My spouse is a military dependa who has never resided in my home of record state, when i file jointly with her my Ohio state refund goes down. Is that supposed to happen?

Assuming Ohio is your HOR and you are stationed outside OH: When you  file a joint OH return, you indicate that she is a non resident and you are a full year resident.

Ohio does a convoluted tax calculation for non-residents/part year residents. It calculates tax on total income, then it calculates a non resident/part year resident credit, which it subtracts from the tax it calculated on the total income. The credit is calculated as your non-Ohio income divided by Total adjusted Income multiplied by the total tax. TurboTax (TT)   does this by allocating your income as either Ohio or non-Ohio. W-2 income will be allocated by the state name abbreviation shown in box 15 of your W-2. TT will ask you, item by item, in the state section, how much of your other income is Ohio or non-Ohio income. Make sure that her non-Ohio wages show XX (Other state postal abbreviation)  in box 15 of her W-2 screen, with the XX state amount in box 16.