Executive Budget proposals worth watching

Takeaways from Gov. DeWine’s final budget

Yesterday, the DeWine administration released an overview of its 2026-27 Executive Budget. Absent the full text of the proposal, Policy Matters Ohio Executive Director Hannah Halbert released the following statement about the broad strokes:

“Gov. DeWine’s budget proposal includes some potentially helpful ideas for making the state budget work for everyone. It avoids the worst trappings of the legislature’s tax-cut fixation, but fails to make the tax system any more fair for low- and middle-income families. It appears to short-change the Fair School Funding Plan, though public-school advocates could persuade the legislature to include a fix. The budget doubles down on wasteful, expensive vouchers for private schools, but it provides a modest increase for Ohio’s libraries, and a badly needed bump for our local governments. The proposal shows little of the ambition or vision one might expect from a legacy-defining final budget, though some elements will be worth fighting for, and others can be improved by legislators through the budget process. A few should be rejected by the legislature at its first opportunity.

“The proposed Child Tax Credit (CTC) will help some Ohio families with children ages 0-6, though it includes an income requirement that will leave out many of the families who need it most. Because the credit is 100% refundable, the lowest-income families who do qualify will receive the full value of the credit.

“Even with its flaws, the governor’s proposed CTC is far more effective and fiscally responsible than the flat tax proposed in SB 3 — which primarily benefits the wealthiest Ohioans at the expense of schools, childcare, and other public services and programs. Defeating income-tax cuts and passing the CTC will require public pressure on legislative leadership and a broad show of support for Gov. DeWine’s proposal. The impact this credit would have on children is well worth Ohioans’ efforts.

“The governor rejected broader tax cuts as unnecessary, saying, ‘We’ve been able to cut taxes and, working with the legislature over a number of years, we are now extremely competitive,’ and ‘Not one company has said, “We can’t come to Ohio because your taxes are too high.”’ Still, he did not go so far as raising taxes on the wealthiest or cutting unproductive tax breaks. Instead, his proposal funds new spending in part through increases in so-called sin taxes, which ultimately make the system less fair for middle- and low-income families.

“The proposal to increase the tax on sports gambling to 40% would make Ohio’s one of the highest in the nation. Sports-gambling revenues currently fund extracurricular activities, but the governor proposes some of that funding go instead to pay for stadium infrastructure, requiring youth sports to split funding with the billionaires who own Ohio’s professional sports teams.

“The governor’s budget includes significant Medicaid cuts in the form of work requirements that would take health insurance away from upwards of 60,000 Ohioans. The proposal will require approval from the federal government.

“We applaud the governor’s stated intention to complete the phase-in of the Fair School Funding Plan. But completing the phase-in does not mean schools are fully and fairly funded. Math matters. The governor’s formula relies on outdated cost estimates to calculate the amount of funding districts need to educate students. The funding plan essentially requires public schools to operate as if prices have held steady since the last budget. Combined with a 10% cut by the end of the biennium in the guaranteed funding that supports some districts through the transition, the governor’s budget will weaken public schools and harm students, families, and communities — especially in rural and urban districts where population is declining.

“The state’s failure to update costs has already dropped the state share of school funding below where it was the time of the DeRolph lawsuit. At that time (FY 1997), the state covered 43.8% of education funding, with local property and income taxes picking up the majority of education costs. In FY 2024, the state’s share of funding fell to 43.3% and will be an estimated 39.3% in FY 25 according to estimates by OEPI.

“The governor also proposed an increase to the Public Library and Local Government Funds from 1.70% to 1.75% of the GRF, a change that will amount to an estimated $31 million in additional revenue for each, and an increase for the Unemployment Compensation’s IT system, which is long overdue and sorely needed.

“In the coming days and weeks, the Policy Matters team will dig into the Executive Budget, especially the proposal to expand access to Publicly Funded Child Care, the details of which remain unclear.”