June 2, 2026 · Finance Committee · 7,760 words · 28 speakers · 191 segments
I call it over to the House Finance Committee. The clerk will call the roll. Vice Chairman Davila?
Present.
Ranking Member Sweeney?
Here.
Representatives Abdullahi?
Abrams?
Here.
Baker?
Bird?
Here.
Calendar?
Here.
Glaspern?
Here.
Grimm?
Here.
Hall?
Here.
Hoops?
Here.
Jerrels? Here.
John? Here.
Johnson? Here.
Manning? Here.
Piccolantonio? Here. Plummer? Here.
Ray? Here.
Ritter? Here.
Robinson? Present.
Romer?
Santucci? Here.
Schmidt? Here.
Sims? Here.
Thomas? Here.
Here.
Troy.
White.
Williams.
Willis.
Here.
Young.
Here. Okay, we have a quorum. We will proceed as a full committee. Just a couple housekeeping items. I want to congratulate Chairman Stewart on the arrival of his new baby. That's why you got me in the chair today. So we'll work our way through the process. We also got Jeremy Wald here in the jump seat as my L.A. Clerk in the committee today. And our first order of business is to appoint a vice chair for today's committee, and I appoint Representative Plummer. Congratulations. Are there any objections? Hearing none, Representative Plummer will be acting as the vice chair. All right. And on to the approval of the minutes from the previous meeting. without objection the minutes are approved and hearing no objection the minutes are approved. I now call up House concurrent resolution 32 for its fourth hearing. Members of the committee will that we're gonna do things out of order from what's on your iPads here just we can get through votes first I know members have other committees to to attend to so we'll call up House concurrent resolution 32 and I recognize Vice Chair Plummer for a motion.
Thanks chairman I move the favorably report House Concurrent Resolution 32
and recommend its passage. Thank you. Will the clerk please call the roll. Davila. Yes. Sweeney. Yes. Abdullahi. Yes. Abrams. Yes. Baker. Yes. Byrd. Yes. Calendar? Yes. Glassburn? No. Grimm? No. Hall? Yes. Hoops? Yes. Jerrolds? Yes. John? Yes. Johnson? Yes. Manning? Yes. McAntonio? No. Plummer? Yes. Ray? Yes. Ritter? Yes. Robinson? Yes. Romer. Yes. Santucci. Yes. Schmidt. Yes. Sims. No. Thomas. Yes. Troy. White. Yes. Williams. Yes. Willis. Yes. Young. Yes. Thank you Okay with 24 affirmative votes and four negative votes the bill will be favorably reported to the Rules and Reference Committee, and I grant LSE harmonizing authority for the committee report. The vote will not be open following committee members, so please sign the roll. If you wish to add your name, please put an asterisk next to your name. That concludes the fourth hearing on House Concurrent Resolution 32. Now call up Substitute House Bill 645 for its fourth hearing. Seeing no testimony, the chair recognizes Vice Chair Plummer for a motion.
Thanks, Chair. I move the favorably report Substitute House Bill 645. Recommend its passage.
Will the clerk please call the roll? Davillo?
Yes.
Sweeney?
Yes.
Abdullahi?
Yes.
Abrams?
Yes.
Baker?
Yes.
Bird?
Yes.
Calendar?
Yes.
Glassburn?
No.
Grimm?
No.
Hall?
Yes.
Hoops?
Yes.
Jerrolds?
Yes.
John?
Yes.
Johnson?
Yes.
Manning?
Yes.
Michael Antonio?
No.
Plummer?
Yes.
Ray?
Yes.
Ritter?
Yes.
Robinson?
Yes.
Romer?
Yes.
Santucci?
Yes.
Schmidt?
Yes.
Sims?
Yes.
No. Thomas?
Yes.
Troy?
White.
Williams.
Willis.
Young.
Yes.
Okay, with 26 affirmative votes and four negative votes, the bill is favorably reported to rules and reference, and I also grant LSC harmonizing authority for this committee report. Members please sign the roll. Place a star next to your name if you wish to sponsor. This concludes the fourth hearing on House Bill 645. I now call up amended House Bill 163 for its first hearing in this committee. And I recognize the vice chair for a motion.
Mr. Chair, I move to amend House Bill 163 with Amendment AM 136-2544.
Okay, the amendment is in order. Will you please explain the amendment?
Mr. Chairman, the amendment modifies the bill's requirement that beginning on the bill's effective date, the Department of Job and Family Services must ensure that all new electronic benefit transfer cards are chip embedded. To instead specify that the department must begin to work on the bill's effective date to meet that requirement.
