Kasich unveils new 2-year spending plan

By Marc Kovac | February 1, 2017 at 12:00a.m.

COLUMBUS

Gov. John Kasich proposed a two-year spending plan Monday that includes a reduction in the number of income-tax brackets, an increase in the personal exemptions for residents earning up to $80,000 and the centralized collection of local business tax filings.

The governor would cover a slight tax cut by increasing the state sales-tax rate to 6.25 percent from 5.75 percent (an extra 50 cents per $100 in taxable goods and services purchased); broadening that tax to cover things such as elective cosmetic surgery and interior design services; increasing cigarette taxes to $2.25 per pack from $1.60 with equivalent increases for other tobacco and vapor products; and increasing tax rates on oil and gas production, among other tax reform measures.

The changes would result in a tax cut of $39 million over the biennium, according to the administration. And state Tax Commissioner Joe Testa said the proposed reforms would mean relief for “virtually all Ohioans,” with 350,000 additional low-income Ohioans no longer having to pay state income taxes.

The governor’s executive budget includes nearly $67 billion in general revenue fund spending, compared to $71 billion-plus OK’d as part of the last biennial budget.

The totals don’t account for federal funds and other state spending – administration officials urged review of the larger “all funds” budget numbers, with spending of more than $144 billion over the biennium, which they said provide a better accounting of the state’s actual spending activities.

The Ohio House’s Finance Committee will begin deliberations on the legislation Wednesday, with plans for testimony from Keen and the Legislative Service Commission. Over the next five months, committees and subcommittees of the Ohio House and Senate will review the budget proposal.

State Rep. John Boccieri of Poland, D-59th, responded: “Though I agree with the governor that there are opportunities to improve our state’s tax structure, I believe shifting taxes from the wealthy few to the working and middle-class will continue to hold back our state’s economic development and job growth ... Creating a $3.1 billion income tax cut while increasing state sales taxes will hurt small businesses in border communities like ours, and it will weaken local communities.”

Kasich acknowledged the legislative opposition to some of his tax reform proposals – “You ask for a lot, and you get a little,” he said. “But a little is better than none.”

Severance tax is at the top of that list. The governor has pushed higher tax rates on oil and gas produced via horizontal hydraulic fracturing in several budget bills, and lawmakers have removed the language each time.

Kasich’s budget proposal includes numerous provisions aimed at better preparing Ohio’s schoolchildren for future careers. The list includes allowing classroom credit for students work force-related experiences, increasing collaboration between K-12 schools, colleges and universities and industry and requiring local school boards to add three local business people to their ranks as nonvoting members,

Spending-wise, the governor has proposed an additional $200 million over the biennium for primary and secondary schools, with a continuation of guarantees to ensure that no school district would receive less in formula state aid compared to the current fiscal year unless they have lost more than 5 percent of their student population.

The governor also wants to freeze tuition and fees at public colleges and universities during both years of the biennium, and he wants to require those campuses to provide students with textbooks, with a $300 per student charge allowed to cover the costs.

On health care, the administration announced plans to seek federal approval to require childless, non-pregnant adults with incomes above poverty levels to pay a premiums for Medicaid coverage, with payments estimated at $20 per month, not to exceed 2 percent of their household income.

Federal officials, under President Barack Obama’s administration, rejected a comparable plan.