Kasich tax cut offset by trade-offs; Ohio schools, local government needs spur ballot requests

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Gov. John Kasich sounded some familiar themes in his State of the State message -- more money for education, a reduction in the state income tax, job training -- while remaining steadfast in his belief that better days are ahead for Ohio.

"The sun is beginning to break through … We are not hopeless. We are not wandering. We have direction," he said during his presentation Feb. 24 in Medina.

Optimism and a penchant for outside-the-box thinking have been hallmarks for Kasich throughout his term as governor, and his fourth State of the State message was no exception. With his re-election campaign in full swing, his pledges for a tax cut and a boost in funding for schools are predictable from a political standpoint. How he will go about implementing them is another question.

Kasich is seeking to reduce the state income tax to less than 5 percent, which he says he will do using revenues from an increase in tax rates on oil and natural gas production. He wants to use $10 million in casino-licensing fees to finance education initiatives through a "Community Connectors" program. He also would tie state funding to colleges and universities to graduation rates; offer college credits for veterans for training their received during military service; use $35 million in tobacco settlement funding for anti-smoking initiatives; and extend vocational training to students starting in seventh grade.

His agenda is an ambitious one, as has been the case throughout his tenure.

Kasich has no shortage of ideas, but he could face a challenge translating them into reality.

Last year's State of the State message included a broad outline for action that focused on reforming funding for schools and tax relief, but Kasich found himself stymied at the Statehouse by legislators from his own party. His plan to tie an income tax cut to fracking revenues could face a similar fate; getting the GOP majority to pass the severance tax measure that he has proposed has been problematic.

Kasich noted that $12 billion in income has left Ohio in the past generation as residents headed to states with lower income tax rates. Cutting the state income tax could help reverse that trend, he believes. "We've got to keep cutting taxes," he said.

The trade-off for that, however, has been to shift the burden of taxation to the local level. Less state aid for education and local government has translated into more requests for school levies and taxes for other services. Whatever taxpayers recoup in their paychecks because of lower state taxes isn't likely to remain with them for long. As State Rep. Rep. Ronald Gerberry, a Youngstown area Democrat, put it, "We have schools that are putting ballot issue after ballot issue after ballot issue (before voters). We have counties that are saying, 'Help us.' We have townships going broke. And what are we doing? Are we addressing in any way … local governments? No. Are we addressing school funding? No."

During his upcoming campaign, Kasich is likely to tout his role in turning around Ohio's economy: He bridged an $8 billion gap in the state budget; boosted the state's rainy day fund from virtually zero to $1.5 billion; expanded Medicaid eligibility (by doing an end run on his GOP critics at the Statehouse); reduced the state income tax rate.

Expect to see all of those points reiterated in the months ahead. And count on Democrats pointing out that reducing the state income tax doesn't necessarily add up to more money for taxpayers in the long run.

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