Kasich aims to cut taxes with unforeseen $400M

6/19/2013

COLUMBUS — Lawmakers have some additional funds to play with as they enter the home-stretch of finalizing a state budget for the next two years.

“We want them to go into tax cuts,” Gov. John Kasich said. “I just don’t want to go back to the old days of taxing and spending.”

A joint legislative conference committee charged with hammering out a compromise between differing versions of the budget passed by the House and Senate learned from Kasich budget Director Tim Keen that they will have nearly $400 million more to work with than expected.

But that comes from the current fiscal year ending June 30. It raises the question of whether those one-time surplus funds will be given back to taxpayers next year in the form of automatic, one-time income tax rebates, built into a permanent tax cut that the state would have to find a way to fund into the future, or spent elsewhere.

“Now that we have additional funds, that doesn’t mean we can do necessarily a deeper permanent tax reduction,” said Rep. Ron Amstutz (R., Wooster), committee chairman.

The committee of four Republicans and two Democrats expects to vote on a final budget early next week. A final budget must reach Mr. Kasich’s desk by the end of the month.

After transferring funds to shore up the state’s once nearly depleted budgetary reserves to nearly $1.5 billion, Mr. Keen said there will still be $396.8 million unspoken for when the books close on this fiscal year on June 30.

While Mr. Kasich wants to use that for more tax cuts, local governments and schools also will eye it hungrily.

Among the key budget differences is who will benefit from $1.4 billion in income-tax cuts. In the House plan, it was a 7 percent across-the-board cut. When the Senate was done, it was a 50 percent cut against the first $375,000 in profits for small businesses that pay the tax.

The two budgets also differ over how much to spend on K-12 public schools and how to distribute state aid. As it now stands, the $61.7 billion budget spends $717 million more for schools over the current budget.

There are differences over restrictions on abortion clinics, a sales tax exemption for the Toledo Mud Hens, higher highway speed limits, and regulation of food items containing alcohol, such as gelatin shots.