Before breaking for its summer recess, the General Assembly this week approved, and Gov. Mike DeWine signed, a $74.1 billion, two-year state operating budget (House Bill 110). This compares to roughly $70 billion in general-fund spending under the previous two-year budget. The 3,300-page measure received strong bipartisan support, with an 84-13 vote in the House and a 32-1 vote in the Senate. Among the highlights and key provisions impacting manufacturers are the following:

• Elimination of Ohio’s sales tax on employment services used by businesses to hire employees. Repeal of this tax has been a longtime priority for Ohio manufacturers. The provision will save employers an estimated $303 million over the biennium. It’s one of the most beneficial pieces of tax reform since the landmark reforms of 2005, when Ohio eliminated the tangible personal property tax and corporate franchise tax. (Read the OMA’s statement.)
• Invests significant funding in Ohio’s workforce development. This includes $5 million in grants for Ohio’s industry sector partnerships, $25 million for Ohio’s innovative TechCred program, and additional support payments to public schools whose students earn industry-recognized credentials. (See separate story.)
• Settles the municipal income tax withholdings question for 2021. The budget extends through the end of this year the temporary law that allows municipal income tax withholdings to be based on an employee’s principal work location, not where he/she has worked remotely during the pandemic. Employees who worked remotely will be able to file for refunds for the 2021 tax year. (Read this summary by OMA Connections Partner Vorys for more details.) During the early days of the pandemic, the OMA worked with members to allow the continuation of withholding from a principal place of business — and throughout the past year, the OMA Tax Committee and staff have worked with the legislature to find an administratively acceptable solution.

Regarding the pro-manufacturing provisions in the budget, OMA President Ryan Augsburger said: “Manufacturers thank Ohio’s policymakers for adopting a responsible and balanced budget, while at the same time focusing on strategic investments to propel the state’s predominant industry.” The governor vetoed 14 items from the budget, but none impacted OMA priorities. (See separate story.) To compare the House and Senate versions of the budget to the final product, the Ohio Legislative Service Commission has published this comparison document and spreadsheet. For more details regarding budget provisions that are important to manufacturers, see separate stories elsewhere in this Leadership Briefing, as well as this updated memo from the OMA Public Policy Services team. 7/1/2021