Ohio Bankers League

04/02/2025 | Press release | Distributed by Public on 04/02/2025 12:06

Ohio State Operating Budget Season is Here: What You Need to Know

Overview

The Ohio State Operating Budget touches nearly every aspect of state government and sets the tax and spend policy for the next two fiscal years. In e very odd-numbered year, which are also non-election years for state offices, the Ohio General Assembly is constitutionally required to pass a bill containing the next State Operating Budget before July 1 when the next fiscal year begins. The Budget bill is the largest and most important piece of legislation that will be passed in any two-year General Assembly .

The Budget pro c ess beings with the Governor introduc ing his propo s ed budget detailing the perspective of his office and the agencies that report to him. The Ohio House then uses that as a starting point and the House Finance Chair introduces a bill containing the Governor's version of the budget which, this General Assembly is House Bill 96 (HB 96) .

After initial public hearings on the bill in House Committees, and primarily the Finance Committee, which is the lead on the budget process, all members of the House can submit language for amendments to the bill to help craft it further with what their policy priorities . After significant deliberations on the submitted amendments , the Finance Committee then releases their version of the Budget in a substitute bill containing all the amendments that the House leadership, their policy team, and the F inance Chair have approved .

This is where the current process stands . Yesterday, t he House introduced Substitute House Bill 96 with amendments, and there has already been a flurry of changes. Roughly 3,000 amendments were submitted for consideration for the budget, which translates to about 30 amendments per State Representative in the House. There will be heavy debate on these amendments or lack thereof over the coming weeks as the House finalizes its version of the budget in HB 96 and votes it out, sending it over to the Ohio Senate for their turn to work on the bill.

Are Banks Affected in the Budget?

As the largest piece of legislation touching almost everything under the sun in state government, there is almost certainly language in the bill that would affect banks in some shape or form . While the main headlines currently surrounding the budget are related to the debates around education funding, "sin tax" hikes on things like sports gambling and marijuana, as well as a potential public funding for a new Cleveland Browns stadium, h ere are some of the items in HB 96 that we are tracking that touch the banking industry :

Treasurer of State (TOS)

As a major state executive government agency, funding for TOS and underlying departments is a large component of the budget. On top of that, as mentioned earlier, some non-budgetary policy language is cur r ently included in the bill including the following :

  • Environment, Social & Governance (ESG) refers to a set of standards used to measure an organization's environmental and social impact. This is a very politically charged topic where typically left-leaning individuals and firms support it while the right-leaning side opposes. It is incredibly complex, as different levels of government may issue varying regulatory policies surrounding ESG. This can make it very difficult for business to comply, especially if these policies are regularly changing .

  • An amendment was added to HB 96 that reiterates the fiduciary duty of government entities including the Treasurer and local governments to not make investment or deposit decisions with the primary purpose of influencing any environmental, social, personal, or ideological policy.

  • The way the language is crafted, the obligation is on the individual making the investment decisions, not on the financial institution. Additionally, this language is similar to the Treasurer of State's investment policy that is already in place and has similar prohibitions. That investment policy can be found HERE with the relevant information at the top of page 14. There are no express penalties , no lists, and no readily apparent major red flags that we have seen in other states so far.

Ohio Housing Trust Fund F ees

An amendment to the budget included in the House removes the requirement that the designated share of Low- and Moderate-income Housing Trust Fund fees collected by county recorders be deposited into the Ohio Housing Trust Fund. It also would require that counties use Low- and Moderate-Income Housing Trust Fund fees for purposes determined by the department of development. T hi s change would s hift revenue credited to Housing Trust Fund to the counties in which the fees were collected. OBL is still working through the impact of this change, but this seems to be in response to some longstanding complaints that certain areas of the state continue to pay into the Ohio Housing Trust Fund but do not see the benefit of the projects or expenditures from the fund.

Earned Wage Access (EWA)

Earned Wage Access (EWA), also known as on-demand pay, allows employees to access a portion of their earned wages before their scheduled payday, providing financial flexibility and potentially reducing reliance on payday loans or credit cards. In most cases, this is an employer-provided benefit provided to employees through a contract with EWA companies.

  • This is a case where a standalone bill ( HB 152 ) working its way through the legislative process and committee hearings gets lumped into another, larger bill as an amendment.

  • The bipartisan authors of this bill, Reps. Josh Williams (R-Toledo) and Terrence Upchurch (D-Cleveland), emphasize that EWA is not considered "payday lending" as these payments are not a loan or entail interest payments. Instead, there is typically a flat fee and with some vendors a cap on the amount an employee can receive through this program.

  • HB 152 language included in the budget bill HB 96 would authorize the Ohio Department of Financial Institutions (ODFI) to create a regulatory framework for EWA where there currently is none. The intent is this would allow the state to regulate out EWA companies who are bad actors that may for example charge an exorbitant fee for an EWA withdrawal.

There has been growing emphasis in the state legislature in recent years on improving financial literacy through education , and the budget retools that approach with a focus from other areas of state government . There are a handful of related provisions in HB 96 affecting the funding mechanism and banks for the Financial Literacy Education Fund administered by the Department of Commerce :

  • HB 96 kept the Governor's proposal that removes the requirement that the Office of Budget and Management (OBM) Director transfer 5% of the charges, penalties, and forfeitures paid to the Superintendent of Financial Institutions by check-cashing lenders, small loan licensees, mortgage brokers, loan officers, and certain other entities regulated by the Superintendent from the Consumer Finance Fund (Fund 5530) to the Financial Literacy Education Fund (Fund 5FW0).

  • It also removes the requirement that the Department of Commerce Director adopt a rule requiring at least 50% of the Financial Literacy Education programs be offered at public community colleges or state institutions.

  • It also r emoves a requirement that the Department of Commerce Director provide an annual report to the Governor and the House and Senate outlining each financial literacy education program developed or implemented, the number of individuals educated by the program and accounting for all funds distributed.

  • Fiscal effect: Potentially reduces the amount of cash transfers to the Consumer Finance Fund ( Fund 5FW0 ) and costs for administering the Financial Literacy Education Program.

OBL Staff is currently combing through the nearly 4,500 pages of legislative language in HB 96, and there are likely other changes we will discover and report on in the coming weeks. The bill is still far from the finish line in the budget cycle, but here is where things will start to pick up speed as the legislature approaches the June 31 deadline.

In the meantime, if you have any feedback on the above provisions we are tracking, please contact OBL VP of State Government Relations and General Counsel Don Boyd at dboyd@ohiobankersleague.com and OBL Manager of Government Relations Anthony Lagunzad at alagunzad@ohiobankersleague.com .