Gov. Mike DeWine sided with public schools, libraries and local governments as he vetoed several high-profile items from the state budget early Tuesday morning.

DeWine also blocked a measure that would have potentially kicked babies off of the state’s Medicaid rolls by ending a DeWine-backed policy that ensured all newborn children deemed eligible for the program stay covered until they turn four years old.

The Republican governor announced the vetoes as he signed the two-year, $100 billion spending bill that funds basic state operations. The state legislature, where Republicans hold supermajorities in both the House and Senate, can override DeWine’s vetoes. Doing so requires support from 60% of the members in both chambers.

Republican legislative leaders issued statements Tuesday signaling they may try to overturn DeWine’s property tax related issues. Senate President Rob McColley and Sen. Jerry Cirino, a top Senate Republican, called DeWine’s moves “puzzling.”

“These are kitchen table issues that hardworking families understand, and the General Assembly needs to strongly consider acting on their behalf to implement these vital changes that would return the property tax system to its cost controlled guardrails as originally intended,” McColley and Cirino said.

The governor left untouched some high-profile legislative priorities tucked into the budget, including a tax cut for Ohio’s top 21% of earners and $600 million in state funding to help the Cleveland Browns build a new domed stadium in Brook Park.

DeWine explained his vetoes, which numbered 67 in total, in written messages that his office announced at 2:11 a.m. Tuesday. He and Lt. Gov. Jim Tressel also held an extended press conference at 10 a.m. Tuesday morning to go over the hundreds of fiscal and policy changes inside the 3,156-page final bill.

Property taxes related to school funding 

One major batch of DeWine vetoes reversed laws Republican state legislators passed that were meant to lower property taxes. These would have come at the expense of local governments, particularly public school districts, which get the bulk of their funding from local property tax levies. Republican lawmakers touted the laws as giving relief to property owners who absorbed huge tax increases due to the historically large increase in property values that has occurred this decade.

The most sweeping veto nixed a new “carryover cap” provision that said school districts couldn’t accumulate cash reserves that exceeded 40% of their annual operating budget. School districts would have to return anything more than 40% to local property owners via automatic tax reductions. The measure was a top priority for Republicans. GOP lawmakers billed it as an immediate multi-billion-dollar tax cut – estimated to be worth in total as much as $2.17 billion. School district officials were designing plans to circumvent it by taking advantage of an exemption for money set aside in a special fund for building maintenance and construction projects.  

DeWine also killed measures that would have:

• Eliminated “replacement” levies, a type of property tax levy that typically results in tax increases but is distinct from an “increase” levy
• Tightened the conditions under which schools can receive larger funding increases tied to existing levies when property values rise, via a tweak to the state’s property tax formula
• Allowed county budget commissions, a panel consisting of the county prosecutor, auditor and treasurer, to unilaterally reduce tax rates when they felt doing so was “reasonably necessary or prudent to avoid unnecessary, excessive, or unneeded property tax collections”

DeWine echoed arguments from local government officials, school officials and teachers’ unions while explaining these vetoes. 

He said the new carryover cap would lead schools to make more frequent levy requests, prompting “levy fatigue” from voters.

“While the intention to save taxpayer dollars is understandable, this item would significantly limit the amount of funding that school districts can carry over year-to-year, resulting in more districts asking taxpayers to pass levies more often, which could very well exacerbate property tax increases instead of reducing them,” DeWine wrote. 

DeWine said that he would form a commission of administration officials, school officials, lawmakers and property tax experts to study possible property tax reforms “to ensure this critical topic is given the attention deserved.” This would add to the years of study the issue has gotten from the legislature that following the governor’s vetoes, still has yet to result in any major reform.

“I’m not going to go through each one of them, but I think that, collectively, they create a problem for the schools,” he told reporters.

The governor chopped a couple more education-related provisions from the budget. One would have required candidates for local school boards to run as Republicans or Democrats or with another political party label. He said doing so would discourage candidates who didn’t want to publicly identify with a party. 

He also vetoed a provision that would set aside $35.1 million for parents to help pay to send their children to attend religious private schools not affiliated with charter or public schools.

There’s “no accountability” for these dollars under the proposal, DeWine said when asked about the veto, as opposed to public or charter schools.

DeWine wants library adult-related material left alone

In addition, DeWine gave a win to public libraries by vetoing budget language that would have required libraries to place “material related to sexual orientation or gender identity or expression” in a special, cordoned-off section that’s not “primarily open to the view of minors.”