Are there any objections to the amendment? Hearing none, the amendment becomes a part of the bill. And I believe we just have one witness here today for this bill and that is Jory Novotny from the Ohio Association of Food Banks to provide testimony Welcome Well thank you Chair Congratulations to Chair Stewart
Thank you, Chair Davila, Vice Chair Plummer, Ranking Member Sweeney, and members of the House Finance Committee. I just appreciate the chance to get in front of you today to thank you for the work on this measure. We're really excited to provide proponent testimony on amended House Bill 163, the Enact the Enhanced Cypress Security for SNAP Act today. The Ohio Association of Food Banks and our statewide hunger relief network urge your swift passage of amended House Bill 163 because it will spur a common sense modernization effort that will save taxpayer dollars and protect low-income Ohioans. Widespread national benefits theft has been occurring for several years and remains a serious problem, including here in Ohio. SNAP benefits are issued on electronic benefits transfer or EBT cards, which currently use magnetic strip technology and are less secure than more commonly used chip-enabled cards. Organized criminals have taken advantage of outdated technology and defrauded families in Ohio by installing skimming devices skimming devices that steal payment data through point of sale transactions at retailers. Data shows that millions of taxpayer dollars have been stolen. In January, the U.S. Secret Service and federal and state investigators conducted a sting operation at about 500 businesses in Ohio in two days, removing six skimming devices and preventing more than $6 million in benefit theft by criminal fraudsters. From June 2023 to December 2024, we know of at least $17 million in SNAP benefits stolen from more than 34,000 Ohio households. The US Attorney's Office recently indicted five international criminals for a snap benefit fraud conspiracy using illegal skimming devices. By swiftly passing amended House Bill 163, the Ohio General Assembly can prevent this fraudulent activity. We're supportive of the approach to phase in chip cards gradually on a replacement basis, making this technological upgrade a secure chip technology offers a proven solution. Recently, states including Alabama, Virginia, Oklahoma, and Arkansas have taken the proactive step to upgrade EBT cards, and the USDA has a variety of resources to support states and retailers with EBT modernization efforts. We urge the passage of amended House Bill 163 and thank bill sponsors, Representatives Dieter and Rader, as well as Chair Klofenstein and members of the Agriculture Committee for their work advancing this important legislation. We also thank Senators Schaefer and Craig and members of the Ohio Senate for their leadership on companion legislation amended Senate Bill 315. Thank you for the opportunity and I'm happy to answer any questions.
Thank you very much. Are there questions for the witness? Representative Roemer.
Thank you so much. Just a really brief question. When there is skimming, when there is theft from an individual, who pays for that? Is the individual reimbursed? Do they have to prove that it was skimming? Can you just talk us through that process just very briefly, please?
Absolutely. Through the chair to the representative, the benefits are not replaced. There's nothing in federal statute that allows the benefits to replace. So therefore the families are left without their benefits. They have food banks to turn to, so we've been under strain trying to respond to that gap.
Okay, thank you. No follow-up.
Thank you. Other questions? Seeing none, thanks for your testimony.
Thank you, Chair.
Okay, members, there is also some additional written testimony you'll find on your iPads. Encourage your review of that. And with that, the chair recognizes Vice Chair Plummer for a motion.
Thank you, Chairman. I move the favor of the report, amended House Bill 163, and recommend its passage. Thank you.
Will the clerk please call the roll? Davila Yes Sweeney Yes Abdullahi yes Abrams yes Baker yes bird
Yes.
Calendar?
Yes.
Glassburn?
Yes.
Grimm?
Yes.
Hall?
Yes.
Hoops?
Yes.
Jerrolds?
Yes.
John?
Yes.
Johnson?
Yes.
Manning?
Yes.
Michael Antonio?
Yes.
Plummer?
Yes.
Ray?
Yes.
Ritter?
Yes.
Robinson?
Yes.
Yes. Schmidt. Yes. Simms. Yes. Thomas. Yes. Troy. Yes. White. Yes. Williams. Yes. Willis. Yes. Young. Yes. The bill passes unanimously and will be reported the Rules and Reference Committee. And again, I grant LSE harmonizing authority for the committee report. Members, as a reminder, the role will not be open on any of these after the meeting, so please be sure to sign the role before you depart. We'll pass those around. And this will conclude the first hearing on Amended House Bill 163. I now call up House Bill 959 for its first hearing and providing invited testimony is Director Kimberly Muirnix, Director of the Office of Budget and Management.
