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Mix of tax cuts, hikes likely next

Senate set to rubber-stamp budget for Kasich to sign

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COLUMBUS — A two-year state budget that cuts taxes on wage earners and many small businesses, raises taxes on consumers and some other businesses, and imposes restrictions on abortions entered the home stretch Tuesday night en route to the governor’s desk.

The priorities in the budget as fashioned by a legislative conference committee, controlled 4-2 by the GOP, led to Democratic accusations that Gov. John Kasich and his fellow Republicans favor wealthier Ohioans at the middle class’ expense and attack women by adding limits on abortion rights.

Republicans countered the tax cuts would touch all Ohioans to some extent, position Ohio for stronger economic recovery, and add roughly $1 billion in funds for K-12 education.

The Senate is expected to rubber-stamp the changes later this week. Mr. Kasich is likely to sign it into law by Sunday, the fiscal year’s end.

The committee voted along party lines to add requirements about abortion rights, along with provisions in the version sent to it by the Senate. The “informed consent” amendment would require doctors to perform an external exam to detect a fetal heartbeat and give the patient the option of listening to that heartbeat and provide certain information to the patient before performing an abortion.



The committee retained a Senate provision that bans public hospitals or their physicians from entering into emergency-care pacts with clinics that perform abortions. Clinics must have such agreements to keep their licenses with the state Department of Health. A Toledo clinic, Center for Choice, was recently closed because it lacked such an agreement.

The tax package promises a net cut of $2.6 billion. It would phase in a 10 percent personal income tax cut over three years and cut taxes 50 percent on the first $250,000 in small business owners’ income.

“This will be one of the largest tax cuts in the history of Ohio,” said state Sen. Scott Oelslager (R., Canton).

The income tax cut, however, would be partly offset by a hike in the state’s base sales tax from 5.5 cents on the dollar to 5.75 cents, effective Sept. 1. That would raise the sales tax in Lucas County, with its 1.25-cent piggyback tax, to 7 cents.

The plan adjusts various minimum rates under the commercial-activities tax paid by businesses on gross receipts with the net effect of raising revenue for the state. This replaces a plan to lower the threshold that would have led more businesses to pay the tax.

The plan includes new or higher taxes on magazine subscriptions, digital downloads such as ebooks and music, and small cigars called cigarillos.

Democrats argued the overall tax package disproportionately benefits the wealthy at the expense of those with lower incomes and was dropped on lawmakers at the 11th hour last week. “My belief is this is absolutely regressive tax shifting,” said state Rep. Mike Foley (D., Cleveland).

Kasich Budget Director Tim Keen disagreed. “As far as the income tax, less than 2 percent of Ohioans will pay more taxes under this proposal than currently do,” he said.

The committee preserved a Senate-approved provision exempting the nonprofit Toledo Mud Hens from paying the sales tax on purchases, retroactively wiping out an unpaid sales tax bill of $553,389 that is the subject of a tax appeal.

The budget sets the stage for the state to cap the rollback program in which it pays the first 12.5 percent of local property taxes. Future rollbacks will apply only to existing tax rates and their renewals, not to new levies passed by voters or to a positive difference in effective rate if a levy is replaced.

The state also will require senior-citizen and disabled homeowners newly applying for the homestead exemption tax break to earn $30,000 or less a year. The program is not currently means-tested. Those currently receiving the break would still do so.

The plan does not include Mr. Kasich’s proposal to expand eligibility for coverage under Medicaid as part of President Obama’s health-care law. Despite GOP legislative leaders’ insistence that discussion will continue over summer, Democrats tried without success to reinsert the expansion into the budget now.

“If we are going to take advantage of the federal government’s health-care law to help vulnerable people, who are working and are between 100 and 138 percent of the [federal] poverty level who need health care, we gotta act this week,” Mr. Foley said.

State Rep. Ron Amstutz (R., Wooster), the committee’s chairman, stressed that talks go on, but the end result may not include the expansion in eligibility as Mr. Kasich proposed. “At the end of the day, we’re trying to do quite a bit more than that,” he said. “...I think I can say we are all focused on trying to go forward.”

The expansion would have provided coverage to about 275,000 more Ohioans, mostly working adults without children.

Contact Jim Provance at:

or 614-221-0496.

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