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House Republicans unveil their changes to governor Mike DeWine budget.

We'll go over many of them this week in the state of Ohio.

Just.

Welcome to the state of Ohio.

I'm Karen Kasler.

As was widely expected.

House Republicans threw out tax hikes introduced by governor Mike DeWine and his executive budget, and also added in other big changes.

the budget.

I think there's been greater degree of participation from members in putting this budget together than than at any time that I've seen.

We started with roughly 3000 amendments submitted by members about 1200 of those were unique.

The House budget, which includes $62 billion in state only general revenue funds and $202 billion when all funds are added in cuts.

DeWine's proposed tax increases on cigarets, sports gambling operators and marijuana.

Republicans said their budget boosts funding to K through 12 schools by $226 million over DeWine's budget and ensures no district is caught, but it does not fully fund the implementation of the final two years of the bipartisan Fair School Funding plan, approved in 2021 with a six year phase in the budget, also includes a provision that caps the funds that school districts can carry over in their operating budgets, if that goes over 25%.

That money is refunded to taxpayers.

It's being billed as immediate property tax relief.

but there's no income tax cut.

we wanted to make sure that there was in this General Assembly enough money to fund the things that we have.

There are folks who think we should have funded things that we didn't.

So, you know, we've done a tremendous amount of income tax and best in the last 20 years, getting it down to two brackets.

So the fundamental question that needs to be studied for those who want to eliminate income tax is either we're going to cut public services or increase other taxes, and those are larger people.

Professional business introduction make under $300,000.

You don't pay income tax now.

And so if you make less than 26,000 and so that that's going to adversely affect that group of people, you know, with fewer services and higher taxes.

And also Republicans also put into the budget a $600 million package of state backed bonds for a $3.4 billion stadium and development for the Cleveland Browns in Brook Park.

The team's owners say it will generate $1.3 billion more than will be needed for the state to pay back those bonds over 30 years, which will total almost $1 billion.

They also cut DeWine's sports facilities fund that was backed by a doubling of the sports gambling operators tax, as well as the cigaret tax for a $1,000 child tax credit, and the marijuana tax for a bunch of things such as the 988 suicide hotline and grants to bring driver's ed back to high schools.

this is not a process where the governor shows up and says, here's what I want.

You know, we tried to do a couple of things.

There's obviously a lot of people with with a lot of different, opinions about what they want.

I had a great meeting with governor DeWine today.

He didn't grab me by the throat and, you know, shoved me up against the wall or anything like that.

DeWine has not shared his thoughts on the budget so far, but House Democrats say they will not support it.

exists as it currently exists?

Absolutely not.

This budget is saying if you are a billionaire, get to the front of the line.

If you are a rich family that wants vouchers for your kids, get to the front of the line.

If you are a pregnant woman, if you are a senior, if you are a hungry child, if you are a public, school, get to the back of the line because we're going to fund those people first.

What do you we are looking at a budget that is doing things like taking away led abatement programs, to prevent lead poisoning and children taking way home visits, to reduce infant mortality in our communities, taking away Medicaid services, for moms and babies.

And the fact that we're even talking about or even it's in the realm of consideration that we're going to get a $600 million giveaway to billionaires is absolutely absurd.

I sat down this week to discuss some of the biggest pieces of the budget with House Finance Committee Chair Brian Stewart, who is the sponsor of the two year spending plan.

Let's start with the tax increases that were removed on cigarets to find $1,000 child tax credit on sports gambling operators for sports facilities, find on marijuana for a bunch of things, including the 988 suicide hotline grants to bring driver's ed to high schools.

You said there was a widespread belief among members of the Republican caucus that you don't want to raise taxes on Ohioans.

Why not allow these use taxes or syntaxes for people who want to engage in these kind of things?

Why not let the state make money on that?

Well, state is making money on that.

We passed sports betting not that long ago at a 10% rate.

We already doubled it to 20%.

Going to 40% would have put us, you know, one of the highest tax rates in the entire country.

That's not where we want to be.

That's a tax.

It will ultimately get passed on to, to Ohioans.

You know, Ohioans voted for a 10% tax rate on marijuana.

