FACEBOOK REACTION
What do you think of the governor’s budget proposal? what do you think lawmakers should tackle this year in Ohio?
Beverly Smith-Whitman: Je keeps cutting taxes for some. The local and school taxes keep going up. He gives you a dollar in one pocket and the locals take 3 times more out of your other pocket. Quit robbing our local governments! Find a better way to fund our schools.
Barb Reynolds: Hope that budget figures out a way to have the state buy enough salt to keep the roads safe during the winter….after all IT IS OHIO and IT SNOWS!!!
Debbie Miller: Yea raise cigarette taxes again….we all have habits… if you want to tax everyone fairly add more tax to toilet paper… everyone uses it…. even politicians
Debbie Raines Smith: Good paying jobs & more funding for education!
BUDGET HIGHLIGHTS
Ohio Gov. John Kasich unveiled his plan for the next two year state budget. Here’s a look at the highlights of what he wants lawmakers to approve:
* Hike the state sales tax rate to 6.25 percent
* Increase cigarette taxes for the first time in a decade, up $1 per pack,
* Cap public college tuition increases at 2 percent this year and freeze tuition the following year
* Deliver a 23 percent income tax cut for all Ohioans.
* Kasich’s budget calls for a 12.5 percent increase in spending from the state’s General Revenue Fund in Fiscal Year 2016, to $35.3 billion, then another 5 percent increase on top of that in FY 2017, to $37 billion.
* Increase K-12 education funding, with the extra money targeted at “districts with the least capacity to raise revenues locally (via levies).”
STATE BUDGET COVERAGE
Our Statehouse Bureau reporter Laura Bischoff will cover the state budget debate in the coming months. Get the latest on Twitter at @Ohio_Politics
Income taxes would go down, sales taxes and cigarette taxes would go up under a budget proposed by Gov. John Kasich on Monday.
Kasich wants to raise the state sales tax rate to 6.25 percent, increase cigarette taxes for the first time in a decade, cap public college tuition increases at 2 percent in 2016 and freeze tuition the following year, and deliver a 23 percent income tax cut for all Ohioans.
Kasich’s budget is a blueprint for spending $138.7 billion in state and federal money over two years. The plan, which was unveiled Monday, says it includes a $500 million net tax cut for Ohioans. That is on top of $3 billion in tax cuts he advanced in his first term.
The second-term Republican governor will lobby lawmakers and the public to embrace the ideas. He’ll start with a visit today to the University of Dayton.
Kasich is pushing for policy changes that he says will make college more affordable, better train Ohioans for key jobs in the workforce, pave a pathway out of poverty for the less fortunate, help small businesses create jobs and more.
“I believe that if we can be successful in the passage of this, I not only think it’s a new day for Ohio but it could be potentially a new day for America as they take a look at a number of things,” said Kasich, a Republican who is mentioned as a potential Republican presidential candidate in 2016.
Cutting and shifting taxes
Kasich has long said he wants to eliminate Ohio’s income tax someday. His budget proposal calls for an across-the-board cut of 15 percent this year and 8 percent the following year, dropping the top personal income tax rate to 4.1 percent, down from 5.33 percent last year.
Kasich’s budget proposes a significant increase in the personal income tax exemption for workers making less than $80,000 a year and eliminating income taxes for small businesses with less than $2 million in annual sales. These two tax breaks would cost $1.07 billion over the two-year budget cycle and help nearly 1 million small businesses and 3 million lower income workers.
The governor is pitching a package of tax increases to offset the breaks and he is calling for a thorough review of all existing tax breaks and loopholes in state law.
First, Ohio’s sales tax rate would be bumped up from 5.75 percent to 6.25 percent. Kasich and the GOP-led General Assembly last increased the sales tax in 2013.
Medicine, food and other necessities would still be exempt. The state sales tax would be broadened and applied to cable TV subscriptions, parking, lobbying, public relations, marketing and opinion polling, management consulting, travel packages and debt collection services.
