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Our View: Kasich strategy: Cut taxes, cap costs

Published: February 7, 2017 11:54 AM

In his budget for Ohio’s coming biennium, Governor Kasich is continuing his strategy of cutting income taxes to make the state more competitive for business, but sensibly hedging his bets since no one knows for sure what direction President Donald Trump will take the federal government.

The governor’s proposal to reduce the income tax by 17 percent and raise the sales tax by half a percent and extending it to services such as cable TV, elective cosmetic surgery and lobbying is consistent with his philosophy that the consumer should bear more of the tax burden.

The governor also wants to increase “sin” taxes. He has proposed raising the tax on a pack of cigarettes from $1.60 currently to $2.25.

He has brought back his proposal to increase tax rates on oil and gas production since it involves non-renewable resources. The oil and gas industry successfully fought increases two years ago and they will likely be working to defeat them once more.

His proposal to cap tuition and fees at state supported universities is do-able if universities can squeeze by reorganizing staff and supplement their operations by continued outside fund-raising. Done well, salary increases could still occur, but we realize it will not be easy.

The governor is proposing increases for primary and secondary education. which cut a wider swath than post-secondary schools. There may come a day when scarce resources compel a reorganization of the state’s more than 600 school districts through consolidation, but that is a hot political potato that no politician wishes to touch. In the meantime, the additional revenues are welcome. We would feel better if charter schools that use the taxpayers’ dollars faced as much accountability as regular public schools do.

A big issue is likely to be Medicaid, which funds so much of Obamacare in Ohio. President Trump has pledged to replace Obamacare, but no one yet knows where he is going with that. The replacement of Obamacare, which may occur during the next biennium, could have serious consequences for Medicaid. Realizing that, Governor Kasich has kept projected expense increases to a minimum and focuses on building a surplus for the state’s rainy day fund. He is also asking for a premium increase to be paid by users.

Two years ago,  the budget the governor proposed went through a series of committee studies and rewrites prior to its adoption. The same is likely to occur going forward. Although major changes may occur, the governor’s direction in its broad outlines of penalizing the consumer and trying to make Ohio more attractive to business by lowering the income tax will continue.


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