Welcome. Thank you. Good afternoon. Chairman Davila, Vice Chair Plummer, and Ranking Member Sweeney, and members of the House Finance Committee, Let me first begin by also extending my best wishes to Chairman Stewart and his wife and family on the birth of their new baby. I'm not sure that any other finance chairman has ever finalized a capital budget and celebrated the birth of a new baby all on the same weekend. So congratulations to him and his family on so many levels. I am very pleased to be with you this afternoon to present Governor DeWine's capital improvement budget for fiscal years 27 and 28, House Bill 959. The capital budget will make appropriations for the renovation, reconstruction, and construction of capital assets for state agencies, colleges, universities, and school districts. It also funds a program of grants and loans to local governments for infrastructure projects throughout the state. Additionally, approximately $200 million in the capital budget will provide funds to support targeted community projects of local and regional importance. The capital budget proposal from Governor DeWine presented to you today includes $3.43 billion in general revenue fund-backed bond funding with another $263 million from non-GRF bonds, cash, and other sources, including federal funds, for a total of $3.696 billion in total appropriations. The table at the end of my testimony provides a summary of the capital appropriations in the bill by agency. Most of the projects in each capital budget are supported by long-term debt issued through state of Ohio bonds. because the bill is largely bond funded, each capital appropriation must have a link to an authorization in the Ohio Constitution and each project must have a nexus or direct link to that constitutional provision. The principal and interest payments for each project are then funded in each of our state operating budgets through the General Revenue Fund. We are proud to report that Ohio's prudent fiscal stewardship has reduced the debt burden to the lowest in modern state history. Since 1980, the state has achieved its lowest inflation-adjusted GRF debt burden on record, with per capita debt falling to just $623 by fiscal 25, which is half of its mid-2000s peak. And our outstanding GRF debt reached historic lows of less than 1% of personal income. Under Governor DeWine's administration, Ohio further strengthened its position by reducing GRF debt obligations by 25% between fiscal year 21 and the start of this fiscal year, and by driving down the per capita debt burden by about $439 per person. Mr. Chairman, that means that Ohioans paid less per person to service the GRF debt than any time before. With nearly three-quarters of the GRF back principal retiring within the next decade, and all GRF debt service currently expected this fiscal year at approximately 2.3%, which is less than half of the constitutional cap, Ohio enters fiscal year 27 with exceptional balance sheet strength and a debt burden at historic lows. These strengths are reflected in our state's exceptional credit ratings, AAA ratings from every one of the major credit rating agencies. Ohio's low debt levels are a powerful asset for policymakers and for future generations, freeing up more of the state's budget for essential services, long-term investments, and strategic priorities. Our state is positioned with increased fiscal flexibility to respond to economic shifts, to invest in infrastructure and to protect core services without compromising our financial stability. Ohio's financial position has never been stronger. We achieved these historic milestones together through a deliberate strategy of paying down debt with cash and aggressively retiring obligations ahead of schedule. By using more than $2.2 billion in cash to fund recent capital budget obligations instead of issuing new debt, The state avoided decades of future interest costs, savings estimated at $1.3 billion. In addition, the administration executed targeted early payoffs, such as retiring callable GRF-supported debt. And together, these financing efficiencies and other debt management strategies generated an additional $160 million in GRF savings just over the past 18 months. Our disciplined approach to borrowing strengthens Ohio's credit profile today and ensures that future generations inherit a state with manageable obligations, ample borrowing capacity, and financial resilience to support growth, opportunity, and continued prosperity. The recommended capital appropriations before the committee are manageable and sustainable within our current budget capacity, keeping the state well under the constitutional 5% limitation on debt service as a percent of revenue. The plan presented today is the culmination of years of planning by our state agencies to determine their most pressing needs. Each of the projects recommended in the proposal will renovate, improve, or maintain capital facilities to better serve Ohioans and provide the best return on investment. A priority in this bill is to provide positive impacts on jobs and to continue to grow our economy. Investing in Ohio's infrastructure is investing in Ohioans and our families. At any given time the Ohio Facilities Construction Commission which works with our state agencies on capital projects has nearly 300 projects in design or under construction and the value of these projects exceeds billion creating more than 18 Ohio jobs And with that in mind, Mr. Chairman, I would like to take a few moments just to highlight some specific appropriations and state agency projects for the committee's consideration. One of the larger appropriations in the bill is for the state capital improvement program managed by the Ohio Public Works Commission. The authority to issue the general obligation infrastructure improvement bonds that provide the funding for these appropriations was granted by the citizens of Ohio in May of 2025. Issue 2 was put to the voters to amend the Constitution specifically to enact Section 2T of Article 8 and authorize the state to issue $2.5 billion over a 10-year period. Prior to the adoption of that measure, the state had been issuing these bonds