On June 8, Republican leadership in the Ohio Senate unveiled their version of House Bill 64, Ohio’s biennial budget bill. The Senate Finance Committee accepted the substitute bill on June 9 before hearing testimony on the new version of the legislation.
Among the changes made in the substitute bill is an increase to the small business tax exemption to 100 percent on the first $250,000 of income for a small business owner filing jointly and 100 percent on the first $125,000 for individuals. The bill also modifies the Ohio income tax so that income above the exemption is subject to a 3 percent flat tax. The Senate also provided an additional reduction to Ohio’s personal income tax of 6.3 percent.
The new version also raises the excise tax on cigarettes from $1.25 to $1.65 per pack and increases the excise tax on other tobacco products from 17 percent to 22.5 percent. The Department of Health’s tobacco prevention, cessation and enforcement program will benefit from an additional $8 million over the course of the biennium.
Other provisions include a freeze on instructional and general fees at state institutions of higher education for academic years 2015-2016 and 2016-2017 for all undergraduate students, restoration of Medicaid coverage for the breast and cervical cancer eligibility group, and an update to the school funding formula for primary education.
Additional changes are expected in the Senate Finance Committee on June 15 and 16. The full Ohio Senate is expected to vote on the legislation on Wednesday June 17. It is widely expected that the Ohio House will not agree to the Senate’s changes setting up a Conference Committee among the House and Senate the week of June 22-26. Ohio’s FY2016-2017 state budget is required by the state Constitution to be signed (minus any vetoed provisions) by Governor John Kasich by midnight on June 30.