COLUMBUS — House Democrats Friday took the first step toward enacting Gov. Ted Strickland's proposal to roll back a 4.2 percent across-the-board income tax cut that most Ohioans began seeing in their paychecks at the start of the year.
A bill that postpones the tax cut until mid-2011 — and adds a 5 percent cut in lawmakers' pay as a show of good faith — is expected to receive its first hearing as soon as Monday.
"We're already hearing from some Republicans who are playing politics with this very serious issue by calling this a tax increase," said House Speaker Armond Budish (D., Beachwood). "This is not a tax increase. No Ohioan will pay more in income tax this year than they paid last year even after the temporary freeze is put in place. In fact, every Ohioan, assuming the same level of income, will actually pay a few dollars less than the prior because of an increase in the personal exemption."
The roughly $844 million that the state would expect to save over the next two years would help to patch an immediate budget hole in K-12 education funding caused by a recent Ohio Supreme Court ruling preventing the state from cashing in anytime soon on its plan to install slot machines at the state's seven racetracks.
The court ruled that the governor and lawmakers could not sidestep a vote of the people by inserting language authorizing slot machines into the state's $50.5 billion, two-year budget. The earliest that a voter referendum on the slots language could take place would be November, 2010.
The 2009 cut was the last of five annual increments totaling 21 percent first set in motion in 2005 as part of a larger tax reform package that also overhauled business taxation in the state.
The Republican-controlled Senate has been slow to embrace Mr. Strickland's proposal, but Senate President Bill Harris (R., Ashland) has not unilaterally ruled it out. More budget cuts, however, are also on the menu.
"It's just one of the options that's there, so it's not a total focus," he said Thursday. "I don't think we would be doing due diligence if we didn't look at cuts along with all the other potential things to look at."
Rather than roll back withholding rates with just two and a half months left in the year, the state is likely to recoup the money when taxpayers file their returns next spring. For a typical family of four with two-wage earners grossing $60,000 a year and filing jointly, this year's reduced withholding has resulted in about $1.63 more in weekly take-home pay, or about $85 a year.
Rank-and-file House and Senate members currently earn a base pay of $60,584 a year, not counting leadership and committee stipends. A 5 percent cut across the board would reduce that by a little over $3,000 a piece.
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