under the authority previously granted by Section 2S, which was enacted in 2014. These bonds support local infrastructure projects throughout the state. And Mr. Chairman and members of the committee, as you review the bill, you will see that many of the pages in the length are dedicated to updating our statutes to include this new provision 2T. Next, Ohio's behavioral health system serves as a safety net by providing specialized care for Ohioans living with mental health, drug addiction, and crises. Building out the behavioral health continuum of care to guarantee access to evidence-based prevention, early intervention, and treatment and recovery support is among Governor DeWine's top priorities. The recommended capital budget provides $385 million in new appropriation for the Department of Behavioral Health to fund general renovations at Ohio's six psychiatric hospitals, hospitals to continue to support program spaces for young individuals affected by mental illness and drug addiction and to fund the construction of a new behavioral health hospital in the Dayton region, a project that was begun in the last capital budget. The capital budget also includes appropriations for the Department of Higher Education and institutions of higher education across Ohio, totaling $528 million. Following the governor's directive, the higher education community work collaboratively to shape a system-wide strategy that prioritized shared needs over individual institutional interests. Led by the Inter-University Council of Ohio and the Ohio Association of Community Colleges, this collaborative effort resulted in a strategic consensus-driven capital plan. And the capital budget recommends $400 million for campus-level projects that address critical facility upgrades, academic spaces, and long-term infrastructure needs. The capital budget also allocates targeted funding to specific smaller campuses that face heightened challenges related to aging facilities and outdated infrastructure. This funding supports renovations, safety improvements, and essential upgrades to ensure that students at these institutions learn in safe environments and that their campuses remain sustainable. The budget further includes $36.7 million for investments that serve our institution statewide. This funding includes support for ORNET, which provides high-speed broadband connectivity to Ohio's higher education institutions, the Ohio Supercomputer Center, which offers advanced computing resources for research and innovation, and related technology initiatives that enhance infrastructure and academic research capabilities across the university system. Along with these investments into higher education the proposal contains appropriations for K school facilities throughout the state The Ohio Facilities Construction Commission administers the state school building program which provides state support to assist school districts with primary and secondary education facilities The budget includes $600 million for ongoing and new construction and renovation at K-12 school buildings and also includes $3 million for the energy conservation program to reduce costs in state facilities, which is incredibly important due to energy prices continuing to rise. To date, OFCC has administered 44 energy conservation capital projects with an annual savings estimated at about $1.4 million. The average time for a return on investment on these projects is just about seven years. The Department of Rehabilitation and Correction has an inmate population of more than 45,000 across 28 facilities, many of which were built early to mid last century. DRC also funds 18 community-based correctional facilities, which serve as secure residential programs for felony offenders and help divert low-level felons from prison. DRC also operates two halfway houses, which provide transitional supervision and services to offenders as their sentences come to an end. The capital budget provides approximately $246 million to support capital projects in our state and community-based correctional facilities, and this investment enables DRC to maintain existing facilities, keeping staff, inmates, and visitors safe while creating more effective programming spaces and living areas. Our Ohio State Parks were recently named the best system in the nation, receiving the 2025 National Gold Medal Award for Excellence in Park and Recreation Management and a record record number of people have visited our parks across the state in recent years, enjoying the beauty that Ohio has to offer while contributing to our local economies. The capital budget provides the Ohio Department of Natural Resources with a total of $265 million, supporting renovations to lodges, cabins, campgrounds, playgrounds, and enhancing the safety of our communities through dam rehabilitation projects statewide, including the Misskingum River State Park locks and dams from Zanesville to the Ohio River in Marietta. Additionally, funding through this capital budget will support the purchase of approximately 12,000 acres of forest land in southern Ohio, which will expand six existing state forests and two wildlife areas, conserving the land for Ohioans well into the future. Next, the Ohio Department of Developmental Disabilities focuses on ensuring health and safety, supporting access to community participation, and increasing opportunities for meaningful employment for Ohioans with developmental disabilities. The capital budget includes $208 million for crucial infrastructure upgrades at the department's eight developmental centers across the state, which provide residential placement and intensive care for adults and youth with disabilities. The funding will support the construction of a new Columbus Developmental Center for a youth unit at the Southwest Ohio Developmental Center and for various renovation projects at our developmental centers around the state. This investment will provide safe restorative environments for Ohioans with disabilities who reside in our centers. And an additional $25 million is included in the budget to support capital assistance available to all 88 counties for the purchase, construction, and renovation