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All but five House Republicans team up to pass their budget, including a bond package for a new Brown Stadium.

They boosted funding for K through 12 schools, but also put in a property tax refund requirement the districts say will be devastating.

Details on that.

This weekend, the state of Ohio.

Just.

Welcome to the state of Ohio.

I'm Karen Kasler.

House Republicans sent the state budget to the Senate by a vote of 60 to 39 on Wednesday, following two months of testimony and a little over a week after they introduced their version of governor Mike DeWine spending plan, which included big changes.

House Bill 96 passed on a mostly party line vote.

Five Republicans joined all Democrats in voting no, including former Speaker Jason Stevens.

The budget totals over $61 billion in state only funds.

It stopped the final two year phasing of the bipartisan fare school funding plan, but puts more than a half $1 billion into K through 12 education.

So no district has a funding cut from current levels.

It creates a 30% cap on cash reserves for districts.

More on those two items coming up.

the budget increases funding to public libraries by $5 million, but changes funding for libraries for a percentage of overall state funds to a state line item.

It ends Medicaid expansion for nearly 770,000 Ohioans if the federal match falls below 90%.

It adds language to state law recognizing only two sexes, bans flags that aren't the US, Ohio or POW Mia flags at government buildings scraps the Ohio Elections Commission, which enforces campaign finance laws, increases motor vehicle fees and requires age verification to view porn online.

The House budget also includes $600 million in 30 year state backed bonds for a $3.4 billion dome stadium project for the Cleveland Browns and Brook Park Republicans, who backed the development from the Haslam Sports Group, have said projections provided by the Browns owners show it's a good investment.

The team has testified that the stadium and surrounding retail and housing will raise $1.3 billion more in income, sales and other tax revenue than the billion dollars the state will need to pay back the bonds.

This is consistent with our capital budget process.

It's consistent with 60 years of history of issuing bonds.

It's consistent with what all of our competing states are doing to attract new residents and keep our young people here.

And it's backed up by detailed financial metrics under which the new tax revenue generated by this project will pay the cost of the bonds, with no out-of-pocket expense for our taxpayers.

It is the most conservative stadium funding proposal in America.

In an unusual move, House finance chair Brian Stewart introduced an amendment early on to require $50 million in upfront cash from the team's owners instead of the $38.5 million they previously offered.

Since the same section of legislation cannot be amended twice in a calendar day, Stewart's amendment blocked two others that sought to remove the bond package from the budget.

Republican Representative Ron Ferguson sponsored one of them.

He ended up proposing an amendment banning state loans for professional sports facilities that failed.

But Ferguson made his point that he opposes state funding for stadium projects.

And he says he's not alone.

you know, a lot of people that really wanted to see this out of there because a lot of people voted yes on the budget, that they would have preferred this not being in there because there's so many great things to point to, in this budget, as Chair Stewart remarked to, but, you know, the one thing that I think was the biggest sticking point was the money, the taxpayer money going to the stadiums.

There's been no analysis on the Haslem Sports Group's tax revenue estimates publicly released from the Legislative Service Commission or from the Office of Budget and Management.

Though DeWine says he's seen it.

Well, at some point, I think that will be released.

I have I have read it.

You know, I didn't agree with all of it.

Agreed with some of it, but I think the for me, the the issue is much bigger than the Browns.

And I know we always talk about this as being a Browns issue.

It's not really so much a Browns issue.

We have a challenge, to meet that challenges that we have more professional sports teams today than we've had in the past.

The stadiums cost more to build.

They cost a lot more also to rehab, just phenomenal amount of money.

And we are going to face this as a state, years and years and years into the future.

How are we going to pay for these?

DeWine had wanted to double the tax on sports gambling operators to create a fund for sports facilities projects.

But that tax hike along with increases on cigarets for a child tax credit and on marijuana, for grants to bring driver's ed back to high schools and fund the 988 suicide hotline, among other things, were scrapped.

One of the biggest changes in the House budget is the requirement that anything over 30% in cash reserves held by school districts be returned to the property taxpayers who paid it.

Around $4 billion in total.

Last week, I talked about that idea with House Finance Committee Chair Brian Stewart.

This week I talked with Paul Imhoff, who leads the statewide organization of school superintendents and administrators.

we certainly are supportive of the fair school funding plan.

It's been it's been developed over years with many of the practitioners in the field.

We also understand we're in a difficult economic time for the state, and this is a tough budget, and there's just not a lot of money available.

And one of the things that our superintendents did across the state after the governor's budget came out is they reached out to their members of the House talking about the deficit, the devastating impact on their students.