Secondly, smokers would see state cigarette taxes jump to $2.25 per pack, up from $1.25 per pack. E-cigarettes and other tobacco products will see tax hikes as well. Public health advocates applaud the proposal, saying it’ll lead to fewer people smoking and lower health care costs. Tobacco giant Altria says it’s unfair to punish adult smokers.
Also, the Commercial Activities Tax rate, which is levied on businesses’ gross receipts, would increase to 0.32 percent, up from 0.26 percent. The CAT is the state’s general business tax that was created in 2005. And Kasich is still calling for an increase in the taxes paid by oil and gas producers.
Policy Matters Ohio, a left-leaning think tank, said Kasich’s $500 million tax cut would be better spent on public services. “Cutting the income tax and expanding the existing tax break for business income is a failed economic strategy; after 10 years of tax cuts, Ohio still has fewer jobs than it had in 2005, while the nation has gained 6 million,” the group said.
On the right, The Buckeye Institute said tax policy should be fair, simple, transparent and pro-growth. “A good tax plan will reduce tax rates on investment and labor, which are key components for economic prosperity and job creation,” the group said.
“The last thing Ohioans need is another increase in the state sales tax,” said Senate Minority Leader Joe Schiavoni, D-Boardman.
K-12 education
The education funding numbers led to some debate Monday. Kasich’s proposal describes a 6 percent increase in K-12 education funding next year, plus another 4.5 percent in 2016-17. But that presents a rosy view, by only counting the General Revenue Fund.
Deep in the 719-page document, under Department of Education, and “all funds,” it says, “Funding for fiscal year 2016 is $10.8 billion (or a 1.4% decrease from fiscal year 2015).” But ODE officials said that’s pessimistic, because it doesn’t include some tangible personal property tax money from outside ODE that is still used to fund schools.
“Even controlling for some reductions … there will still be overall increases to state aid for schools,” said Aaron Rausch, ODE director of budget and school funding. He said upcoming explainer sessions will give more detail on Kasich’s proposal.
Regardless of state school funding totals, individual districts’ funding could vary. Kasich’s budget calls for more money to be sent to “districts with the least capacity to raise revenues locally.” Districts with more income and property wealth could see slight decreases.
In other education highlights, Kasich called for a major increase in early childhood spending, boosting an issue championed by several Montgomery County education groups.
The budget calls for stricter regulation of charter schools on one hand, with state superintendent Richard Ross saying subpar school authorizers could be banned from sponsoring schools in the future. But it also suggests a legal change that could make charter schools eligible for public levy funds.
Kasich called for an 18 percent reduction in student testing hours, roughly in line with Ross’ own report last month.
Making college affordable
Kasich is calling for a 2 percent cap on tuition hikes in 2016 and a tuition freeze in 2017 for Ohio’s 37 public colleges and universities. His budget also includes $18.5 million to train teachers in disadvantaged high schools as adjunct professors so they can offer College Credit Plus courses; $120 million college debt relief fund for graduates who stay in Ohio and work in-demand jobs; and $20 million innovation fund to help colleges develop ways to cut student tuition.
The Kasich administration wants to allow community colleges to offer four-year degrees in targeted disciplines, as is the case in 20 other states. Kasich is also proposing letting community college students use Ohio College Opportunity Grant money for year-round studies, especially since federal Pell Grants cannot be used for summer coursework.
Overhauling social services
The governor said his budget will increase funding for developmentally disabled Ohioans so they can live and work in the community, coordinate all social services for individuals through one agency, improve job placement services for young adults, and provide a bridge for low-income workers who rely on subsidized child care so that they don’t automatically lose all assistance when their income crosses 200 percent of the federal poverty line.
Ohio’s expanded Medicaid program, which added 430,000 low income Ohioans to the rolls, will continue but with a dose of personal responsibility. Ohioans between 100 percent and 138 percent of the poverty line will pay nominal monthly premiums — $15 to $22.
Under state law, the governor develops the budget, which is then introduced in the Ohio House. The House debates, makes changes and passes its version, then sends it to the Ohio Senate. After Senate approval, differences are worked out in a conference committee. The two-year budget takes effect July 1.
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