They didn't vote for a 20% tax rate on marijuana.

And just generally, look, we have a philosophical difference with, you know, some of our friends in the other party that we don't want to raise taxes.

We're not going to kind of pick and choose which taxes we like.

These are ultimately borne by our citizens.

We didn't think they're warranted.

And so we're glad there's no tax increases in this budget.

You said differences with people in the other party, but these were from governor Mike DeWine.

Well, fair enough.

And, the governor has his view, and we've, agreed on many things and disagreed on others.

And when it comes to taxes, this is an area where we're just going to disagree on one of those complicated areas in the budget.

K through 12 funding under the House budget, districts will get $266 million more than in DeWine's budget.

Is that correct?

266, 200, I believe 226 million more than they got in the current 2025 and per pupil funding as increase.

The fair school funding plan is not going to go forward.

And you described what you're doing as a bridge formula to take you to the next General Assembly.

Are you moving to another formula in two years, or House Minority Leader Allison Russo said, you're just shifting the burden onto local communities.

What's happening with that formula?

Well, first of all, we're spending $16.5 billion on traditional public schools in the new biennium.

That is 226 million more than they got in 2025.

And we're not getting rid of the fair school funding formula in its entirety, but it is in their higher revised code that is often revised and new when it comes to school funding that is typically revised every two years.

So cut Patterson is still kind of the bedrock that we started with.

But what we've seen over the last few years is it's not really working in the manner it was intended.

It's not accounting for these high growth districts.

It's not accounting for, you know, fairly historic rates of property tax increase.

And so under the old formula, as property values increase, the state share decreases.

And so what you saw, and I think you saw this in the governor's budget, is a proposal where an awful lot of school districts were going to get a cut.

You had some districts that were going to get an unusual amount of increase.

And all we've really done in this budget is kind of take the, the, the losers and the winners and kind of collapse everybody towards the mean.

Every single school district in Ohio is going to get a budget increase under this version of the budget, and we think that's a good place to be.

Does that carry forward into the next General Assembly?

I mean, I know that Speaker Matt Huffman has said you can't promise things for future lawmakers to take up, but like tax cuts stay in budgets beyond the current GA. What's going to happen going forward on this?

Well, tax cuts are just like school funding.

They are subject to revision any time it is a high revised code.

So we are putting ourselves on a path towards a more sustainable way of funding public schools.

I expect we'll have a similar conversation in two years.

I expect that we will.

You know, every year, generally, we give more money to our public schools, but we can't do it at these unsustainable levels as and folks have asked for, you know, the additional $1.8 billion, that's not sustainable.

We don't have it.

Ohioans are not going to support us raising taxes to cover that.

And so, you know, giving more money to every public school district, is a good place to be.

We understand it's budget season.

And, you know, folks are not getting 100% of what they asked for.

Almost nobody is, but we need to live within our means.

That includes our public schools.

One of the ways that, this becomes complicated is when you start talking about property tax changes, which there are several bills that would deal with property tax changes.

And you've got a provision in this budget that would allow school districts to carry over 25% of their budgets, but if they go over that, then each county tax office would refund the overage to property taxpayers.

You said that folks who pay a higher share of property tax get a higher share of benefit, but school districts say many of them that would take them into the red within their five year forecast.

And it would force them to go to voters who don't want to pass levies.

And Russo has said it's not real property tax reform or tax relief because there are bipartisan bill that would do that.

So explain this 25% cap and what's it going to do to public school districts or right now, public school districts cumulatively in the state of Ohio are sitting on $10.5 billion in their operating accounts as an excess.

We heard from a public school district today that had a 55% carryover balance.

We think there should be a carryover balance.

State has one, local governments have one.

But 25% or less is is more than norm.

And so when you have school districts collecting more property tax than they actually need to operate, that's money coming out of the pockets of our residents and into the bank account of the government school district.

So, you know, we think that money is better off in the pockets of the residents.

They're still going be able to have a carryover.

They're still going to be able to have their levies.

This is not include federal money that they receive.

It does not include, you know, bond revenues that they may be receiving.

This is just your operating account for the school district.

