Ohio House OKs 2-year budget with few tax cuts

Plan to trade higher taxes for lower personal income rate fails

5/3/2017

The Ohio budget now crosses the capitol rotunda after being passed by the state House of Representatives.

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COLUMBUS — For the first time since Gov. John Kasich took office, the Ohio House of Representatives on Tuesday approved a proposed two-year state budget that provides for no broad tax cuts.

State tax collections have trailed expectations for a year and the spending plan that now crosses the Capitol Rotunda to the Senate falls short of the deal Mr. Kasich reached with Republican Party leaders in recent weeks to cut $800 million from his original proposal.

The plan abandons the governor’s idea to trade higher taxes on sales, tobacco, alcohol, and shale oil and natural-gas production for a net personal income tax cut.

The House, however, did carve out a couple of tax breaks, exempting prescription eyewear and digital jukebox and arcade game plays from sales taxes.

The plan also reduces the state’s personal income-tax brackets from nine to seven, eliminating the bottom two brackets with nearly no impact on individual tax bills.

“The business community basically came to us and said we appreciate all the progress we’ve made over the last few budgets.” said state Rep. Ryan Smith (R., Bidwell), chairman of the House Finance Committee. “Stability in business is paramount to plan, and they felt like the best thing we could do is as little as possible as far as moving things around in this budget.”

Democrats, however, argued that the state is paying the price for past tax cuts that didn’t yield the high-paying jobs that were promised.

“Yes, the tax shifting has ended in this budget for the most part,” said state Rep. Jack Cera (D., Bellaire), finance’s ranking Democrat. “But really that’s because the revenue is not there for additional tax cuts.”

House Bill 49 passed the chamber 58-37.

Four Democrats, including Rep. Mike Sheehy (D., Oregon), broke ranks to join most Republicans in support of the plan.

“You can find a lot of fault, but I held my nose to a certain extent,” Mr. Sheehy said. “I didn’t make any friends in my caucus by doing so, but I committed myself to other portions of my constituency.”

He said the additional money to fight addiction, as well as a proposed overhaul in agricultural-land property taxes won his vote.

Meanwhile, 12 Republicans voted no, including northwest Ohio Reps. Wes Goodman (R., Cardington) and Craig Riedel (R., Defiance).

Despite continued opposition from some Republican conservatives, the plan preserves Mr. Kasich’s controversial expansion of Medicaid health coverage. The endangered federal Affordable Care Act funds 95 percent of the cost, but that will drop to 90 percent in 2020.

But Republicans added a provision requiring the state to ask the Trump Administration for approval to impose work requirements on the roughly 715,000 Ohioans on the expansion rolls. It provides exceptions for those over 55, considered medically fragile, in school or job training, or in substance-abuse treatment.

The bill also requires the state to get approval every six months from the Ohio Controlling Board, a quasilegislative budgetary panel, to spend Ohio’s share of the expansion costs. Republicans added that provision to keep pressure on the Kasich administration to pursue the federal work waiver.

House Bill 49 adds $170.6 million over the next two years to battle Ohio’s opiate painkiller and heroin addiction epidemic.

“This doesn’t need to be about politics,” Mr. Ryan said. “This has to be about policy. This has to be about people. ... Understand, if you vote no, you’re voting against $200 million to try to stave off an epidemic that [leads to] 4,000, maybe 5,000 deaths in Ohio.”

Democrats tried unsuccessfully to earmark another $200 million toward the epidemic using money from Mr. Kasich’s JobsOhio job-creation entity. They voiced support for using some of the state’s $2 billion budgetary reserves for that purpose.

The budget adds about $90 million more a year to basic K-12 education aid over what Mr. Kasich originally proposed, but about half of school districts are expected to face cuts.

The bill also states that authority to regulate lead abatement in Ohio belongs solely to the Department of Health, a provision pushed by state Rep. Derek Merrin (R., Monclova) that is seen as preventing cities like Toledo from enforcing local ordinances.

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