of housing for Ohioans with disabilities in our communities. Finally, this capital budget provides the Department of Administrative Services with 122 million for statewide facility and IT improvements and the multi radio communication system or MARCS Building projects include chiller replacements security upgrades fire system upgrades sanitary drain replacements and more across our state buildings the marks program provides interoperable services to ohio's first responders and public safety providers 15 million is dedicated to infrastructure improvements security upgrades towers and local partnership development efforts to incorporate regional systems into the network and increased tower coverage areas. Mr. Chairman, I am pleased to report that Ohio continues to be well positioned to support the projects included in this capital budget. Approaching the end of the fiscal year, through the end of April, GRF tax receipts are 4.9% above forecast. As I noted earlier, Ohio's AAA credit ratings are top tier and stronger than at any other point in our history, which, of course, is crucial as we consider bond-supported projects. Our annual debt service per capita reached historic lows, and according to our most recent calculation, our projected highest future debt service represents only 2.25% of total estimated revenues, which is well below the 5% constitutional cap. Ohio's economy is strong. and our April state unemployment rate was just 3.9%, which was one full percentage point lower than Ohio's 10-year average. Additionally, our state income tax rate is lower than it's been in more than 40 years, now a flat 2.75%. Ohio's economy and our finances are solid and will support this bill and ongoing state operations. Our state is well managed, our liabilities are low, and our strong leadership and positive returns are recognized. Ohio is a great investment. Mr. Chairman, members of the committee, I appreciate the opportunity to present Governor DeWine's capital improvement budget for fiscal years 27 and 28. I want to thank Governor DeWine and his staff, Lieutenant Governor Trestle, members of the Governor's Cabinet, and especially my team at OBM, who worked tremendously hard for many months to develop this proposal before you today. And I also appreciate, Mr. Chairman, your teams, and the Legislative Services Commission, who worked many long hours in recent days and weeks to put this proposal together for you. It truly has been a team effort. And I also want to, Mr. Chairman, thank you and Chairman Stewart and the past chairs of the finance committees for the fantastic working relationship over the past eight years. This is likely my last appearance before this committee, presenting the governor's fourth capital budget. We have worked together on four operating budgets and a few appropriation acts in between, and I appreciate all of the work of all the committee members, the chairs, the vice chairs, the members of the subcommittees for the operating budget, and all of the subcommittee chairs as well. It really has been fantastic to be able to work with you, and it has been an honor to represent Governor DeWine and the administration before this committee for the past almost eight years. I have enjoyed the partnership and look forward to working together as we finalize this fourth and final capital bill. And with that, Mr. Chairman, I am happy to answer any questions that you and the committee have this afternoon.
Thank you, Director, and thank you for your service to the state over this period of time. We appreciate it.
Thank you.
First question goes to our ranking member.
Thank you, Chair, and thank you, Director, and congratulations. It is no easy feat. over the past eight years to deal with this committee. My first question is, could you just maybe expand upon, for the Ohio Facilities Construction Commission, is how the state determines the $600 million number, and what is that compared to the current need and current backlog or wait list compared to the needs of our school facilities? So what is $600 million compared to the need, and how do we determine that's the number?
Sure. Representative Sweeney, through the chair, we have, the state of Ohio, has had a proud history over the last 25-plus years of dedicating significant dollars in each capital budget to K-12 school facilities. And $600 million is the targeted amount. It is actually embedded into our statute, and that is the amount that we have consistently applied. The state is working through the list of all school buildings, and we work through the list in reverse order of wealth, so essentially serving the lowest wealth districts first, and we have been doing that again for many years. We have some additional programs that when school districts have exceptional needs, they can come to OFCC for additional assistance. And we have, again, had a very strong record of working through the districts in that order. and look forward to this $600 million allowing us, I say us because I am the chair of OSCC, to continue working through that list and offering state funding to the next group of districts in priority order.
A follow-up, Chair. Thank you. So just so I'm understanding, are you saying that $600 is prescribed, that would you be able to increase that? We do it by a set dollar amount. Is that what you're saying?
Representative Sweeney, through Chairman Davila, we have, there is a statute that requires that each capital budget that we introduce includes $600 million. I think it actually says $300 million per fiscal year. And so, yes, that has been our consistent, dedicated amount of funding over many years. And we support that and want to continue to provide those dollars, again, as we continue to work through all of the school districts statewide. You know, when we look at the capital budget, it is bond funded, supported by debt issuances. And so it's always a balance when you look at what are the needs versus what's the capacity. and I would point out that K-12 school districts at $600 million is the largest allocation of capital dollars in this and in previous capital budgets, so it is
always the highest priority. Follow-up, please. Yes, proceed.