How much can you carryover and when a, you know, 25% is to get a triple A bond rating.

So we're letting folks carry over 25% maintain their bond rating.

You know, we've not heard that kind of pushback yet.

I mean, I understand you're quoting the minority leader, but, you know, that's our job.

And, we believe that 25% very reasonable.

And this is the quickest, most significant way to get real property tax relief to Ohioans in a timely manner without just simply shifting the burden from local taxpayers to every taxpayer in the state.

So you have not heard pushback from county school districts or anybody at the school district level on this?

Well, we just had our first, hearing on the budget this morning.

I mean, there were, you know, two to 2 or 3 districts that, were complaining.

But, you know, we looked up their balances in real time, 55%, 42%, schools should be able to take property tax to cover what they need, but not afford an an unusual amount beyond what is, necessary.

The school districts, in your understanding, hoard some of that money, hold back some of that money.

Because of the uncertainty of school funding in general.

Well, they are subject to the same tier process that we are, you know, to say, well, we just have to continue to take more money from our taxpayers than we need.

Planning for a rainy day six, seven, eight years from now.

It's just not realistic.

Let's talk a little bit about the $600 million bond package for the new Brown Stadium and development that what's around it.

It's a huge deal.

It will be Ohio's first dome stadium.

It will be half funded by the team's owners, the Haslam, who are billionaires.

The expectation is it would generate a lot of events and a lot of activity, a lot of economic activity.

You said the Browns have given what you call very reasonable metrics on what type of increased economic activity will essentially pay back the state for the cost of those 30 year bonds, which is about $1 billion.

Over that 30 year period, the team has estimated $1.3 billion more in revenue than it would cost the state to pay back those bonds.

There was a 12 page presentation that was made to the House Arts, Athletics and Tourism Committee about that.

It gave their total numbers, but there's no real breakdown on how much income tax, sales tax, whatever.

Have you seen a breakdown on how much individual tax revenue from each pot will create that economic impact?

I, I probably have I mean, I have seen all of their metrics and math and I've seen the 30 year chart.

I mean, I think that what they're proposing is reasonable.

I mean it you don't have to be an economic genius to understand that if you put the premier, entertainment venue in all of America in a great big open space just outside our, you know, one of our, our largest region, and you add retail, shopping, office space and a premier entertainment venue, you're going to have more economic activity.

You're going to have more income tax, you're going to have more sales tax.

And so, we do this all the time in deals across Ohio with, with tax increment financing tips, where we, we say that we're going to, keep the income generated from this project at the project site.

We do that in every community in Ohio.

And so we think this is just kind of a obviously a larger version of that, but it is consistent with how we have done things in the past.

Ohio voters have authorized us for 30, 40, 50 years to sell, revenue bonds to do capital projects.

Now, typically every two years, we do a capital budget where we, you know, get that money back into the community.

We do, you know, amphitheaters and Circleville and a splash pad and Wapa Canada and everything in between.

This is just a bigger version of that.

It's a selling bonds, doing a large community project.

And I think that when the ribbon is cut and folks walk through the door and we see the activity activity that this drives, I think people are going to be happy that this is in Ohio.

You're confident that it won't just take economic activity from downtown Cleveland or some other parts of the state and just rob them of that?

I don't think so.

I think when you look at what Indianapolis has been doing, they've been eating our lunch in terms of, entertainment venues and national events for almost 20 years.

When you look at other venues that of this size that have occurred elsewhere.

I, we think this is a rising tide is going to kind of lift a lot of boats.

I think you're going to get events to Ohio that we're not getting currently.

I think you're going to have an event space with a dome that, unlike the, you know, stadium on the lake, can be used year round.

I think that is going to attract more events and be a driver of economic activity in that area.

Has there been an analysis from the Office of Budget and Management or the Legislative Service Commission about those numbers that came from the Browns?

Our staff is looking at all the numbers.

I mean, I think we are digging in and, you know, doing our homework and double checking.

But, you know, again, it's not, it's not much of a stretch to understand that when you go to a great big open site and now you add the premier, entertainment venue, that there is going to be an increased economic activity.

