Balancing The State's Budget: The Challenges And Opportunities
A Guest Column by Senate President Larry Obhof
May 02, 2017
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Every two years Ohio’s General Assembly and Governor are called upon to pass a biennial budget bill that funds the operations of the state. The Governor proposes the bill, which is introduced in the Ohio House of Representatives and is considered for several months before being sent to the Senate. This General Assembly’s budget bill is House Bill 49. 
The House is completing its consideration of House Bill 49 this week. The Senate has only a brief time to work on it—the bill must be finalized by the end of June—but we began preparations for the bill several weeks ago. This bill is a centerpiece of the legislature’s agenda and includes funding or statutory changes related to all of the state’s departments. 
Perhaps more so than any other legislative action, the biennial budget bill reflects the priorities of the state and determines the course of its agencies for the next two years. The budget funds state agencies and social services at both the state and local levels. The bill will include a funding formula for Ohio’s school systems, and it will allocate the resources needed to fund that formula.  It also reflects legislative choices about tax policy, the size and scope of government and the role of government in the economy. Each bill is unique and each is influenced by economic and fiscal conditions, which vary from year to year. While each bill presents its own set of challenges, each also presents an opportunity for the Senate to make sure Ohio keeps moving in the right direction.  
When I joined the State Senate in 2011, Ohio faced an estimated $8 billion shortfall. The prior administration had run down the state’s “rainy day fund”—essentially, the state’s savings account—to just 89 cents. Ohio faced a difficult and uncertain future. 
Did we raise taxes to close the $8 billion gap? No. We made difficult choices but balanced the budget by restraining government spending. And while we were doing so, we actually cut taxes, including eliminating Ohio’s death tax. We wanted to make Ohio more attractive to job creators, encourage small business growth and let hardworking Ohioans keep more of their own money.   
In 2013, the Ohio Senate remained committed to lowering Ohioans’ tax burdens. We instituted a broad series of reforms that included, among other things, a 10 percent across-the-board income tax cut and a small business tax cut, for a net income tax cut of nearly $3 billion. At the same time, we added more than $700 million to the state’s school funding formula—the largest new investment in primary and secondary education in more than a decade. 
In 2015, we again provided tax relief and support to Ohioans and small businesses with the purpose of keeping the state’s economy healthy and growing. That year’s budget bill included an across-the-board 6.3 percent income tax cut for all Ohioans, but also invested an additional $900 million dollars into K-12 education. The Senate worked hard to ensure that no school district lost funding compared to the prior budget. 
The past three budget bills played a major role in Ohio’s recovery. As we have implemented tax cuts and other pro-market reforms, the business climate has improved and Ohio has gained more than 460,000 new jobs. We replenished the rainy day fund, which now holds around $2 billion, and Ohio's credit outlook was upgraded even though the national credit rating fell. No single factor is responsible for all these things, but the starting point was a responsible budget that controlled costs and lowered the tax burden on Ohio’s workers and job creators. 
This year we face a more challenging budget cycle than any since 2011. Although Ohio employers continue to add jobs, the state’s tax revenues have generally missed projections, month-after-month for the past year.  Governor John Kasich, Ohio House Speaker Cliff Rosenberger and I recently announced that Ohio’s projected revenue for the next two fiscal years is on pace to be $800 million less than originally anticipated. 
This is a significant gap, and we will have to make some tough decisions over the next two months in order to close that gap. One thing is certain, though: the Ohio Senate will pass a balanced budget. We will roll up our sleeves and get to work, just like we did in 2011. You, the taxpayers, should settle for nothing less.   
I welcome your input on the biennial budget or on any other bill. If you have questions, or if you have any ideas that you would like to share, you can reach me by phone at (614) 466-7505 or by e-mail at You may also reach me by mail at State Senator Larry Obhof, 1 Capitol Square, 2nd Floor, Columbus, Ohio 43215.
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