The abundance of federal government related news stories taking up most headlines in print and online outlets has shielded what’s going on with Ohio’s budget process. There are obvious reasons why NSA leaks and IRS scandals steal headlines, but here locally many folks are awaiting Governor Kasich’s signature on House Bill 59.
With plenty of work still to be done, yesterday’s proposal by the Republican led General Assembly included many items that don’t seem too unreasonable, while still sticking to the original theme of personal and small business income tax rate cuts.
It’s not unusual for the biennial budget to come down to the last minute or at least down to the last couple of days. The Ohio constitution requires the biennial budget bill be signed into law before the end of the fiscal year, June 30th. However, unlike years past, Governor Kasich’s dramatic early proposals contained tax reform not necessarily well received by the public. Kasich’s plan for a personal income tax reduction sounded nice until combined with an aggressive sales tax overhaul, which was met with fierce backlash from lobbying groups such as the Ohio State Bar Association and the Ohio Chamber of Commerce.
There are several tax related pieces that have come and gone in the process, and this bill will affect everyone, so where do we stand? Personal income tax cut still obviously a hope for many including the General Assembly, but the question that remains is how. Sales tax on everything is certainly no longer a realistic possibility, but suddenly a rate increase is, if only a quarter of a percent. Commercial Activity Tax rate increase…maybe not, but now limiting the annual CAT exclusion has come to the table. Regardless, let’s get this show on the road already.
The economy, especially here in central Ohio, has experienced an upswing, helping drive those excess tax revenues we keep hearing about. Other parts of the state are also experiencing similar upticks. Utica shale and manufacturing activity in northeast Ohio and revitalization and beautification in and around downtown Cincinnati are just two examples of increased investment, job growth, and taxpayer spending.
It would appear on the surface things are moving in the right direction for many parts of the state. As a result, many taxpayers are curiously asking if the current administration ought to think twice about legislation potentially harming the recent economic activity that several other parts of the nation would give anything to have. For now, we have no choice but to ride out the next ten days.