COLUMBUS, Ohio (AP) — Ohio Gov. John Kasich rolled out an
ambitious election-year policy document Tuesday that delivers a
promised income-tax cut through increases in tobacco and other taxes,
and streamlines government offerings for jobseekers and the poor.
The
fate of the Republican governor’s plan is uncertain. Lawmakers he will
ask to approve the measure face particularly competitive elections this
year.
Testimony was set to begin on the bill Wednesday in the GOP-led Ohio House’s powerful Ways &
Means Committee.
Kasich,
who also faces re-election this fall, proposes reducing Ohio income
taxes by 8.5 percent over the next three years, which would lower the
top tax rate to 4.88 percent by 2016. The administration estimates that
would mean a cumulative tax savings from 2011 to 2016 of about $350 for a
median-income couple with two kids.
The nearly $2.2 billion
reduction would be made up for through increases in taxes on commercial
activity, cigarettes and drilling.
Kasich said cutting income taxes and improving education and training are already proving beneficial.
"We’ve
got to keep building on these ideas because they’re lifting our state,
and with the continued partnership of the Legislature we’ll keep that
progress going for Ohioans," he said in a statement.
Cuyahoga
County Executive Ed FitzGerald, Kasich’s presumptive Democratic
challenger in November, criticized the governor’s tax package as
primarily benefiting the wealthy.
"As governor, I will focus on
growing our economy from the middle out, rather than top down," he said
in a statement. "… Ohio’s seniors and most vulnerable should not have
to pay for John Kasich’s giveaways to the very well off."
The
Kasich administration says Ohio’s 9-year-old commercial activity tax,
conceived as an alternative to traditional business taxes on gross
receipts and inventory, is due to be modernized. Its rate would rise
from 0.26 percent to 0.30 percent, a 15 percent increase, under the
plan.
Per-pack cigarette taxes would go from $1.25 to $1.85 under
the bill, up 48 percent, and other tobacco products — including
e-cigarettes — would see similar tax hikes. The bill couples those
increases with $26.9 million in national tobacco settlement money for
smoking cessation and prevention programs.
The legislation takes a
second crack at raising the tax rate on Ohio’s big oil and gas drillers
after an earlier Kasich effort fell flat at the Statehouse. Tuesday’s
proposal imposes a severance tax on gross receipts from well operations
of 2.75 percent, exempting smaller drillers and allowing large drillers
to recoup costs of $8 million per well before taxes.
Kasich would
earmark 20 percent of drilling-tax proceeds for local governments under
the plan, with half the money flowing directly, a quarter set aside for
competitive infrastructure grants, and a quarter directed to a "legacy
fund" controlled by newly created shale gas regional commissions.
API
Ohio, representing drillers, said asking energy developers to pay 10
times more than the commercial activity tax is "simply unworkable."
"If
this proposal becomes law, it has the real potential to place a
chilling effect on the short- and long-term economic value of this shale
play," director Chris Zeigler said.
The influential Ohio Business Roundtable praised Kasich’s tax changes.
"Ohio
as a state will be better with a modernized severance tax that
recognizes the bounty of our natural resources, a consumption tax that
discourages cigarette smoking, lower effective tax rates on business and
reduced income taxes to enable our citizens to keep more of their
hard-earned money," President and CEO Richard Stoff said in a statement.
It’s
the second time that Kasich has introduced something similar to a
budget bill halfway through Ohio’s two-year budget cycle. The practice
follows the pattern in Washington, where Kasich served as a congressman
and House Budget chairman.
The legislation goes beyond tax changes
with particular focus on education and workforce training initiatives,
tying all state higher education funding to course completion and
authorizing institutions to offer tuition guarantees.
For
veterans, Kasich proposes setting up special offices on every public
campus in the state to help them navigate college and a state initiative
to expedite professional licensing and certifications paid for by the
GI Bill.
The bill would devote $10 million in casino licensing
fees to a student mentorship program called Community Connectors, begin
technical and vocational offerings as early as seventh grade, and set up
programs to reduce Ohio’s 24,000-student-a-year dropout rate. Kasich
also proposes a dropout recovery program for adults piloted through
community colleges and career centers.
Those efforts would
dovetail with an effort to streamline Ohio’s disjointed coordination of
three federal workforce programs, better coordinating the programs and
reducing duplication.
The bill also sets up a Human Services
Innovation Office within the Ohio Department of Job and Family Services
aimed at simplifying government interactions for the poor.
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Online:
http://transforming.ohio.gov
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