But when all of the hassles pay for it all by themselves, well, they're paying for 1.2 billion.

That's the largest private investment, in the state's history.

That is one that is a bigger private investment than most deals of this kind.

I, you know, I don't know all their finances, but I assume even billionaires at some point have a bit of a limit of what, what you can do in a project.

And so, this is the norm across the country.

If I was king for a day, maybe there would be no stadium deals in any state.

But if we don't do this in Ohio, our competitors certainly would.

If you look at other states of our size, our type, this is the norm.

Las Vegas is the most recent stadium.

Public involvement in that stadium was vastly higher than what is being proposed for Ohio.

Tennessee is a, you know, a red state that a lot of our members of our caucus, like to take a look at and, you know, kind of comparing ideas.

I believe they've got a proposed, stadium that would be, you know, in excess of $1.2 billion in taxpayer participation.

So we're talking about roughly half of that investment for a site here in Ohio.

This is this is kind of the price of having one of these, Premier sites that, you know, I've lived in Ohio my entire life, and I've heard from some people, not myself.

You know, there's nothing to do in Ohio.

What are we doing to keep kids here?

What are we doing for young people?

What do we do?

Like why do other states have things that we don't have?

Well, now, here we are.

We have a billionaire who's saying, I want to put in, you know, $1.2 billion of my own money.

I'm asking for essentially a $600 million loan from the state.

And we have folks who are saying, well, no, I don't want those.

I don't want that anymore.

I think we're going to win.

This is done.

People are going to be happy it's here.

And I think it's going to be a good thing for the state.

You have Cog County Executive Chris Ronayne and Cleveland Mayor Justin Bibb, who both oppose the project, and Brook Park.

They've said that the team's estimates hinge on prices per ticket for games going to $800 a ticket over 30 years, and for every game to be sold out for every parking place to be sold out.

Are those reasonable estimates in your view?

That's not my understanding of how they're calculating their math, and I'm not surprised that opponents of the project may have, some, some different arguments and metrics that they're trying to use.

The locals will decide what they want to do.

I think the state has made a determination that this is a project worth doing in this budget.

Does the state bond package go through no matter whether the locals do it or not?

It does.

What happens if the locals don't come forward?

What happens to those bonds?

Well, the well, I would say the the legislation would authorize us to sell bonds regardless of whether the locals participate, whether we actually would I mean, would be a question for, for down the road.

I mean, I think it would determine on whether obviously the project's going to happen.

I think if the if the if the Browns say, we can make this project work without local participation, then I think the state would still be involved.

If for some reason that the lack of local participation is a problem for the project, I mean, we're not going to sell bonds or a project that doesn't exist.

The two leading Republican candidates for governor, Vivek Ramaswamy and Dave Yost, have both said they want Ohio to go to zero income tax.

Many Republicans feel that way.

You had a tweet last year when you talked about an aggressive move toward eliminating the tax, which you said should be done by reining in state spending.

If there are income taxes in this revenue mix, though, wouldn't going to zero or cutting the income tax, wouldn't that dramatically affect the revenues that the state would reap from this project?

Well, any any elimination of the income tax unless there is a significant adjustment to spending is going to work, would require adjustments elsewhere.

I mean, other states that have gone to a 0% income tax, they didn't find a cheaper way to pay for roads.

They just collect the same amount of revenue through different pots.

And I expect that if we if we got to that point, eventually it would be a similar thing in Ohio.

So you would have to go back to the stadium project and redo the numbers.

No, I'm saying I think that if you were actually going to eliminate the income tax, it's entirely likely that there would be adjustments either to, you know, property tax, sales tax, you know, some other, you know, ticket tax or there would be some other offsetting, adjustment made that would that would raise revenue from the project is the same.

That brings me the question of what is the mechanism to make sure that the state is made whole with the revenue doesn't come in?

Well, first of all, the the team is depositing a $38 million bond at the beginning that will be invested and grow over time.

The projections are that invest that that that compounding of interest would be about 150 to $200 million, by the end of the 30 years.

So, we feel good about the projections on what the increased tax revenue to the state would be.

