House Finance Committee begins work on State Budgets

By Jason Warner, GOPC Manager of Government Affairs

The first month of the 132nd Ohio General Assembly began slowly, with mostly organizational work going on behind the scenes while new members acquainted themselves with life as a member of the state legislature. That quiet period has now come to an end, as the House Finance Committee has taken up the task of passing the next state operating budget for the next two years.

The state operates with four state budget bills: the Main Operating Budget, the State Transportation Budget, the Bureau of Workers Compensation Budget (BWC) and the Industrial Commission Budget (IC). The BWC and IC budgets are passed separately from the main operating because they are supported through the fees that businesses pay in the state. Those fees provide the operational funds for those organizations and must be passed separately as they do not use general revenue funds (GRF) for operations.

Like the BWC and IC budgets, the State Transportation Budget is funded through a combination of federal funding and revenues derived from the state motor fuel tax. The Ohio Department of Transportation and other agencies funded with state motor fuel tax revenues also receive funding in the main operating budget from the GRF, but the State Transportation Budget deals exclusively with the disbursement of funding from federal transportation dollars and motor fuel tax proceeds. 

On February 1, the House Finance Committee began hearings on the main operating budget, which concerns the funding of general government operations for the next two years. A day later, on February 2, the committee began hearings on the State Transportation Budget. Both budgets must be passed within the next 5 months so they can take effect on July 1, when the next state fiscal year (FY2018) begins (though it is worth noting that, due to a ruling of the Ohio Supreme Court, the transportation budget must have a 90 day effective date, requiring it to be passed by April 1).

Governor John Kasich introduced his proposed budget to the state legislature on January 30. The governor’s budget proposal recommends total GRF (Main Operating Budget) spending of $33.10 billion in FY2018 and $33.82 billion in FY2019. In total, the two year operating budget calls for total appropriations worth $66.92 billion. The proposed Transportation Budget calls for spending $3.96 billion in FY2018 and $3.85 billion in FY2019. This actually represents a reduction in overall spending compared to the past two years, where the transportation budgets appropriated $4.01 billion in FY2016 and FY2017.

Beyond spending, the budget also serves as a catalyst for a number of state law and policy changes, and Governor Kasich has proposed a number of initiatives through this budget proposal. Among these changes are further proposed tax cuts, with a proposal to simultaneously cut taxes across the board and reduce the number of tax brackets from 9 to 5; a freeze on public college and university tuition rates, along with a proposal that universities provide text books to students (while charging up to $300 to offset costs); improving state government through technology, including moving 100 percent of state computers to cloud computing.

On the transportation side, the proposed budget seeks to create ‘smart highways’ along existing state highways (I-270 in Columbus and I-90 near Cleveland), seeks to provide the Director of the Department of Transportation with the authority to enact variable speed limits and ‘hard shoulder running’ along highways during peak rush hours, and appropriates $45 million for expanding research capabilities at the Transportation Research Center in East Liberty to further foster research and development of autonomous vehicles and smart highway technology.

The majority of the proposed spending in the transportation budget is dedicated to maintenance on Ohio’s more than 43,000 lane miles of highway and 14,000 bridges, but does also include a proposed increase in federal ‘flex funding’ for public transportation, appropriating an additional $10 million per year towards a grant program which will assist local transit agencies in replacing their aging fleet of vehicles.

Over the next several weeks, the various subcommittees of the House Finance Committee will begin hearings on the hundreds of provisions and line items contained in the state budget and begin the process of crafting their own version of the bill, using the governor’s proposal as a framework. The House is expected to pass its version of the transportation budget by the end of February, sending it over to the Senate where it will be completed by the end of March before being sent to Governor Kasich for his approval. The Main Operating Budget will likely see passage in the House near the end of April, while the Senate will look to pass a version of the bill by mid-June. Final passage of the 2018-19 state budget is expected to occur in late June to take effect on July 1, 2017.

 

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