House Republicans are set to put their stamp on Gov. John Kasich’s $72.3 billion biennial budget Tuesday, with Speaker Cliff Rosenberger confirming at a news conference that a majority of the governor’s tax proposals have been axed from the bill.
The new measure, to be adopted in the House Finance & Appropriations Committee this afternoon, will also include $179 million in additional funding for schools over the Fiscal Year 2016-2017 biennium and a guarantee that districts won’t receive less than they did in FY 2015 under a plan the otherwise maintains the governor’s K-12 funding formula proposals.
The tax revisions have been telegraphed for some time by a reluctant House majority caucus that has witnessed a lengthy parade of mostly opponent witnesses during committee deliberations over the last several weeks. Key business groups including the Ohio Chamber of Commerce have also been vocal in their opposition to many facets of Mr. Kasich’s plan.
Deleted are increases in sales, commercial activity, tobacco and oil and gas severance taxes. One of the few components of the governor’s plan to survive is means testing for income tax credits and deductions.
So instead of a major overhaul to the tax code that continues a shift away from income to consumption-based taxes, the House GOP plan would instead provide for $1.2 billion income tax cuts using in large part the projected growth in tax revenue to offset the expense.
Those cuts include a 6.3% across-the-board reduction in rates, bringing the top rate below 5%, House leaders said. The new plan also makes permanent a 75% small business tax cut for the first $250,000 of income.
The overall plan spends $775 million less in general revenue funds that the governor but more in “all funds as a result of increasing the proposed hospital franchise fee from 3% to 4%. That change draws down more Medicaid matching funds from the federal government.
Other key changes include requiring the administration to seek a Medicaid waiver for health savings accounts, returning Medicaid eligibility determinations to the General Assembly, and increased funding for foodbanks, drug courts, drug addiction treatment programs and College Opportunity Grants.