If those cuts were to happen.

And so we were really thankful that the members of the House did work hard to come up with a creative method, to make sure not only were none of our districts cut, but all of our traditional public schools, are receiving, additional funds within the House budget.

Now, the, House finance chair, Brian Stewart, said what they are doing instead of fully implementing the fair school funding plan is a bridge.

Now, you just mentioned you supported the Fair school funding plan.

It apparently is no longer going forward.

Are you concerned where that bridge goes?

Well, I think when you listen to Chair Stewart in the press conference, he talked about fair school funding was still the bedrock of the formula.

So the formula is still in the budget and it's the basis that the numbers are built upon.

And as far as our work moving forward, we are ready to work with the General Assembly moving forward, to make sure that the formula continues.

And for us, this is the major thing continues to meet the needs of the kids we serve.

Let's talk about the cap now.

And this is the cap on money that school districts can hold in their operating accounts, essentially as advertised.

This plan is described by Republicans and support it as the largest property tax relief bill in Ohio history and the swiftest, most significant property tax relief that lawmakers can provide.

It would send more than $4 billion back to property taxpayers at a time when they're already facing huge property tax bills.

What's wrong with that?

Well, I'm going to start with this.

So our superintendents understand and I talk to superintendents every today I was with 30 superintendents in northwest Ohio this morning.

Superintendents understand the need to reform our property tax system.

And so I want to start there.

It is an important topic I think one that we all all agree upon.

But when we look at this plan, this is a plan that could have a devastating impact on the students we serve.

As you know, over 80% of our students in Ohio attend a traditional public school.

And as we look at this cut of over $4 billion, as as I look at that, I see services that are not going to be able to be offered.

And I look at the unintended consequences of that.

And as we look at it being called a tax cut, I think it's also important to know that at the end of the day, it is a temporary one time tax cut in everyone's property tax rates.

After that first year are likely going to go right back up to where they were.

And another, and unintended consequence of this.

I think it likely means more property tax levies on the ballot, which no one wants.

And I think it could overall lead to higher property taxes over time.

And so I think there's a lot of work to be done on this proposal to make sure there aren't unintended consequences that could be damaging to our kids and damaging to our taxpayers.

You are invited to testify at a hearing along with some other school officials, and we're asked several questions about the plan.

Obviously, there was also the question about if all school districts are going to be getting an increase, then why should there be cuts in school district funding because of this 30% now 30% cap.

Well, I think we have to look at what this is.

So I think it's very important our schools, operate in a very, conservative manner.

And right now, as we look at cash balances, it is true that cash balances are at historic highs, but it's also true that we're coming off a period of historic levels of federal investment in schools.

And again, when you look at the ad, the at the typical school in Ohio, most of our schools are small and rural.

And when they have an influx of funds, they are just not going to find a way to spend all of those dollars.

They are going to be smart, and they are going to be very conservative in the use of those dollars.

And so what many school districts have done is they have saved these, these dollars and, and put them away.

And now they are sitting on cash balances.

But they've also worked with their, communities and boards, and they've come up for plans for how they're going to spend those.

For instance, I was talking to a rural, district in northwest Ohio today, and they have been working together again with their, community and board.

And they have aging roofs and aging Hvac systems.

They did not want to go to go, go, go to the ballot for a bond issue and raise taxes.

So they're going to use these dollars that have been saved to actually fund all of those needs.

So they don't have to go back to the, to the taxpayers.

And so I think those are the types of plans that are going on around the state.

And I think it's important to know the full scale of what we're talking about.

Let's talk a little bit more about that.

Republicans have championed this idea because they say district cash carryovers are at historic levels, have increased year over year since tracking started in 2012, $3.6 billion then in these cash accounts to $10.5 billion.

Now the largest amount is held by the state's largest school district, Columbia City.

Almost $395 million is a cash balance, but that is 46.4% of their operating their expenditures for the year.

And by my calculations, though, that the spending about $140 million back to taxpayers.

So these are big amounts of money.

You also have southwestern city schools and Franklin County, the second highest reserve total, almost $181 million.

That's 82.2% of the total expenditures.

And you've got 48 districts that have over 100% of their expenditures.

So double what they need.

Why should they be sitting on this kind of money?

I mean, you mentioned building projects, new roofs and that kind of stuff, but some of these districts have really, really big amounts of money and percentages and reserves.

Well, I think as you look at some of these things, for instance, in the in the Columbus Public Schools, they actually recently passed a levy.

