Mahoning Valley officials are concerned about the governor’s proposed sales tax increase

February 3, 2015 at 12:05a.m.

YOUNGSTOWN

After Mahoning County struggled to get a 0.75 percent sales tax approved by voters, Commissioner David Ditzler said he’s “almost shocked” that Gov. John Kasich wants to increase the state’s sales tax by 0.5 percent and apply it to more services.

“Is he going to put it on the ballot?” Ditzler, a Democrat, sarcastically asked about the Republican governor.

State sales-tax increases need only the approval of the General Assembly.

The county’s sales tax increased by 0.25 percent — the tax measure approved by voters was for a 0.5 percent renewal and a 0.25 percent additional — on April 1. If the state Legislature approves Kasich’s proposal, those buying taxable items in Mahoning County will pay 7.75 percent sales tax.

That’s 6.25 percent from the state, 1.25 percent from the county and 0.25 percent from the Western Reserve Transit Authority.

“The reaction from voters will be to vote against city and school levies because of the sales tax increasing,” Ditzler said. “To impose a 0.5 percent and put local governments in jeopardy is wrong.”

Overall, Kasich said his budget reduces the state tax burden by $523 million. His proposal reduces income-tax rates by 23 percent over the next two years, and brings the state’s maximum personal income tax rate to 4.1 percent from 5.9 percent when Kasich took office in January 2007. It also virtually eliminates state income taxes on businesses with gross annual receipts of less than $2 million.

The state’s two-year budget, starting July 1, would be $72.3 billion — about $10 billion more than the current two-year budget.

The state increased and expanded the sales tax in September 2013 by 0.25 percent.

“No one said boo when it happened before, and I expect this one to go under the radar, too,” said Youngstown Mayor John A. McNally, a Democrat. “And the county had to struggle to increase the sales tax. Kasich is pushing a mantra of consumption tax.”

The sales-tax increase proposed Monday by Kasich would raise about $2.5 billion over the next two years and expand to such services as cable television and parking.

“The last thing Ohioans need is another increase in the state sales tax,” said Senate Minority Leader Joe Schiavoni of Boardman, D-33rd. “Instead of raising taxes on everyone to benefit a few, the governor should have proposed meaningful investments in education and local communities.”

Kasich’s proposal also includes a 6.5 percent tax on fracking, but a request two years ago to increase that tax went nowhere in the Republican-controlled Legislature.

The governor’s proposal includes adding $375 million to the state’s rainy-day fund, which is already about $1.5 billion.

Local officials say major reductions in the Local Government Fund are largely responsible for that surplus.

The LGF amounts were cut by 50 percent.

In his proposed budget, there’s a 1.9 percent increase in the upcoming state fiscal year, starting July 1, in the LGF, and a 1.7 percent increase starting July 2017.

“That’s a small victory for us,” McNally said. “Republican legislators are getting pounded by their local government leaders about the cuts.”

Kasich’s proposal also would raise the amount of state funding for school districts, although one Mahoning Valley educator says districts are awaiting the details of how that would work.

Kasich’s two-year spending plan calls for $7.7 billion in 2016 for primary and secondary education, a 6.1 percent increase over 2015, and $8 billion for 2017, a 4.5 percent increase from 2016.

“We’re always very skeptical until we see actual appropriations and disbursements per school district,” said Ron Iarussi, superintendent of the Mahoning County Educational Service Center.

An increase in the total appropriation doesn’t mean every school district is going to see a 6 percent increase in its foundation funding next year, he said.

“That’s usually not the case,” Iarussi said.

Kasich also wants to move school districts off of the guarantee, or minimal, state funding level.

“If they wean districts off of the guarantee, that would require more per-pupil funding to do that,” the county superintendent said.

The governor also wants to increase funding for early childhood programs and improve charter-school accountability. He’s also aiming at allowing charter schools access to local schools’ levy dollars.

When voters approve a levy, their intention isn’t approval of money that leaves the district, Iarussi said. He wonders how the administration will justify locally generated tax dollars following a student outside of a district where the dollars are levied.

For higher education, the governor recommends FY 2016 funding of $2.4 billion, a 2 percent increase from FY 2015. For FY 2017, his recommendation is for $2.5 billion, a 2.5 percent increase from FY 2016.

The plan also calls for a 2 percent tuition cap for next year and a freeze in 2017.

Students also could get credit based on their competency rather than that being limited to those taking a class.

Ron Cole, a Youngstown State University spokesman, said university officials are reviewing the governor’s budget.

“We will certainly work within the boundaries of the governor’s budget as approved by the General Assembly,” he said. “We continue to work to do whatever we can to lower student costs. That’s a priority of the governor and a priority of the General Assembly, and it’s priority for YSU ... as I’m sure it is for everyone in higher education.”

YSU officials believe a way to do that is to ensure students are successful in their classes and graduate on time, Cole said.

Laura Meeks, president of Eastern Gateway Community College, likes what she sees.

“It contains a very high percentage of the items that are on the agenda for community colleges,” she said. “There’s a clear emphasis on community colleges, and that just pleases us greatly.”

Meeks is particularly pleased with the restoration of the Ohio College Opportunity Grant for community college students. Those grants, for financially disadvantaged community-college students, were eliminated in 2009 but remain available to other Ohio college students. It establishes a $1,000-per-semester performance- based workforce grant. The grant would be for up to $2,000 per academic year.

Students can use that money to cover the cost of books.

“Because tuition at community colleges isn’t high, some people think the student can do better” and doesn’t need the extra help, Meeks said. “But that’s why people come to community college. They really need this.”

Although Kasich’s plan also would allow community colleges to offer some four-year degrees, Meeks said EGCC isn’t part of that.