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Ohio governor signs $71.2B budget; strikes 44 items, including tax breaks for some businesses

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COLUMBUS, Ohio — Ohio Gov. John Kasich on Tuesday signed a $71.2 billion, two-year state budget that continues his expansion of the Medicaid health program and provides an income-tax cut.

The Republican governor made extensive use of his line-item veto ahead of the signing, striking 44 provisions from the sweeping spending blueprint. Several vetoes targeted benefits lawmakers had sought to provide to large businesses or industries, including power plants, big box retailers and nursing homes.

At a signing event at his Statehouse office, Kasich said the budget delivers more money to people in need without breaking into a "party time" of loose spending.

"Here in this state, we're minding the store," he told the packed room. "We've got our eyes firmly fixed on the horizon. We know that we can be better and stronger."

Kasich rejected a series of Medicaid-related budget provisions. His veto message indicated that he did so to reduce overall costs and maintain the state Medicaid director's authority over such things as setting nursing home reimbursement rates.

"By requiring a specific reimbursement methodology, it creates an unnecessary barrier to the development of innovative purchasing models that can improve quality and efficiency," Kasich wrote.

The governor also scratched the repeal of tangible personal taxes imposed on electric generation plants. Revenue from those taxes, which was going to some school districts, had been restored in the budget. The veto means about 100 of Ohio's wealthier school districts will get less money in the second year of the budget.

"Ohio is committed to keeping the state's electric generation competitive with those units located in other states," Kasich wrote in his veto message. "However, there are unknown consequences of transferring tax burden from one entity onto another."

Kasich also vetoed a budget item that would have imposed expensive private appraisal standards on county auditors' offices and removed several earmarks, including one that would have delivered dedicated funding to the largest Chamber of Commerce in each of the state's designated economic development regions.

The overall budget provides a 6.3 percent state income-tax cut beginning in tax year 2015 as a part of a roughly $1.9 billion net tax reduction. That lowers the top income-tax rate to just below 5 percent. It also provides tax relief for small businesses and funds public schools.

Kasich left untouched two provisions that aided in the closing of more Ohio abortion clinics. Abortion rights groups continued their protests against the provisions outside Kasich's office Tuesday.

Kasich has said he'll continue pushing for a tax hike on oil-and-gas drillers that lawmakers stripped from the bill. The proposal had been a priority of the governor's and part of his plan to provide a larger income tax cut.

The budget plan also spends $955 million more in basic state aid for K-12 schools than the last two-year period, with no district getting less than what it got this year. It also boosts state funding for higher education to help offset a two-year tuition freeze at public universities. Colleges also must propose ways to reduce student costs by 5 percent.

Smokers would see a 35-cent increase on a pack of cigarettes under the bill, which also set aside money for police training, eliminates special elections in February and prohibits independent health care and child care workers under contract with the state from unionizing.

Associated Press writer Ann Sanner contributed to this report.

PHOTO: Ohio Gov. John Kasich talks about Ohio's 2016-2017 operating budget before signing it Tuesday, June 30, 2015, in Columbus, Ohio. Kasich said the $71.2 billion, 2-year state budget he signed helps people without getting "loose" with the spending. (AP Photo/Jay LaPrete)
Ohio Gov. John Kasich talks about Ohio's 2016-2017 operating budget before signing it Tuesday, June 30, 2015, in Columbus, Ohio. Kasich said the $71.2 billion, 2-year state budget he signed helps people without getting "loose" with the spending. (AP Photo/Jay LaPrete)

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PHOTO: Ohio Gov. John Kasich signs Ohio's 2016-2017 operating budget Tuesday, June 30, 2015, in Columbus, Ohio. Kasich said the $71.2 billion, 2-year state budget he signed helps people without getting "loose" with the spending. (AP Photo/Jay LaPrete)
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