And what we have to understand and in, in the district I served for over a decade as the superintendent, which was a non 20 mill floor, school in, in those districts, as property values go up, property tax rates go down.

So school districts receive the same amount of money on all of their voted operating levies.

So the only way for those schools to deal with inflation is they have to come back to the voters every four, four or so years, and they have to ask for a new levy, because those levies bring in a fixed amount of money.

And so what happens in the first couple of years of that levy cycle?

They are bringing in extra funds, and so they're building a cash balance.

And then in the last couple of years of that levy cycle, they they they are going into deficit spending.

And so they are, are are reducing that cash balance under, under this plan, many of those districts, instead of doing that four year cycle, they may be forced to the go.

I go to the ballot every year for a new operating levy.

And I don't think anyone wants school districts to be on the ballot more.

So I keep coming back to the unintended consequences of this language.

Now, Ohio, as I recall, has the highest number of school levies on the ballot, typically, and I believe school levies are starting to fail more in larger numbers.

So this would potentially really put funding for school districts in jeopardy.

But certainly taxpayers will say you should have to defend where my tax money's going.

You know, I've never I've never met a superintendent who didn't say, I am happy to go back to the voters and they get to make that call.

But the reality is of our property tax system in the state of Ohio, which has been in place in its current form since the late 70s, from that time, we have had over 20,000 school levies in the state of Ohio and over that same period of time.

So when I go back to the late 70s, the the average operating millage for our schools was about 28.5.

And, and as we sit here today, it's about 30.5.

So 50 years, 20,000 levies and our average property tax rate has gone up by less than two mills.

And there's been a shift too in who pays property taxes over time there there has been a large shift.

So again, we go back to the late 70s and there was basically a 5050 split between residential and agricultural a taxpayers and business taxpayers.

And as we sit here today, that that split is almost 75, 25 with the residential and agricultural taxpayers paying the 75%.

So the burden is definitely more on residential taxpayers, homeowners.

Well, certainly.

And I think that's why more and more of our homeowners are coming forward rightfully so, saying we have issues with our property taxes, especially, by the way, our senior citizens who who are on fixed incomes, again, I, I was a superintendent for years.

I've not met a superintendent whose heart doesn't break when they have those conversations with senior citizens who are forced to between supporting the schools they love and buying the medicine that they need.

We definitely need to fix that.

And of course, the argument can be made that everybody is on fixed income at some point.

Yes.

Also, that hearing the question was asked whether there should be an upper limit on how much school districts can hold in those accounts.

For example, the state has a 10% upper limit that they're held to.

So is there an upper limit the school district should be held to?

And if there isn't, why not?

Or should there be?

So we recommend that every local school board have this decision with, with, with their community.

And they adopt a policy and they set a floor and a ceiling based upon the feedback of their local A community.

So should there be a ceiling?

Of course, a there should be a ceiling.

And that should be set by the local community and the officials that they have elected to lead their school district.

I want to ask you about, the idea of as being the swiftest to property tax relief that could be offered, according to state lawmakers, if this passes, how long would it take?

It is how do you set up the process of returning money that normally you're collecting?

How do you set up the process of returning that money to taxpayers?

Well, how this system would work is our school districts would have to appear between the county budget Commission and in the language in the House.

The county Budget Commission would be the county auditor in the county, and the county treasurer.

And in the past it's been the county prosecutor.

But in the latest version of the House budget with patch, which passed on, Wednesday, the county prosecutor would be replaced by the president of or the chairman, excuse me, of the county, commissioners.

So they would have the responsibility at their budget hearing of reducing the tax rate for that district for one year, in order to bring their cash balance under that 30% number.

And then after that one year, tax rates would automatically revert back to where the citizens had voted them to be.

So when I talk about the fact this is a temporary one time tax cut, I think it's really important to understand what this is.

Will it take an amount of time to stand up this process?

Because this has never been done before?

Well, in the in the language, we're going to start on this process almost immediately.

And so I think there are some very good questions that have to be asked about the mechanics of it.

And if we have the capacity to do that, as quickly as it's, as it's in the language, I think, that is a question for our county auditors and others.

But I think it's definitely going to be a heavy lift when it comes to the timing.

You didn't have a whole lot of time to look at this proposal.

Again, this has not come forward before.

This is not part of governor Mike DeWine has proposed budgets.

I don't think this idea has really come out before at all, has it?

No.

So the so the first time we saw it was in the substitute bill, just, just a week ago, we testified in on it just 48 hours after that, our superintendents and treasures and school board members across the state of Ohio, have been working to come to terms with how this would impact, them.

