Kasich touts tax plan as best approach, legislators & educators push back on school funding

Gov. John Kasich went on the offensive Tuesday, pushing the tax plans in his budget proposal as a way to bolster Ohio’s economy and his plan to revamp school funding across the state as the responsible thing to do.

Kasich, speaking at a gathering of presidents from Ohio’s public colleges and universities, said the tax changes he has proposed will help to strengthen Ohio.

“What we want to do, and are trying to do, is to change the very mix and diversify the economy of Ohio,” Kasich said. “What we’re trying to do is to shift this whole tax system to a system that rewards investment and risk taking so that we don’t drive our best and brightest out of the state.”

In his executive budget proposal, Kasich recommended lawmakers grant a 100 percent income tax deduction for small businesses — pass through entities — that have $2 million or less in annual gross receipts. He also proposed a 23 percent cut to income tax rates over two years and increases to personal exemptions.

To pay for those changes, Kasich proposed raising the state sales tax from 5.75 percent to 6.25 percent — 50 cents for every $100 of goods purchased — and increasing the tax on cigarettes by $1 a pack. The commercial activities tax, which is charged on businesses’ gross receipts, would rise from 0.26 to 0.32 percent. He also would boost the state’s severance tax on oil and gas profits from shale fracking wells to 6.5 percent.

Kasich’s last budget included similar proposals for severance taxes, the CAT and cigarette taxes, but legislators stripped them out of the budget. He proposed a reduction in the sales tax, but sought to broaden the base. Instead, lawmakers increased it by 25 cents on every $100 of goods purchased.

Also Tuesday, the House Finance Committee heard three hours of testimony from state Superintendent Richard Ross and Budget Director Tim Keen on school policy and funding proposals in Kasich’s new budget plan.

The funding proposal drew the most heat from legislators, with criticism coming from two sources — Republicans in rural areas that will see reduced state aid and Democrats who want the state to pick up a greater share of education costs.

Each said districts they represent are puzzled at which districts in their areas are seeing gains and which are seeing losses.

Click here to read more about Kasich’s push.

To read more about the committee hearing testimony, click here.