Kasich eyeing tax cuts as budget suggests covering lower revenues with hike on oil, gas firms

12/20/2012

COLUMBUS — Gov. John Kasich said Wednesday that the proposed budget he will roll out in two months will make a down payment on his hope to reduce if not eliminate Ohio’s income tax.

“This income tax is too darn high, and people say we’ve already lowered it and did it do any good. Yeah, it’s done good. We’re at about 127,000 jobs, including a more business-friendly climate,” the Republican governor said during a news conference highlighting what he and legislative leaders consider to be their 2012 accomplishments.

“But this tax, at 5.9 percent, is too high, and a comprehensive tax-reform program that we will have for you in February is going to present the legislature with an option to lower that tax on small business,” he said. “They’re the ones that create the jobs.”

The reform proposal, which he stressed is not complete, will include his plan to hike the state’s severance tax on the extraction of oil and natural gas, a move aimed primarily at the growing hydraulic fracturing industry in eastern Ohio.

The revenue from the increase would underwrite a dollar-for-dollar, across-the-board cut in the personal income tax paid by individuals and small businesses.

The severance tax hike, however, ran into an election-year brick wall this year, even as outgoing Senate President Tom Niehaus (R., New Richmond) and returning House Speaker Bill Batchelder (R., Medina) sounded more optimistic it could pass in 2013.

Before becoming a gubernatorial candidate in 2010, Mr. Kasich talked about the need to eliminate the state’s income tax. He later softened his rhetoric, and a bill introduced by conservative House Republicans to eliminate the tax went nowhere.

The closest he has come to affecting income tax rates as governor is by not interrupting an incremental income tax cut that was set in motion before he took office, enacting a couple of income-tax credits for business, and championing the oil-for-income tax swap.

Wednesday’s news conference sounded optimistic.

Overall, 2012 was a relatively quiet year when compared to the uproar that dominated 2011 over Republican efforts to limit the collective-bargaining power of public employees.

Mr. Batchelder pointed to an increase in bills jointly sponsored by Democrats and Republicans as evidence of new bipartisanship in Ohio.

But Senate Minority Leader Eric Kearney (D., Cincinnati), didn’t see it that way.

“True bipartisanship means Democrats and Republicans should work together to find solutions on all the major issues facing the state of Ohio, not just when it’s convenient,” he said. “The governor’s comments covered a wide range of issues but offered few specifics about his forthcoming proposals for school funding and tax reform.

“If he truly wants to be bipartisan, then Governor Kasich should invite Democrats to be part of the process from beginning to end.”

Mr. Kasich’s second two-year budget proposal is also expected to include his promised proposal to change how Ohio funds schools, but he stressed that’s not complete yet either.

“I want the child — no matter where they live, no matter what the wealth is in their district — to be able to compete effectively with a child in every other district. …,” he said. “Everybody deserves a chance.”