The Ohio Senate unveiled a number of amendments to the House’s proposed the biennial state budget that included flattening the state income tax, potential property tax relief and helping the Cleveland Browns finance a new stadium in suburban Brook Park.
The GOP-majority Senate Finance Committee’s measure would flatten the state income tax, moving ti from a two-tier model to a flat rate for all Ohio taxpayers at 2.75% by tax year 2026. according to Ohio Legislative Service Commission (LSC) estimates, the change would immediately save Ohioans earning more than six figures, while costing Ohio more than $1 billion.
Senate President Rob McColley (R-Napoleon) told the Statehouse News Bureau LSC estimates don’t take into account positive effects of reducing tax burdens for high earners.
“States that have a flat income tax or no income tax are seeing much more economic growth than the state of Ohio and some other states are, and it’s not just warm weather states, it’s states across the country,” McColley told the website Tuesday.
Former President Ronald Reagan touted so-called “trickle down” economics in the 1980s, but that theory has largely been debunked, including a 2024 study by the London School of Economics and Political Science.
“Based on our research, we would argue that the economic rationale for keeping taxes on the rich low is weak,” Julian Limberg, a co-author of the study and a lecturer in public policy at King’s College London, said in an email to CBS MoneyWatch. “In fact, if we look back into history, the period with the highest taxes on the rich — the postwar period — was also a period with high economic growth and low unemployment.”
The House property tax amendment would create a ceiling on school districts’ cash reserves, which House Speaker Matt Huffman (R-Lima) said it would bring “much-needed” property tax relief.Under the proposal, if a district carryover balance exceeds 30% of cash on hand, county budget commissions would lower property taxes the following tax year. The Senate modification would raise that to 50% and add overflow allowance so districts could reserve an amount of money for certain ongoing and future construction, though that overflow must be used within three years. Bowling Green School District broke ground for a new high school May 1 after taxpayers approved a construction levy last year.
The Senate amendments also change course for funding of a domed stadium for the Cleveland Browns. Under the House plan, the state would issue $600 million in state bonds, but the Senate changed direction.
According to Senate Finance Committee Chair Jerry Cirino, a Lake County Republican, under the Senate plan, $1.7 billion would be taken from the state’s $4.8 billion unclaimed property fund to create a state Sports and Culture Facility Fund. From that, the Browns would be loaned $600 million in cash as a “performance grant,” state Sen. Jerry Cirino (R-Kirtland) said during a press conference at the Ohio Statehouse.
Cirino said the load would be paid back over 16 years through tax revenues generated by the stadium and related development.
“For each of those 16 years, we outlined the incremental taxes that the new stadium and mixed-use development would provide to the state,” Cirino said at the press conference. “Through income taxes, sales tax and CAT (commercial activity tax).”
While Cirino called the plan “a forward-thinking plan that acknowledges the economic impact professional sports has on our communities,” but economist J.C. Bradbury of Georgia’s Kennesaw State University offered a much different opinion to The Center Square.
“This is not free money,” he told the website. “It has to come from other priorities or out of taxpayers’ pockets. This isn’t forward-thinking, it’s willful ignorance. This is an F answer in Econ 101.”
Commissioners from Cuyahoga County, where the new stadium would be located, called the Senate funding plan “economic piracy” and the Akron Beacon Journal published an editorial admonishing Browns’ owner Jimmy Haslam for seeking public funding for the project.