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Ohio Budget Bill: To Everyone’s Surprise, 100% of Ohioans Favor HB 59

by Judd Ballard

Sarcasm, obviously, although I can’t take total credit for it.  The best quote I heard during the budget process came from Ohio Tax Commissioner Joe Testa during a Columbus Metropolitan Club luncheon at the Athletic Club over three months ago.  Because of the topic, and given the other invited speakers present, Testa volunteered to go first and began his conversation with a classic one-liner…”the most surprising thing about the Governor’s initial budget proposal was how well received it has been statewide”.  A nice loud laugh came from the crowd.

Now finalized, the dust is certainly beginning to settle.  Open any Ohio-based publication any day of the week and every corner of the state is weighing in on the signed House Bill 59.  It’s hardly surprising the editorials are coming from all directions.  There will always be sides that claim victory, while others claim defeat.  No one is ever 100% happy with these budgets.  But read between the lines to figure out who won and who lost.

Democrats? Not happy.  Republicans? For the most part, happy.  Small business owners? To be determined.  Job creators? Supposed to be happy.  Wealthy individuals? It depends on who you ask.  Manufacturers? Probably feel a little let down.  Utica shale investors? Off the hook for now, but apparently playing a large role in the lack of change to the severance tax.  And lastly, don’t forget about the online retailers.  Online shoppers are somewhat safe for now but it’s likely the days of “tax free” online shopping will come to an end soon.

The underlying theme of HB 59 from the beginning was to cut personal income taxes.  Governor Kasich’s wish to shift Ohio’s tax burden from income to consumption seems to have succeeded to an extent.  While the CAT rate and base remained largely intact, the new graduated structure for the annual minimum tax appears to be covering for lost tax dollars related to lower individual income tax rates.  In addition, the slight increase in the state sales tax rate will also help cover forgone income tax revenues, as will additional sales tax revenues from certain digital products and magazines.

It’s been almost a month now since the bill was signed into legislation and there are still several topics not sitting well with the entire state.  Kasich appears ready to continue the fight for an increased severance tax, vowing to not back down to a House Republican or two opposing the idea.

Stay tuned for updates on a handful of other bills with tax consequences, municipal income tax reform, et al.  If House Bill 5 passes in its current form, you can fully expect the entire state to be pleased.

This entry was posted in Audit & Tax Talk and tagged Accounting. Bookmark the permalink.

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