What Does the Newly Passed Two-Year State Budget Mean for Ohioans and Ohio Organizations?

Government Relations

After a slight delay, the state’s Fiscal Year (FY) 2024-2025 biennial operating budget bill, Amended Substitute House Bill 33 (HB 33), was passed by the General Assembly on June 30, and signed by Governor Mike DeWine (R) on July 3, 2023.

The bill was supposed to be passed and signed by the end of the day on June 30, but as the conference process did not conclude and the bill was not passed until late that day, there was no time to prepare the final bill or allow the Governor time to review and prepare a veto message by the deadline. A three-day continuance was passed last Friday to allow the Legislative Service Commission the opportunity to prepare the bill, which was delivered to the Governor at approximately 10:00 p.m. on July 2, and to allow Governor DeWine the opportunity to review the bill and prepare his line-item veto message.

HB 33 was by far the largest operating budget bill in recent history. The working document going into the conference committee was nearly 9,200 pages and contained close to 900 points of difference for the conference committee to work through. The committee met for approximately 1.5 hours last Friday afternoon to announce the final provisions. The final vote on the conference report by the committee was 4-2, along party lines.

As the day drew to a close, the Ohio House of Representatives and Senate voted to approve the conference committee’s report. The Senate went first and approved the bill with a straight party-line vote of 25-6. While the Senate’s debate was relatively short given the deep divide between the parties on the bill, the House’s debate was more spirited and reflected in the bipartisan vote of 67-30 to approve the bill. Eight Democrats voted for the bill and seven Republicans voted against the bill.

Key Policy Provisions

Among the most touted policy provisions included in the nearly $200 billion two-year bill are:

  • Massive personal income tax reform and rate cuts, collapsing the income tax structure from four to two brackets, while increasing the income threshold from $26,050 to $100,000 by tax year 2025. The bill also exempts many businesses from paying the Commercial Activity Tax (CAT) by creating exclusions on the first $3 million for 2024 and $6 million for 2025 and beyond. HB 33 also includes a new expanded sales tax holiday in cases when the state has excess tax revenues, with the first holiday coming in August 2024.
  • An overhaul of the state’s K-12 governance, which grants Governor Mike DeWine the power to appoint the director of a renamed Department of Education and Workforce, while the board and state superintendent will be relegated to a subset of their current powers, mostly focused on teacher licensure and discipline. HB 33 also included an expansion of the state’s education voucher program to all students but with reduced scholarship amounts provided to families earning above 450% of the federal poverty level.
  • HB 33 includes increased funding for the Ohio College Opportunity Grant (OCOG), the state’s needs-based financial aid program, and creates a new merit scholarship to provide $5,000 awards to students in the top 5% of their graduating class in Fiscal Year 2025. The conference committee also removed the provisions of the controversial higher education reform bill, Senate Bill 83, but included provisions to establish new constitutional instruction academic institutes at five public universities.
  • Increased funding for multiple mental health and substance abuse programs, though not at the levels proposed by the Governor. The final version of the budget scales back Governor DeWine’s proposal to expand the income threshold for publicly funded childcare to 160%; instead, the final budget adopted a 145% income threshold, which is slightly above the current 142% threshold. The bill also dropped Medicaid appropriations by more than $1.3 billion, adopting the Legislative Service Commission’s lower projections for the Medicaid caseload.

Governor Vetoes

Late on July 3, just before the extended deadline, Governor DeWine signed HB 33 and released a statement outlining his 44 line-item vetoes. This is the largest number of vetoes for an operating budget bill since DeWine took office, compared to the Governor's 25 vetoes for the FY2020-2021 budget and 14 vetoes for the FY 2022-2023 budget.

Highlights of the vetoes include:

  • A veto of language that modified the State Appropriation Limit calculation in future years to further limit the General Assembly’s ability to appropriate General Revenue Fund dollars.
  • Removed the codification of Medicaid rates in statutes that would have limited executive agency flexibility.
  • Vetoed language that would have directed future large settlement awards to the General Revenue Fund, as opposed to current law that allows the establishment of nonprofits like the OneOhio Recovery Foundation, which is funded through the opioid settlement awards.
  • Removed multiple provisions related to tobacco that the Governor saw as undermining state efforts to reduce smoking, including the veto of the provision that would have prohibited local governments from enacting their own more stringent tobacco regulations.
  • Removed the expanded vaccine exemption provisions for university students, which would have provided exemptions from any vaccine requirements, saying it was contrary to good public health measures for congregate living situations and would have required religious higher education institutions to have accepted religious exemptions that were contrary to the institution’s religious teachings.

In a prepared statement, the Governor said: “I am proud to sign this budget, and while it makes historic investments in Ohioans across their lives, I believe we are doing more to support and encourage Ohio’s children to lead happy, healthy, and productive lives than ever before.  Whether it is helping them get the healthiest start in life by providing top-notch health care for moms; to expanding access to quality early childhood education; to ensuring their teachers have the resources and skills needed to teach students how to read in the way their brains learn to read; to providing prevention and early intervention tools for those struggling with mental and behavioral health issues; to expanding access and opportunity for all types of training, certifications, and degrees after high school graduation, and continued career development; through ensuring Ohioans have a high quality of life and the highest quality of care as they age, this budget helps make Ohio the heart of opportunity for everyone.”

FY 2024-2025 Budget Effective Date

The appropriations, and any language required to make those appropriations operative, became effective immediately upon signature by the Governor. Any other provisions, that do not have a particular effective date outlined in the bill, will become effective on the 91st day after the Governor’s signature, which should be October 2, 2023. 

For additional information on this topic, please contact your regular Calfee attorney or the author(s) listed below:



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