House Budget Maintains PLF at 1.68% of GRF

On May 9, the Ohio House passed their version of the state’s $69 billion two-year budget, House Bill (HB) 166. It passed the House chamber with overwhelming bipartisan support by a vote of 85-9 after being reported out of the House Finance Committee unanimously.

 

While the House decided to maintain the Public Library Fund (PLF) at 1.68% of the state’s General Revenue Fund (GRF), they added significant tax reform changes to the proposal – some that would increase revenues as well as others that would reduce the GRF base. Here are a few of the highlights:

 

PLF

  • Maintains the PLF at 1.68% of the State’s GRF

 

Increases Revenue

  • Eliminates the Motion Picture Tax Credit (Estimated GRF increase of $40 million in FY21.)
  • Eliminates Both Campaign Contribution Tax Credit & Pass Through FIT Tax Credit (Estimated GRF increase of $8 million in FY20 and $8.3 million in FY21.)
  • Reduces the Business Income Tax Deduction from $250,000 to $100,000 & Eliminates the 3% Flat Rate on Business Income Above those Amounts (Increases GRF by $528 million.)
  • Clarifies that Sales Tax Should be Applied to Ride Sharing like Lyft and Uber (Estimated increase to GRF of $16.2 million in FY20 and $17.7 million in FY21.)
  • Repeals the Sales and Use Tax Exemption for Jets, Motor Racing Teams, Gold Coins (Increases GRF revenues by $33 million in FY20 and $44 million in FY21.)
  • Conforms Sales Tax to Online Purchases as Related to the U.S. Supreme Court’s Wayfair Decision (Increases GRF revenue by $25 million in FY20 and $50 million in FY21.)

 

Decreases Revenues

  • Creates the Ohio Opportunity Zone Tax Credit (Estimated loss to GRF of $30 million in FY21.)
  • Creates the Lead Abatement Tax Credit (GRF loss limited to $5 million in each year.)
  • Zeroes out the 2 Bottom Tax Brackets & Exempts Individuals with Income Less than $22,250 from Paying Income Taxes
  • Across the Board Income Tax Cut of 6.6% (Estimated loss to GRF of $636 million when coupled with the changes to the tax brackets.)
  • Creates Income Tax Credit for Hiring Ex-Felons (Reduces GRF by $3 million annually.)

 

Local Tax Reform (Proposals that would Impact Local Levies)

  • Creates Property Tax Exemption for Daycare Centers
  • Provides Local Property Tax Exemption for Residential Home Developers (HB 149)
  • Eliminates August Special Elections (HB 187)

 

There are lots of moving parts in this budget, including various tax reform proposals. The Legislative Service Commission (LSC) has created a Comparison Document on HB 166 as passed by the Ohio House.

LSC Comparison Document (PDF, 624 pages)