State finance committee overhauls budget

5/28/2013

COLUMBUS — A Senate committee today stripped a proposed 7 percent across-the-board income tax cut from the House-passed budget and replaced it with a cut targeting small businesses.“It’s about creating jobs and growing the state’s economy,” Senate President Keith Faber (R., Celina) said. “While we are all for a 7 percent across-the-board income tax cut, we just did a 4.5 percent across-the-board income tax cut (in 2011). And while it helped at the margins, the reality is we want to do something that is targeted to those 95 percent of the creators of jobs.”

The Senate plan is closer to what Mr. Kasich proposed. The plan provides a 50 percent cut in taxes on the first $750,000 in business profit. The price tag is expected to be about $1.4 billion over the two-year budget.

The price tag is expected to be about $1.4 billion over the two-year budget.

One Ohio Now, a coalition of unions, social service organizations, and local governments, has sought additional review for government services and sees the tax cuts as undermining that goal.

“Unfortunately, the poorly targeted big business income tax cut, which gives 80 percent of the benefit to 5 percent of taxpayers, is back in the Senate version…,” said state Director Gavin DeVote Leonard. “Ohio should not give away billions of dollars without research to support any of the proposed tax cuts.”

The committee also stripped a provision from the proposed state budget that critics argued was designed to discourage public universities from helping students to vote in Ohio. The provision would have required the schools to charge cheaper in-state tuition for any out-of-state student that it supplied documentation that could be used to establish residency for voting purposes.

“We had a significant number of members on both sides of the aisle that requested the removal of that,” Mr. Faber said.

A huge chunk still missing from the budget is how the chamber plans to deal with K-12 schools, preventing lawmakers from putting a total price tag on the two-year spending plan for the moment. Talks continue, but Mr. Faber predicted that the final product is likely to be closer to what Mr. Kasich initially proposed than what the House put forth.

Mr. Kasich’s school funding plans, particularly his promise that more money would flow to poorer schools, were initially greeted with optimism by school superintendents across the state. But that mood quickly soured when the administration released numbers showing that some 60 percent of school districts would see no funding increases while some wealthier, fast-growing, suburban districts were in line for large increases.

The House, in turned, capped the growth in subsidies to those suburban schools, resulting in more districts being in line for increases, including Toledo Public Schools. Mr. Faber would not speculate what the Senate’s total K-12 pot of funding would be larger or smaller than in the House version.

Also still notably absent from the spending plan is the expansion of Medicaid, the federal-state health insurance of last resort for the poor and the infirm, that Gov. John Kasich has championed but House Republicans shelved. Mr. Faber said again Medicaid reform will not be part of the final budget, but discussions continue along a separate tract.

The Senate Finance Committee adopted a massive amendment making wholesale changes to the $61.5 million, two-year budget that the House sent it more than a month ago. The committee and full Senate plan to vote on the plan next week.

The plan will likely end up in a conference committee to hammer out a compromise. A final budget must reach Mr. Kasich’s desk by the end of June.

As now written, the plan includes an amendment pushed by Sen. Randy Gardner (R., Bowling Green) to increase funding for the Healthy Lake Erie Fund by $600,000 over the biennium on top of $550,000 already expected to roll over from the current budget.

The grants fund research and monitoring to combat harmful algae bloom on the lake. Scientists and environmentalists had requested an additional $1.7 billion over the two years.

The budget also sets aside $600,000 toward Attorney General Mike DeWine’s plan to establish a new Bureau of Criminal Investigation and Identification forensic laboratory at Bowling Green State University.

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.