Ohio Senate leaders late Wednesday night passed their version of the two-year state operating budget designed to reform the state's tax system, control Medicaid spending, rework school funding and impose restrictions on the Bureau of Workers Compensation's investments.
Senators approved the budget largely along party lines by a 19-13 vote, with dissenting Democrats claiming its provisions cut needed services and harm small businesses. The budget now heads to a joint House-Senate conference committee, which must submit it to Gov. Bob Taft for a signature by July 1.
The Senate kept a proposal to cut income taxes 21 percent across-the-board, despite objections from Democrats who claim the cut will disproportionately benefit higher-income taxpayers. In addition, a new business tax on gross receipts will replace former taxes on profits, inventory and equipment, said Finance Committee Chairman John Carey, R-Wellston.
The budget also eliminates the House-proposed beer and wine tax increases to save jobs in the state's large brewing industry but significantly raises taxes on cigarettes, Carey said.
While Republicans claim the reforms will make Ohio more attractive to businesses, Democrats say the loss in revenue resulting from the tax cuts could have been useful. Sen. Eric Fingerhut, D-Cleveland, said additional higher education funding would be a better investment in Ohio's future than tax cuts.
When you can find room for an $800 million income tax cut and a $600 million sales tax cut
but you can't find a dime for higher education I think you've made a clear statement of your priorities he said.
Another cornerstone of the budget is an attempt to curb Medicaid spending, which is by far the state's largest financial burden, Carey said. To restrict the growth of Medicaid, senators raised to 1,800 the number of slots for an assisted living program for seniors who need care but do not want to live in nursing homes. The House budget had cut that number to 1,000.
The whole idea is to focus more on consumers
Carey said. Once they have the power to make their own choice
that will drive down the price.
But Democrats remain opposed to cuts in many Medicaid services, including cuts to vision and dental coverage and the Disability Medical Assistance program, which provides health care and drugs to poor people.
Sen. Tom Roberts, D-Trotwood, said the cut services are not optional, but essential.
In the long run it will cost us more to go that route
Roberts said. People are going to end up needing those medical services
and they're going to end up having to go to emergency hospitals to get them.
The budget also reworks the funding formula for primary and secondary education. A new building blocks approach will increase funding to impoverished districts and provide a clear picture of what basic funding is supposed to support, said Education Committee Chair Joy Padgett, R-Coshocton. A new program will provide vouchers to 10,000 students in failing schools, and all Ohio schools funded with state money would be subjected to the same accountability measures.
But Sen. Teresa Fedor, D-Toledo, said the budget still does not provide enough public school funding or address public schools' reliance on property taxes for local funds.
They're abandoning public schools in Ohio
Fedor said. They're more concerned about privatizing the system
The Senate also curtailed the Bureau of Workers Compensations' investment options in response to state investigators' discovery that up to $12 million of the agency's $55 million investment in two rare coin funds is missing.
Among other measures, the budget bans the Bureau from investing in rare collectibles and from dealing with contributors to the campaigns of governor or lieutenant governor candidates, Carey said.
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