Ohio House passes $71.5B budget after overhauling Kasich's tax, school funding proposals

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COLUMBUS, Ohio — The Ohio House passed a two-year, $71.5 billion budget Wednesday that overhauls many of the governor's tax policies, adds more money for schools and revises some of his health care policies.

The sweeping spending blueprint, which funds state operations for the two years beginning July 1, was approved on a 63-36 vote. The massive measure now goes to the Senate for consideration.

The legislation contains a smaller state income tax cut than what Republican Gov. John Kasich had pitched in his spending blueprint, while leaving untouched the continuance of his Medicaid expansion.

Majority Republicans in the House removed major elements of Kasich's tax proposal from the spending bill, including increases on certain business and sales taxes, along with higher taxes on cigarettes and oil and gas drilling, that were intended to fund an income tax reduction. Representatives want to create a commission to study such potential tax changes.

Kasich had wanted to use part of the money from the tax increases to cut the state income-tax rate by 23 percent over the next two years, to a top rate of 4.1 percent by 2017.

The House plan proposes a 6.3 percent income tax cut beginning in tax year 2015. That would lower the top rate to just below 5 percent. It also would make permanent a small business tax reduction passed last year.

House Finance Chairman Ryan Smith, a Bidwell Republican, said the bill leaves more money in the pockets of Ohioans while promoting business growth. "It's going to take Ohio to a better place."

Rep. Denise Driehaus of Cincinnati disagreed, contending the spending plan is out of line with residents' priorities.

"We made some progress, but there remains so many missed opportunities in this budget and issues that went unaddressed," said Driehaus, the top Democrat on the House Finance Committee.

Republicans tabled Democratic amendments to target the income tax cuts to those in the middle class, give Ohio companies the first crack at state contracts and boost money for local governments.

The vote for the budget's passage was mostly along party lines. But three Cleveland-area Democrats supported the measure, while five Republicans opposed it.

Through a spokesman, the governor questioned the House approach while expressing confidence legislative leaders would come together on a plan to strengthen Ohio.

"Restrained, responsible budgeting has helped get Ohio back on track, which is why the governor is so troubled by the House budget," spokesman Rob Nichols said in an email. "Their spending increases and rosy budget projections threaten the progress Ohio has made in the past four years and the rejection of tax reform is a missed opportunity that, if allowed to remain, would erode our improving economic climate."

The increases in Kasich's sweeping tax package drew widespread opposition from business groups and state representatives, though the Ohio Chamber of Commerce and Ohio Manufacturers' Association have signaled support for the changes the House made.

The House also revisited Kasich's education formula and added about $270 million to the governor's proposed school foundation funding. The governor's proposal gave less money to more than half of public school districts due to changes intended to better reflect a district's capacity to raise revenue.

While the House plan did not alter the governor's expansion of Medicaid, Republicans added provisions to strip the ability of Ohio's Medicaid director to determine eligibility for the program in the future and require the state to seek federal approval to allow for health savings accounts.

Several GOP lawmakers expressed concerns about the budget's inclusion of funding for the expanded Medicaid program.

"Just the taste of that, just the odor of that gave me a real problem in considering a yes vote," said Rep. Ron Young, a Leroy Republican. Still, he said he believed the bill would improve the state as a whole and praised the removal of what he described as "growth-killing tax increases" contained in Kasich's proposal.

State Rep. Nickie Antonio, a Lakewood Democrat, urged fellow legislators to let the Medicaid expansion stand as it is currently and not create barriers to health care.

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