ohio’s General Assembly and Governor are called upon to pass a biennial budget bill that funds the operations of the state. The Ohio Senate is currently working on the budget, which must be finalized by the end of June. This bill is a centerpiece of the Senate’s legislative agenda and includes funding or statutory changes related to all of the state’s departments.
Perhaps more so than any other legislative action, the biennial budget bill determines the priorities of the state. For example, the bill includes a funding formula for Ohio’s education system, and it allocates the resources necessary to pay for that formula. The budget funds many social services at both the state and local levels. The budget bill also reflects legislative choices about tax policy. Each bill is unique and influenced by the financial condition of the state. Every budget presents its own challenges, but each presents a significant opportunity to keep Ohio moving forward.
When I joined the Senate in 2011, Ohio faced an estimated $8 billion shortfall. The prior administration had run down the state’s “rainy day fund”—essentially, Ohio’s savings account—to just 89 cents. We faced a challenging and uncertain future.
When faced with a multi-billion dollar shortfall, the “easy” thing to do would be to raise taxes. Some states did just that. For example, in 2011 Illinois sharply increased income taxes, raising rates by more than 66 percent and shifting the burden of another $7 billion onto the working men and women of that state. Ohio took the opposite approach. We made difficult choices but balanced the budget by restraining government spending. Unlike Illinois, we actually cut taxes. We wanted to make Ohio more attractive to job creators, encourage small business growth, and let hardworking Ohioans keep more of their own money.
In 2013, the Ohio Senate remained committed to lowering Ohioans’ tax burdens. We instituted a broad series of reforms that included, among other things, a 10 percent across-the-board income tax cut and a small business tax cut, for a net income tax cut of nearly $3 billion. At the same time, we added more than $700 million to the state’s school funding formula—the largest new investment in primary and secondary education in more than a decade.
I firmly believe that the past two budget bills have played a major role in Ohio’s recovery. As we have implemented tax cuts, the business climate has improved and Ohio has gained more than 300,000 new jobs. Because Ohio’s economy is growing and more people are working, revenues have actually gone up despite the tax rates going down. We replenished the rainy day fund, which now holds roughly $1.5 billion, and Ohio's credit outlook was upgraded even though the national credit rating fell. No single factor is responsible for all these things, but the starting point was a responsible budget that controlled costs and lowered the tax burden on Ohio’s workers and job creators.
As we wind through this budget cycle, we find ourselves working on familiar issues. What should the school funding formula look like? How can we control the growing costs of Medicaid? What can we do to improve Ohio’s business climate so that the private sector can create jobs?
The Governor and the Ohio House of Representatives have each weighed in on these questions. It is now the Senate’s turn, and we will be making many changes over the coming month. The 3,000-page budget bill is constantly changing and many issues are in flux. My overarching focus, however, will remain the same: to improve the state’s economy and to let you, the taxpayer, keep more of your hard-earned money.
I welcome your input on the biennial budget or on any other bill. If you have questions, or if you have any ideas that you would like to share, you can reach me by phone at (614) 466-7505 or by e-mail at Obhof@ohiosenate.gov. You may also reach me by mail at State Senator Larry Obhof, 1 Capitol Square, 2nd Floor, Columbus, Ohio 43215.
Ohioans can watch live online broadcasts of the Senate Finance committee during the budget process at www.OhioSenate.gov, or access an archive of recent Finance committee hearings at www.ohiochannel.org.