COLUMBUS, Ohio – In an election year, there are no guarantees that a policy plan introduced by Gov. John Kasich Tuesday is a slam-dunk in the Statehouse.
A legislative panel is scheduled to begin hearing testimony as early as Wednesday afternoon on the measure that includes cutting Ohio’s income tax through increases in drilling and a hike in state tobacco taxes that would add 60 cents to the cost of a pack of cigarettes.
“We know what works: balanced budgets, tax cuts, better education and training, and a helping hand so everyone can benefit from a stronger Ohio,” Kasich said in a statement accompanying the release of his Mid-Biennium Review.
The bill’s prospects amid campaign season are uncertain, even in the GOP-controlled General Assembly. House Speaker William Batchelder (R-Medina) greeted it with reserved enthusiasm:
“We will devote careful attention to all of the provisions the governor has laid out in this legislation, and I am confident that the finished product will continue to carry out our mission of improving Ohio’s economy and making our state a better place for families and businesses,” he said.
Democrats maintained their stance that the income tax cut, reducing the rate for Ohio’s highest earners below 5 percent, benefitted only the wealthy.
“The Governor and his friends don’t need another tax break, especially when it’s paid for by raising taxes on businesses and lower-income Ohioans. This is a reincarnation of the same failed economic policies that put individual wealth over the success of our economy, the strength of our middle class and the effectiveness of our schools and communities,” House Minority Leader Tracy Maxwell Heard (D-Columbus) said in a statement.
Kasich, who faces re-election this fall, proposes cutting income taxes by 8.5 percent over the next three years, taking the top tax rate to 4.88 percent by 2016. Kasich’s office claims that Ohio’s top marginal income tax rate will have been reduced by 22 percent over the past three years from 5.925 percent in 2011 to 4.88 percent in 2016.
Commercial activity, cigarette and drilling taxes would rise to pay for the reduction.
While the Ohio Business Roundtable voiced its support, saying the tax proposals, “taken as a whole,” would improve the state’s “business tax competitiveness,” the American Petroleum Institute greeted the proposal to raise severance taxes on drillers with unreserved hostility.
“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,” API Ohio’s Chris Zeigler said.
Kasich also proposes expanding the state’s Earned Income Tax Credit and increasing the personal income tax exemption for low- and middle-income families, proposals that met with approval from the policy research institute Policy Matters Ohio, which was critical of the income tax cut.
“Ohio does not need another across-the-board income-tax cut,” the group stated.
Kasich also proposes streamlining Ohio’s workforce development and poverty programs, tying all public-college funding to graduation rates and expanding vocational and dropout education offerings.
The review also includes changes in the state’s approach to addiction, mental health and developmental disabilities.