Thank you, Chair. Thank you for that. If you don't have the information today, if you can follow-up, just specifically if there is a, of that list, how if we keep doing $600 million at one point, is it even gonna be in our lifetime compared to the need? If we've been at $600 million consistently for years, to me it seems very clear, you not keeping up with inflation And of course this is a split responsibility to our locals One of the biggest chunks of our property taxes is on the locals going to the ballot to pay for that other piece The last question I have is just within DAS, and of course, correct me if I'm wrong, we were just looking today to see compared to what the agencies were requesting compared to what ended up in this budget, and it seems by and large pretty consistent. One of the biggest gaps was from DAS through the Administrative Building Fund. I think overall they were requesting the Department 290, and we gave 120. Do you have answers to what that gap is, what was being requested, and what that decision was to not go forward with that?
Representative Sweeney, through the chair, a large portion of that gap was for information technology projects. Ohio has from time to time in the past used capital dollars to support IT projects, but more and more IT projects have been less of an infrastructure and kind of site-based, you know, server room, state-owned equipment-focused set of projects, and they have become more operational, fee-for-service. We've moved a lot to the cloud. which is not state-owned infrastructure. And so we have, over the past several capital budgets, moved to provide less bond debt-funded to IT projects for that purpose. IT projects also turn over much more quickly. And so when we issue bonds, we usually issue bonds for 18 years. You know, somewhere between 15 and 18 years is kind of a typical time horizon on a bond issuance, and there are very few IT projects that really last that length of time or even kind of the minimum 10 years that we look at. So we are going to continue working with DAS on how we shift the IT needs to more short-term operational funding over the upcoming budgets, and we've been consistently doing that with them as well. But you do point out something that has been an evolution over the past several years. Yep.
Representative Pickle Antonio.
Thank you, Chair. Thank you, Director, for your service to the state. Thank you for the hours that you and your staff have spent working on this and to all of the state agencies who have spent immeasurable time working to put this together. Um, the question that I have for you is really just about the certainty of the predictions. So we learned last week or the week before that, um, predictions related to sales tax exemption for data centers were wildly under predicted in amounts. I think by the tune of 11 times, how can we, I guess, what certainty can you give us about these numbers, given just how out of balance those predictions were?
To the representative, through the chair, I would say that the data center estimate in the last tax expenditure report, When the Department of Taxation put that together it was really an evolving space There has been significant additional capital investments in the data center space over recent years And I believe the last year of actual data that they had to base the estimate in the tax expenditure report was from 2022. So that is a challenge as we work with the Department of Taxation to forecast those kinds of expenditures. What I'll say is on the tax revenue side, we have been very successful in projecting our revenue position. And in fact, we have in all but I think one of the years that during the DeWine administration, we have exceeded estimates significantly. And we had one year where we were more kind of more on target, I would say we like to be in a space where we are projecting conservatively. And so our revenue estimates, then when we look at the actuals, we exceed them. Right now, we're about 5% above estimate. And what I can tell you is as we project the funds to support the capital budget, we are issuing bonds. And so we know that when we go to the bond market, we will, especially given our very strong credit ratings, be able to achieve the debt sales and execute such that we generate the cash to support this for our bond funds. So I am not concerned about the state's fiscal position at all. As I noted in my testimony, The state's fiscal position has never been stronger, and that is evidenced by our external assessment, which is the state credit rating. So we're in a very strong position and absolutely can support this budget.
Follow-up, Chair?
Yes, please proceed.
Thank you. I guess, can you maybe explain how the tax expenditures factor into your evaluation of the state of our budget? And are there other tax expenditures that you have any concern about being, I don't, of all of the tax expenditures that exist, Are there other ones that are newer, like the data center exemption, where you are concerned that the predictions might be out of balance from the actual?
Representative, through the chair, the pursuant to the revised code, the Department of Taxation compiles the tax expenditure report in advance of each budget for inclusion in our blue book that we submit to the General Assembly. What I would say is when OBM and working together with the Department of Taxation and based on economic forecasts, when we project our revenues, we're not really reliant on the tax expenditure report as much as we are reliant on economic forecasts from our advisors. And we look at variables largely driven by things like state personal income, forecasted unemployment rates, you know, on the sales tax side, it's also highly reliant on personal income. And so those are some of the main variables that we look at in forecasting the budget and the dollars that are available And like I said we have in most cases been able to exceed estimates Right now we running about a billion dollars above estimate through the end of April. So it is always kind of an art as much as a science when you're forecasting revenues and you're trying to predict what the future might hold from the global and national and then state economy. So it is a challenge that we meet every two years. I'm really proud of my team's work on this front over the last four budgets and in the last eight years and commit to continuing to project revenues that are consistently conservative and that will support the state of Ohio's tremendous success that we've achieved so far.
