Last week, Gov. Mike DeWine signed Ohio’s two-year budget into law. Before doing this, he issued 67 vetoes, significantly reshaping the budget that was sent to him by the General Assembly. While he made many changes to the budget, the following three stood out to me as potentially having a significant effect on Ohio’s economy.
Tightening fiscal policy for public schools
Ohio lawmakers have been looking for ways to reduce the impact of property taxes on property owners and renters for a couple of years now. One of their solutions was to impose new rules on school districts that limited the amount of cash they could hold from year to year, mandating property tax decreases to make up for cash not being spent.
The perverse incentives in this policy should be clear to a reader. While it could lead to lower property taxes, it could also lead to school principals making mass purchases of unneeded equipment at the end of the year rather than saving funds for more useful purchases the year after.
Ensuring public school districts aren’t dealing with arbitrary limits on their reserve funds will allow for fiscal flexibility that will benefit public schools making tough decisions around long-term financial planning.
Reduction of Medicaid coverage for children under age four
Medicaid is another category of state spending that legislators have been eyeing. Medicaid is the top insurer of Ohioans and even though the federal government picks up a large portion of the tab for Medicaid, the state still spends billions of dollars on it per year. One way legislators were planning to reduce state spending on Medicaid was to require families with young children to do more paperwork, increasing the chance they will miss a deadline and lose their health coverage.
While this is a way to save money, it would also lead to lower health insurance coverage rates and more fiscal instability for families with young children. This also would happen at a crucial moment in child development. This veto has the potential to keep coverage for more households with young children, getting them off to a good start with health and family resources.
Limiting voters’ ability to fund local services
Another strategy state lawmakers have adopted to reduce property taxes is to empower county lawmakers to reduce local property taxes at will, even overturning levies passed by voters. This would allow county leaders to reduce property taxes, lowering rates for property owners and renters, but also reducing resources for local schools and human services. If this provision was left in the budget, it could have led to lowered property tax rates across the state and less resources for local governments that rely on these property taxes.
Ohio’s state budget is a long, labyrinthine document. It also is the main tool policymakers use to set public policy in the state. The decisions in this document have wide-reaching implications that impact the future of our economy, poverty, inequality, education, health, and well-being of Ohio and its residents. Now the ball is in the court of the General Assembly to see how many of these 67 vetoes will stand.