

Five key questions the Senate will answer with its version of the budget:

1) What will the Senate do with taxes, including the business income-tax deduction?

The Ohio House surprised people around the Statehouse when it reduced the state’s business income-tax deduction to $100,000 to help pay for a 6.6 percent reduction in all income-tax brackets and elimination of state income tax for those earning less than $22,250.

Business groups have strongly fought to keep their full $1.2 billion annual tax break, which includes not only the $250,000 in tax-free earnings for those filing as pass-through entities but also a 40% tax break on income earned above $250,000. However, the tax break has drawn criticism from those who say it disrupts tax fairness, goes to a number of out-of-state investors and hasn’t led to proven job creation.


Speaker Larry Householder, R-Glenford, went so far recently as to say the current tax break may actually discourage business owners from hiring people. He also stresses that 86% of business tax filers still get their same tax break under the House plan.

But Senate Republicans and Gov. Mike DeWine support the deduction and are expected to restore it, though there has been talk about altering the break for those earning more than $250,000. Senate President Larry Obhof, R-Medina, has all but guaranteed the Senate will pass an overall income-tax cut larger than the roughly $100 million net cut from the House. Positive state tax-revenue numbers in recent months should give the Senate the room to do it.

Also look for the Senate to restore some targeted tax breaks that the House eliminated, such as the motion picture tax credit.

2) What will new high school graduation standards look like?

The Senate has worked on new standards to replace the current seven end-of-course-exam requirement that was never fully implemented. Senators have been looking at a pair of graduation proposals, and it’s expected that whatever leaders choose to go with, it will mean fewer high-stakes tests.

In addition to graduation standards, it will be interesting to see if the Senate alters House amendments that change how district report-card grades are calculated, allowing more districts and buildings to avoid a D or F grade even without improving their scores. The Senate also may eye House revisions to charter-sponsor evaluations, and a change prohibiting the state from issuing report cards for dropout-prevention schools until lawmakers act on future recommendations related to the schools.

3) Which schools will get more money?

The Senate is not planning a major rewrite of the current school-funding formula. It’s likely that the chamber will follow what Gov. DeWine and the House did — take what schools got this year and add money.


The Senate appears ready to add money for “capped” school districts — those that, because of rapid student growth, changes in property valuations or quirks of the state funding formula, don’t get as much money as the formula says they should get.

This school year, 165 of Ohio’s 610 districts had their funding capped, losing $470 million compared with what the formula calculated. For 44 districts, it cost them at least 20% of their revenue, a list that includes Olentangy (79%), New Albany (69%), Dublin (37%), Licking Heights (46%), Delaware (30%), Whitehall (25%), Columbus (22%) and Westerville (21%).

4) Will the Senate add requirements for Medicaid and food stamps?

At the behest of Democrats, the House removed a Medicaid budget provision known as “Healthy Ohio” that would have charged new fees to more than 1 million Medicaid recipients and stripped several health-coverage benefits from those who miss payments. It now would allow Ohioans to set up health savings accounts that can be used for prescription drugs or medical devices.

The plan would impact an estimated 38% of poor and disabled Ohioans on Medicaid. Some conservatives hope the Senate puts the provision back in the budget.


5) Will the Senate go further to address pharmacy benefit managers?

As state leaders have been made aware of growing concern that pharmacy middlemen known as PBMs have been taking major profits and short-changing pharmacies though Medicaid, the House added a budget provision that would reduce the number of PBMs to one. It also would require that remaining PBM to act in the state’s best financial interest, pursing the lowest drug costs.

The governor, Speaker Householder and Attorney General Dave Yost have expressed concern that PBMs such as CVS Caremark and OptumRx are ripping off taxpayers. Those PBMs billed taxpayers, through managed-care organizations that run Medicaid for the state, nearly a quarter billion dollars more for prescription drugs in a single year than they reimbursed pharmacies.

Independent pharmacies argue that the Medicaid prescription-drug reimbursement system is driving them out of business.

So what will the Senate do? One idea is to require that pharmacies be reimbursed the national average cost of the drug plus $5 per prescription. Others see a need to address the lack of transparency in the pricing system.

It’s unclear if the Senate will enact its full PBM-related proposal Tuesday or install more of a placeholder.