Ohio House proposes 2 percent income tax cut

Apr. 13—COLUMBUS — Ohioans would see an across-the-board 2 percent income tax cut totaling $380 million under a proposed two-year budget unveiled Tuesday in the state House of Representatives.

The move comes even as the state is in litigation with the federal government over a provision of the most recent coronavirus package that appears to prohibit states that accept billions in aid from enacting tax cuts.

It was likely that the Republican-led General Assembly would again embrace a tax cut given robust state tax collections and an expected year-end surplus, despite last year's coronavirus shutdown.

The massive amendment accepted by the House Finance Committee would also enact a new formula for distributing state aid to K-12 schools that has been in the works in the chamber for more than two years.

This marks the House's first stamp on Gov. Mike DeWine's proposed spending plan unveiled in February that contained no significant tax cuts or hikes. The plan will likely undergo more changes before it clears the full chamber, possibly as soon as Thursday.

A final budget must reach the governor's desk before the start of the next fiscal year on July 1.

The House version of the budget would spend roughly $74.3 billion over two years.

Under the "Fair School Funding Plan," which passed the House last session only to stall in the Senate, the formula's assessment of a district's wealth would be based 60 percent on local property tax valuations and, for the first time, 40 percent on residents' incomes.

The goal over time is for the state to make up the difference after determining what it costs to educate a student in each district. Of the state aid, 60 percent could go to direct instructional costs, 20 percent to building operations, 15 percent for instructional and student support, and 5 percent for district leadership and accountability.

Mr. DeWine had again proposed additional dollars for in-school wrap-around wellness services like mental health treatment, counseling, and mentoring that are not directly related to in-classroom instruction. But he did not tinker with the state's school funding formula to generally distributed state per-pupil aid to more than 600 districts.

The House proposal would incorporate those services as components of its formula of the cost of educating a student.

When it passed the House last year, the plan would cost the state nearly $2 billion more a year when fully implemented over six years.

First Published April 13, 2021, 2:26pm