I have one more follow up.
Just one more.
Thank you. This is a quick one. Can you just talk a little bit about how the total dollar amount for this capital budget compares to prior years?
Sure. The current capital budget is about three point six nine billion dollars. It's fairly similar to the last capital budget, except for the last capital budget did have an additional $700 million in that one-time strategic opportunities fund, which made it slightly larger. So this is more in line with what I would call a traditional budget. we have increased the capital budget in recent years as we've been able to support it through our state's economic success so that we're able to address priorities and not just focus on renovations, but we're able to do additional new projects like the proposed rebuild of the Columbus Developmental Center for our Ohioans with disabilities and like the new Dayton Behavioral Health Hospital that's getting underway. We're able to fund projects like that in the bill because of our state's strong financial position.
Vice Chairman Plummer. Thanks, Chair. Thanks, Director. It's been a pleasure working with you through the past eight years. You've always been very nice. I'm sure we drove you crazy a time ago. New jail construction, is that in this budget and what bucket would it come out of
and how much is it? Do you know? Representative Plummer, through the Chair, This budget does not have an allocation to support local jails. It has funding for the Department of Rehabilitation and Correction in our statewide prison system, as well as our community correctional facilities, but there is not an allocation for local jails.
Follow up?
Yes, please.
And then why is public safety so low? It seems very low on here. What's that issue about?
Sure. Representative Plummer through Chairman Davila, the Department of Public Safety, there's funding in the budget to support ongoing renovations at their Shipley facility and at highway patrol stations around the state. It's kind of a typical level of funding for the Department of Public Safety. They're not a highly capital-focused agency like some of our other agencies which run institutions like DRC and Behavioral Health and DYS. So they're not really a capital-focused agency. They're more of an operating budget-focused agency. Representative Troy.
Okay. Thank you, Mr. Chairman, and thank you, Director, and my compliments, too, on you commanding the ship for the last eight years. Thank you. I'm hoping that there's some money in this bill for elevators over at the Reif Center. But, you know, you indicated here that, you know, you're comfortable that Ohio's economy and finances are solid and will support this bill. you mentioned that we are at this historic low of a 2.75% state income tax. Do you feel that any further erosion of that particular rate downward might complicate our ability to monitor the debt service required on a lot of these projects?
The representative, through the chair, we have a very balanced system of general fund revenues. The personal income tax supports about a third of our general fund budget, and sales taxes, both the non-auto and the auto sales tax, are the largest slice of revenue for the state general fund, which then again supports our bonds. I would assert that Ohio has a strong, balanced, current system of taxation, and I think that our model is working really well.
Mr. Chairman.
Yes, proceed.
Just to follow up on that. So you mentioned how you calculate in your discussions the tax expenditures, and having now served in this position now in your eighth year, Do you feel that maybe the General Assembly or the state is maybe overdue in taking a real hard look at a lot of those tax expenditures? They may have been put in place 40, 50 years ago. They might not be relevant today. I mean, you're feeling on maybe just a comprehensive review and see, because obviously those impact the revenue that you obviously depend upon to prepare these budgets.
The representative, through the chair, each budget, we encourage a thorough review of the tax expenditures. I'll also point out that in most cases, tax expenditures don't come to pass unless the economic activity that they're based on comes to pass. So when we look at something like the recent data center tax expenditure, that increased tax expenditure occurred because there was significant increased capital investment. So I think we need to keep that in mind that there are, you know, it's not just a tax expenditure. It is because tremendous amounts of additional economic activity occurred, which, you know, is a positive overall for the state's economy. So, but to your point about examining tax expenditures, I think that is exactly why we produce, in working with the Department of Taxation, both a biennial budget with a revenue forecast, but also a separate detailed analysis of all of the existing tax expenditures And of course would recommend that that data be thoroughly analyzed by the next finance committee and the next biennial budget
Thank you very much.
Further questions? Representative White.
Thank you so much for all of the detail and all the willingness to answer all our questions in and out of this committee. But I did want to ask you through the chair and director, when you looked at the projections of our revenue, 4.39% or whatever, and I apologize if I missed this, but what do you attribute that to since we lowered state taxes? What do you attribute it to and what do you project for the rest of this calendar year based on what you're seeing in the revenues?
