COLUMBUS - Reacting to recent job losses in the auto industry and threats of more, Ohio Senate President Bill Harris yesterday proposed a tax credit on electricity targeting that industry alone.
"This motivates Ohio to be different from any other state," the Ashland Republican said.
With Ford closing a Lorain plant, General Motors slashing a work shift near Dayton, and the Delphi parts manufacturer in bankruptcy, Mr. Harris proposed a credit essentially offsetting the kilowatt hour-tax the industry pays.
The Ohio Department of Taxation estimated the credit would cost the state $8 million a year. The tax is a flat rate levied on electricity used, regardless of that power's price. Industrial users with large energy demands pay a lower rate than residential consumers and small businesses.
"One of every six jobs in Ohio is connected to the auto industry," Mr. Harris said. "That's critical. We need the auto industry in Ohio driving very effectively."
The credit would not be tied to job creation and retention, unlike a proposed expansion of the existing Job Retention Tax Credit program pushed by House Speaker Jon Husted (R., Kettering).
Gov. Bob Taft's package consists largely of targeted benefits within existing programs for the struggling industry.
"I'm encouraged by the fact that there are additional alternatives," Mr. Husted said. "One of the things we'll have to look at is whether it makes sound tax policy. We're doing that now with our own proposals."
The Harris proposal is a sharp turnaround from a little more than six months ago when Mr. Taft was pushing a 30 percent across-the-board hike in the kilowatt hour-tax as part of his much-larger overhaul of the state's tax structure. The proposal was killed when lawmakers received rosier-than-expected revenue projections.
"They've been talking out of both sides of their mouths for so long that I don't think even they know what they're saying anymore," Sen. Bob Hagan (D., Youngstown) said. "I was one of only two who voted against [electricity] deregulation, because I knew all of this would come back to haunt us."
Mr. Hagan said such debate overlooks health-care costs that he contends add between $1,300 to $1,500 to each car's sticker price. In the fiscal year ending June 30, 2004, the kilowatt hour-tax generated $539 million for the state. Although it fought the proposed kilowatt hour-tax hike last spring, the Ohio Manufacturers Association has not lobbied for a credit.
"We'd like to see it for everybody," said Ryan Augsburger, managing director of public policy services. "All manufacturers are burdened with unpredictable energy prices. However, we recognize the significance of the auto sector and the ripple effect it has on the manufacturing economy as a whole and the economy in general."
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