Libraries had urged the governor to veto the provision. They called it a form of censorship that would be expensive and potentially legally risky to implement.

The governor is a major library supporter who at times in his political career also has taken steps that were sympathetic to LGBTQ+ people. He wrote that the state’s existing obscenity laws were adequate to protect children.

“I think as parents or grandparents, no one wants their child to have a book or something that is inappropriate or obscene,” he said. “But I just felt that the language simply just did not work.”

DeWine vetoed a anti-trasngender measure dealing with children. He nixed language that would have forbidden homeless shelters from “promoting or affirming” transgender minors’ gender identities. DeWine said the provision would have limited shelters’ ability to get needy children off the streets. 

“We want homeless shelters to be open for everyone that’s coming in,” he said during his press conference Tuesday morning.

The governor kept other anti-transgender language in the budget, though, such as a measure that declared it official state policy to recognize the traditional male and female gender binary. He also left alone a measure that forbids medical providers from billing Medicaid for mental health care that affirms transgender people’s gender identities. 

Medicaid-eligible babies

One of DeWine’s vetoes preserved a measure passed in the last state budget bill two years ago. It automatically keeps children – ages three and younger already enrolled in Medicaid – covered until their fourth birthday. Medicaid is the health insurance program for the poor and disabled run by the state and federal government, and state officials currently perform annual eligibility checks on all recipients that can lead to disenrollments.

Lawmakers had decided to end “continuous enrollment” as part of a larger push to reduce the massive program’s costs. Children’s advocates sharply criticized the change, since it would have caused some babies and young mothers to lose health care coverage if families failed to comply with paperwork requirements.

In his veto message, DeWine said continuous enrollment reduces the state’s administrative burden and called it a “pro-life” policy.

“Access to needed healthcare for babies and young children is critical to early childhood development, and continuous health insurance coverage will help ensure children receive preventative care, ongoing care for chronic conditions, and hospitalization or emergency care,” he said. 

Data centers keep tax break

For about a decade, Ohio has given data centers owned by technology-sector players sales tax breaks worth hundreds of millions of dollars. The public subsidization came despite low employment at the facilities after construction and despite their enormous demand for electricity, which is on track to outpace supply.

The Senate proposed ending the tax break outright on new builds. Legislative analysts estimated this would mean $20 million in new taxes from the owners, although the figure doesn’t track with the estimated $127 million the tax break costs Ohio this year. 

DeWine said Ohio’s tax structure has been key to attracting tech and artificial intelligence companies to the state. 

Speaking to reporters, he said the data centers, even when they’re not major employers, attract other businesses here. Plus, he said data center businesses pay “significant” property tax dollars that support local schools. He didn’t mention, however, a common practice of local governments that lessens the money districts gain. That happens when local governments offer 75% to 100% tax abatements to such facilities lasting between 10 and 30 years.

“If we want Ohio to move forward, we have to move with history,” he said. “We cannot be behind history, we have to be with … the flow. And the flow is that data centers are important, and they’re important to our future.”

Newspapers keep a tax break

Along with the data centers, the budget would have hiked taxes on newspaper subscriptions and inputs used to create ad inserts. 

Lawmakers framed it as ending a longstanding tax break to make a fairer tax code and help pay for an income tax cut for the wealthy within the budget. However, the proposal came amid a broader political environment in which the right regularly attacks the press and congressional Republicans are seeking to defund public media. 

DeWine called the tax hike unnecessary and said it will “reduce civil discourse” in the state. 

“Newspapers serve a critical role in our society to inform the public about important issues, allow for civic engagement and discourse, and help bolster local communities,” he said. 

Stopping raids on account interest

To help pay for income tax cuts, lawmakers executed a macro-level hunt for stray coins lost in the couch cushions. This included transfers from certain accounts set for special purposes into the state’s general fund and sweeps of interest in certain accounts into the general fund. 

Of the cash transfers, DeWine blocked: 

• $2.5 million per fiscal year from the Information Technology Fund
• $20 million from the Pre-Securitization Tobacco Payments Fund 
• $5 million per fiscal year from the Human Services Project Fund 

He also stopped lawmakers from sweeping interest on principal into the general fund from several accounts. Most of the accounts are known only to bureaucrats but help pay for things like erecting state buildings, Ohio’s tobacco-quit hotline, schools, brownfield remediation and health care.  

A previous version of this story incorrectly stated continuous Medicaid enrollment also extended to mothers.