Yeah, great question. As we, when we look at the projections for the state budget, again, I talked about some of the variables that are important. When we look at the current overage, and especially in the general fund, the personal income tax has been the largest driver of our current overage, that billion dollars that I mentioned earlier. About 58% of that is driven just by the personal income tax. And so when we look at that, almost half of that variance on personal income tax receipts is driven by non-wage income and the filing of returns on the non-wage income in April. That was largely the result of investment earnings in the stock market during tax year 25. So when we see the revenues come in in April and kind of all across the spring, it really is a look back to economic activity that happened in the previous calendar year, the previous tax year. And so I would recommend that we look at that overage kind of as one-time money because we don't know for sure that those elevated stock market returns that drove much of that personal income tax revenue will continue in the upcoming years. And so that is why OBM budgets very conservatively. And then when we see those kinds of revenues come in, we want to address them very conservatively.
Follow up, please. Thank you, Chair. Thank you, Director. So then when you look at the sales tax, because there's a lot of theories going around about taxes in this state, what is the sales tax contribution to our revenues being up? And with the lower income tax, personal income tax, wage-based, are you in fact seeing more spending and more sales tax?
Yeah, so Representative White through the chair, we are seeing that sales taxes are above forecast they about five and a half 5 above forecast through April up about million just in April and $296 million through the end of April, kind of year-to-date. But that compares to personal income tax receipts that were almost $700 million above. So really the overage is driven a lot by personal income tax, but sales taxes are also performing quite well. I will point out that sales taxes, of course, are based on purchase price, and so when we are in high inflationary environments, that can drive additional state sales tax receipts. So we look at these kind of environments with that in mind as well. And of course, as inflation comes down, we expect that to come back to more in line with recent trends. And that is exactly what we saw post-pandemic. We saw really surges in both, especially in sales taxes, and we saw that come back to normal growth rates when inflation kind of subsided after that. So again, that is why we budget very conservatively, and when we look at a surplus, a revenue surplus in the general fund, we like to treat those as one-time dollars and use them for one-time expenses, not for recurring new programs by and large. So those are some of the things. I know that since you've been on the committee, you've heard me talk about using one-time dollars for one-time expenses. And I even mentioned in my testimony today one of the things that we did when we saw those surges in revenues in past years was use them to cash fund a previous capital budget. And that has provided tremendous return on investment and has put us in this strong financial position that we are today. So I would assert that that was one of the fantastic decisions that this committee and in partnership with our partners in the Senate and the administration that we made a few years ago and would be something that we would be happy to look at again, of course. Representative Hu.
Thank you, Mr. Chairman. Thank you, Director, for your years of service here. And because of your experience, and you mentioned this maybe your last time in front of this group, I know there's been talk about you mentioned the income tax and how we've continued to decrease it. Or there's groups out there and members who have talked about, including myself, of eliminating the income tax in the future. Where do you see the state as far as if we eliminate that? Because we have to balance our budget. So do you feel, just through your experience, that if we would lower the income tax, would that generate dollars somewhere else, like sales tax, would it bring in more people to the state? I guess, and this is more of a future thing, because this will affect a capital budget in the future too. So what are your thoughts on eliminating the income tax completely and what do we need to look out for in the future Sure
Representative Hoops, through the chair, even at our very low rate that we're now at 2.75%, the personal income tax still generates about a third of our general fund revenue. It's over $10 billion per year. that is comparable even more than funding for things like primary and secondary education, higher education. So when you look at completely eliminating a major revenue source, I think you need to think about what are the priorities that that revenue source supports. Right now, this is the first year that we are at the flat 2.75% rate. I believe that that is the second lowest flat rate in the nation, and so we have a very competitive environment. As our administration talks with businesses and people, the personal income tax, it used to be one of the major factors that kind of discouraged businesses from locating in Ohio. That's really no longer the case. We have worked together with the committee over this administration and the previous administration to get to that 2.75% low rate. And so I think we are quite competitive, and that provides a very balanced revenue portfolio for the state and for budgets like this to rely upon. Of course, if you are looking to completely eliminate a source of revenue, you would have to look at doing that probably very slowly in stages. I know that some other states, as I've talked to budget directors around the country, some states, when they have looked at doing that, they've put in triggers in law that bring it down over some number of years as certain performance indicators are achieved. And so, you know, this will not be me presenting the next operating budget to you, but as you work with future OBM directors and future finance committees, I would say those are all some things to keep in mind. But Ohio, we used to be in a position where we were a state that had a portfolio of taxes that were not encouraging to business location. And thankfully, through a lot of hard work over many years, that's no longer the case. And we are seeing some tremendous economic projects come to the state. And that is fueling the growth that we are seeing that support budgets like this.
Thank you.
Of course. Thank you, Director, very much for your testimony.
Thank you.
Thanks again for your service. That will conclude the first informal hearing on House Bill 959 and seeing no further business to come before the committee. We stand adjourned.