COLUMBUS — Deviating from typical budgets proposed by the Republican-dominated chamber, House leaders Thursday proposed increasing taxes on wealthier business owners, eliminating income taxes for the state's lowest earners, and doubling money for county child protective services.
Plus, majority Republicans proposed giving another $125 million for K-12 education, another $35 million to help counties pay for indigent defense, and increasing the state's needs-based scholarship for higher education.
House Speaker Larry Householder, R-Glenford, said Gov. Mike DeWine set the tone with his introduced two-year operating budget, and the House sought to further focus on family issues."We need to do a better in Ohio making sure that we take care of our communities, our children and elderly — those Ohioans who are actually the most vulnerable."
Angela Sausser, executive director of Public Children Services Association of Ohio, said she was "blown away" by the additional $60 million in child protective services funding added to the budget, on top of what DeWine had already proposed. She called it a "truly spectacular move that will have a lasting impact on children and families in Ohio struggling with addiction and other challenges that lead to child abuse and neglect."
Householder said he was moved recently when he rode along with children's services staffers in Coshocton County.
"It was very impactful for me to see the way some children are having to live their lives today and the expectations we have for future generations," he said.
The House budget plan, which will undergo more changes next week before a likely House vote by Thursday, includes $300 million in tax cuts, eliminating personal income tax on all earnings below $22,500. For income between $22,500 and $88,800, the tax rate would be cut by 4.7 percent.
The House changes also would scale back the business income tax deduction that currently allows pass-through entities, including partnerships, sole proprietors, and LLCs, to pay no income tax on their first $250,000 in income. Thursday’s proposal would roll that back to $100,000.
The plan, Householder said, is to also eliminate the current 40 percent tax cut on business income above $250,000. The proposal also would ensure that taxpayers cannot use the deduction to qualify for other tax breaks designed to go toward low-income Ohioans.
"This [business] tax break was not tied to employees or employee retention," said Rep. Jay Edwards, R-Nelsonville. "Coming from my district, it's hard to fathom that you've got lower-income folks working minimum-wage jobs who are paying state income taxes, but people making up to $250,000 using this pass-through deduction are not."
House Democrats also have pushed to significantly roll back the business tax break, and Rep. Adam Miller, D-Columbus, called the change "very encouraging."
Majority Republicans also propose to eliminate various targeted tax deductions and exemptions, including the motion picture tax credit, the credit for contributing to a political campaign, plus sales tax exemptions for motor racing teams, gold coin and bullion purchases, flight simulator purchases, aviation repair and partially owned private jets.
"I'm a believer that when you look at tax policy, we shouldn't try to pick winners and losers," Householder said. "We should try to keep [taxes] as low as possible."
House Republicans say the overall tax plan provides a net $100 million reduction over two years.
As expected, the House did not include the Cupp-Patterson revamp of the current school-funding formula that has been under development for more than a year. Householder is concerned that the plan drives too much money toward wealthier suburban districts.
Instead, the plan adds $125 million over two years to the $550 million Gov. Mike DeWine proposed in his initial budget for services such as mental health counseling and after-school programs, distributed based on student poverty concentration. The House money would be separate from DeWine's funding, focusing more on districts with rural poverty.
The House plan also would provide $20 million for a new school bus purchase initiative.
In higher education, the House plan would freeze for four years all tuition and general fees for incoming freshmen at four-year universities. It also would increase primary higher education funding by $22 million next year and $20 million in 2021, about 1 percent per year, plus a 40 percent increase over the biennium for technical colleges.
It also would increase funding for the state’s needs-based Ohio College Opportunity Grant by 21 percent per year, totaling $148 million by 2021.