That bond is there as a backstop, though, if we're off by, you know, 50, 100 hundred and $50 million, the team is putting up a collateral security to make sure that we could make the taxpayers hole.

In any event, there are some other things in the House budget that Democrats disagree with, which is to be expected so much that Alice LaRusso said that there's no one in the Democratic caucus who would vote for this budget right now.

Is that okay with you?

Is there room for compromise as far as you're concerned?

Well, look, we would always you know, anybody who votes against this budget is voting against more money for public schools or voting against property tax relief.

They're voting against an increase of funding for higher education.

They're voting against a lot of good government reforms.

People have to make their own decision on the floor about, how they want to proceed.

But, you know, we have a 65, member Republican caucus, and we could pass a bill, as we're constitutionally required to do, probably without, the support of the other party.

I'd like to have their support, but I think we've, you know, there's been an appetite in our caucus to have a more Republican budget.

I think for quite a while.

I think the, the, you know, the the strength of the last two years, I think there was a lot of dissatisfaction in our caucus about, you know, what we what we did and didn't get in that budget based on the kind of, power sharing arrangement that there was.

And so, we would love to have all the votes that we possibly can, but this is going to be a fiscally conservative, Republican budget.

But this is the first budget in, I think, seven years, seven cycles.

That doesn't include an income tax cut.

Yeah.

I think this is, Santa Claus has gone home.

I mean, there is no more federal money.

There is no more CARES act.

Arpa.

You know, whatever other acronym the federal government put on it, we've had for several budget cycles, frankly, a lot of money from the federal government that, you know, went out the door and created programs and is now gone.

And so we're back to we're back to normal.

We're back to a regular order here.

And we have to live within our means, unlike our friends in Washington, DC.

And so, there is, you know, necessarily going to be cuts which we are making in this budget and, we're going to be realistic about the fact that we probably, in this budget environment, probably can't do an income tax cut.

We have cut.

So we have cut it to the point that we are competitive with all of our neighboring states.

We are not hearing the same kind of concerns from our residents or businesses, that our income tax is a hindrance to economic development or, you know, people's desire to live here.

I think people are much more concerned about property tax relief.

That's why this budget is emphasizing, you know, immediate, swift property tax relief through the county Budget Commission process.

And I think if we provide residents property tax relief, I think that's what they're more interested in right now than the income tax.

And one final question.

You said we're back to normal.

One of the things that's not back to normal is that a ban on food banks, food banks got a cut in governor Mike DeWine budget.

I don't believe that's been restored in the House budget.

There are folks who are going to say, why not help food banks?

Why not help people who are in need instead of, say, doing the $600 million in bonds for the Brown state?

Well, first of all, the bonding issue is entirely separate from our general revenue fund spending.

Okay?

Our capital budget does not affect what we spend on any other state obligations.

So those are those are apples and oranges.

The with regard to the food banks, they are getting $22.5 million in each year from the state budget.

They're not getting the full amount they asked for.

Again, nobody really is in this budget.

We have 4% unemployment in the state.

We have a huge list of open jobs available for people to go fill.

I hope people do.

We think that should drive the demand for the food banks down.

And, we are funding food banks like we are everyone to the capacity that we can.

But we're not going to, live outside our means.

A note in response from the Ohio Association of Food Banks.

They surveyed their customers last year and found just over half had a member of the household who was working.

Those who weren't.

58% reported they were too disabled or sick, and nearly 44% said they were retired.

The food banks have modified their request in the budget, now asking for around $10 million more, or nearly $29.5 million a year.

Executive Director Jory Novotny said it won't provide an adequate emergency response, but it will be meaningful and is vitally necessary to stop hunger and support Ohio agriculture.

Speaker Matt Hoffman says the plan is for a full floor vote on the House budget on Wednesday.

By the way, DeWine signed the $11.5 billion transportation budget right on the March 31st deadline, with no vetoes.

It had passed both chambers unanimously.

But he had been urged to veto provisions requiring proof of citizenship to register to vote and Bureau of Motor Vehicles offices and a new leadership position and pay raise for Assistant Speaker Pro Tem Phil Plummer.

And that is it for this week for 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.

Just.

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.