Ohio House and Senate agreed to a temporary budget this weekend, as both sides were unable to reach agreement on a biennial budget during conference committee hearings. It funds state operations for 17 days into the next fiscal year. The interim budget, Senate Bill 171 (SB 171), and a one-month interim budget for the Bureau of Workers’ Compensation, Senate Bill 172 (SB 172), were passed nearly unanimously by both chambers. Governor Mike DeWine signed both bills on Sunday evening.
SB 171 funds state operations at Fiscal Year 2019 levels. GCP has remained steadfast and has continually requested state leaders consider the following in the biennial budget:
Preserve Ohio’s current small business tax deduction, which is utilized by our members for reinvestment back into their companies, workforces, and communities. Reducing the deduction for business income, as proposed by the House, by 60% is significant and it would seriously jeopardize future planning and investments.
Maintain the 3% flat tax rate that pass-through businesses pay on earnings over $250,000. Should elected officials choose to eliminate the current rate and increase the tax rate on these Ohio businesses, allowing entrepreneurs an opportunity to plan and budget for it in the future, as outlined in the Senate’s proposal, is absolutely critical. Because most businesses are set up as pass-through entities, they pay taxes on business income at the income tax rate of their individual owners. Ensuring the proper treatment for a variety of business types, expenses, and investments made by business owners—to support the growth of their businesses—is a crucial focus in deliberations on tax policy.
A budget deal must be reached by Wednesday, July 17. If not, another temporary budget must be passed in order to avoid a government shutdown. GCP will continue monitoring ongoing budget talks.