Senate pushes for income tax cut, cig tax increase

Faber takes shot at Dayton, Springfield over traffic camera lawsuit.

Ohio Senate Republican leaders unveiled a proposed $71.3 billion, two-year state general fund budget on Monday that includes $1.7 billion in tax cuts, a per-cigarette-pack increase for smokers, more money for schools and colleges and cuts in Medicaid spending.

“I’m supportive of what we’ve managed to put together. There’s a lot of competing priorities,” said State Sen. Bill Beagle, R-Tipp City. “The Senate wanted to deliver on tax cuts, we wanted to invest in education and try to balance the numerous priorities. I think we did a pretty good of landing in a spot that fulfills the objectives.”

If approved, the budget would mean lower income taxes, elimination of taxes on some small businesses and the higher tax on smokers. But it does not include the one-half of one percent sales tax increase or oil and gas severance taxes sought by Ohio Gov. John Kasich.

College tuition rates would be frozen for two years and funding would increase for schools and colleges. The proposal adds more than $935 million in school funding and $240 million for colleges over two years. It allocates $100 million for need-based college financial aid for students.

The budget proposal is not yet written so details came from a news release and remarks made at a news conference held by State Senate President Keith Faber, R-Celina. Faber said the budget represents a “commitment to fund what matters and return to taxpayers what’s not essential.”

“Ten years ago, the legislature started to take Ohio down a new path — a path of using lower tax rates to create jobs and stimulate economic growth,” said Sen. Bill Coley, R-Liberty Twp. “This budget continues down that path and I believe that Ohio’s economy will continue to grow as a result.”

Zach Schiller, research director of the liberal think tank Policy Matters Ohio, isn’t so sure. The various budget versions — all drafted by Republicans — continue to give the bulk of the tax benefits to wealthy Ohioans, and fail to provide much-needed funding for cities and for human services such as child care for working parents, he said.

“The point is our state badly needs public investments in services that benefit all Ohioans,” Schiller said. “And by taking $1.7 billion and deciding to scatter it — especially among the most affluent — we won’t make those investments and that’s a bad deal.”

Like the House version, the Senate proposal would cut local government funding to punish cities like Dayton that continue to operate red light and speed enforcement cameras even though the legislature last year said they could only be used to issue traffic tickets if a police officer is on site.

Cities including Dayton and Springfield have filed lawsuits to overturn the law, but Faber said the cities could have to return the money if the courts rule against them.

“And last time I checked somebody who collects things illegally is committing some kind of an offense,” Faber said. “We think the better solution is you shouldn’t be collecting it.”

Dayton Mayor Nan Whaley expressed disappointment that the Senate version of the budget “includes penalties for cities that have chosen to use their due process rights to continue to operate (the) cameras. This issue is currently being monitored by our attorneys and we are hopeful that a resolution in our favor is forthcoming.”

The city argues that the cameras are a safety enhancement and not simply a way to raise revenue.

The Senate budget sets up a debate with the House and governor’s office over differences in the proposals, with the Senate version allocating $228 million less than the House version and $998 million less than Gov. John Kasich’s proposal. Kasich had proposed a 23 percent across the board income tax cut and the House proposed a 6.3 percent cut. The Senate also proposes reducing the income tax by 6.3 percent, savings taxpayers $1.26 billion over two years, according to Faber.

A 40 cents per pack cigarette tax would raise $406 million, and $8 million of that would go to a smoking cessation effort. Taxes on other types of tobacco would increase but, like the House version, the Senate proposal rejects Kasich’s effort to tax e-cigarettes.

The Senate version also scuttles a proposal to raise taxes by $264 million on the Social Security benefits of wealthier senior citizens.

Businesses with annual incomes up to $250,000 would pay no taxes and those with incomes higher than $250,000 would pay a 3 percent flat tax.

Faber said he anticipates a compromise will be reached on the issue of severance taxes on the oil and gas industry, which Kasich wants to increase and the House would not change. There also are differences in the three budget proposals regarding school and college funding.

“The governor proposed an aggressive strategy to keep moving Ohio forward. There is still work to be done, and we will continue to push for a larger income tax cut and urge against overly optimistic economic assumptions, but it’s encouraging progress,” said Rob Nichols, spokesman for Kasich.

Brittany Warner, spokeswoman for Ohio House Speaker Cliff Rosenberger, said he “looks forward” to reviewing the Senate budget proposal when it is released today.

Like the House, the Senate bill would continue Kasich’s expansion of Ohio Medicaid under Obamacare. It restores Medicaid coverage for certain low income pregnant women, along with breast and cervical cancer screenings, but cuts overall Medicaid spending by $1 billion.

“We have kept our foot on the throat of growth while maintaining outcomes for patients,” said Sen. Dave Burke, R-Marysville, chairman of the Senate Finance Medicaid subcommittee.

Sen. Peggy Lehner, R-Kettering, said she supports the restored Medicaid funding for women’s health care and hopes to add funding for early childhood and early literacy funding during the amendment process.

The general fund budget proposal is part of an overall budget of $129.9 billion — which includes federal and other funds — for state fiscal year 2016 and 2017. The Senate will begin hearings today, consider amendments and plans a vote on the final version by June 17. The House and Senate would then work out a compromise bill to send to Kasich. The current fiscal year ends on June 30.

The budget proposal also would increase funding for police training, with smaller forces getting a larger percentage of their costs covered than larger ones. Townships and villages would get access to a new pot of money to help them with costs, Faber said.

The Senate proposal also would provide nearly $13 million for digital electronic poll books used in voting and a revolving loan program for businesses “affected by lakes in economic distress such as Buckeye Lake,” according to the news release.