And I will tell you, we are hearing more and more stories as our districts do the full analysis, again, of some of the unintended consequences of this.

And we have districts who are already looking at the fact that if this went went into place and all of those cash balances were erased basically overnight, they they would be in the position of either cutting programs for our kids at a time when we need to be focusing on literacy and workforce and other very important priorities.

They would be forced to either cut programs for kids or immediately go on the ballot to raise taxes.

So again, coming back to our unintended consequences, there are a couple of bills that have been talked about to deal with property tax reform, and this is in the budget.

But there are other bills.

For instance, there's one that would deal with the 20 mill floor, which is you just referenced it a little while ago.

It's a it's a whole it's a whole thing there.

You were asked in the hearing about what property tax measures you would support.

You said at the beginning of this interview that you want to see property tax reform.

What do school districts want to see with property tax reform, given that you're primarily funded by property taxes?

Well, we definitely want to be a partner.

So again, as I said at the beginning, we see this as an issue that that needs to be addressed.

But we want to address it in such a way that it doesn't hurt the children we are serving.

So we have said that we are very supportive of means tested property tax relief, especially for our senior citizens.

I think that is very important.

We have talked about a circuit breaker approach that that has been discussed, in the General Assembly, and we're certainly open to having conversations about other ideas.

One of the things we are absolutely not for, is, going after and attacking the 20 mill floor.

So when we talk about the 20 mill, mill floor, that is something that is predominantly used in our poor rural districts.

And these are districts who oftentimes are just a getting by.

So changing that 20 mill floor, which, as we understand, is the only way they have to deal with, with inflation, would just absolutely be devastating to some of our neediest kids.

When I ask you real quickly, there was an effort under former Republican former Governor John Kasich to try to consolidate school districts.

Have you heard any talk about that being a possibility for districts to kind of deal with some of these issues in general?

You know, I think there are always rumblings about that.

And I think one of the things we have to realize about Ohio, that that that Ohio has traditionally been a local, control state, as I get to travel across the state of Ohio as, as we represent our public schools across the state of Ohio, Ohio has many small towns that are wonderful, beautiful places, and our schools are the center of of all of those communities.

So I think if you really put this idea to the taxpayers of Ohio and asked them if they wanted to lose those small school districts, which are excellent, by the way, when when you look at the results they are getting, I don't think the citizens of Ohio are going to want to lose that identity.

And while there could be marginal savings, I think there are other costs you have to pay attention to, that, could actually cost us even more money as we start to lose maybe a sense of community in some of our small towns.

And finally, I know you're not a lawyer, but there are questions about whether this action is legal because these levies were approved by local property tax.

Local voters.

And this would essentially repeal some of those levies.

Is that something that school groups are looking at, whether this is even a legal action?

You know, we have only had this this information for less than a week.

And so what we've been focused on right now is how would this be put into place and how would this impact the kids we serve.

And and at this point, we are just very concerned about the consequences for our students.

As we look forward, all of our schools, look, look forward in a five year forecast, which in this budget could, I could be moving to a three year forecast.

So we are at, at, at an historic high in our cash balances now, and we're in fiscal year 25.

As we look forward to fiscal year 27, without this language around cash balances, we are projected to be at a Sturrock low.

If we institute this, this language, we are at dangerous lows with barely a month of cash in the bank to cover payroll.

So, again, this could be devastating.

And we've been spending our time trying to understand that and make sure everyone understands again what I believe to be the unintended consequences of this policy idea.

Lawmakers are now in spring break, but the Senate will soon pick up the budget, aiming to voted out of that chamber in mid to late June, sending it to a conference committee.

It has to be signed by DeWine by June 30th.

By the way, you can see that interview with House Finance Chair Brian Stewart in our archives at State news.org.

And that is it for this week from my colleagues at the Statehouse News Bureau of Ohio Public Media.

Thanks for watching.

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Thanks for watching, and please join us again next time for the state of Ohio.

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Support for the Statehouse News Bureau comes from Medical Mutual, dedicated to the health and well-being of Ohioans, offering health insurance plans, as well as dental, vision and wellness programs to help people achieve their goals and remain healthy.

More at Med mutual.com.

The law offices of Porter, right, Morris and Arthur LLP.

Porter Wright is dedicated to bringing inspired legal outcomes to the Ohio business community.

More at porterwright.com.

Porter Wright inspired Every day in Ohio Education Association, representing 120,000 educators who are united in their mission to create the excellent public schools.

Every child deserves more at OHEA.org.