COLUMBUS, Ohio (AP) - State senators on Tuesday pulled what's left of Gov. John Kasich's proposed income tax cut from the state budget in favor of tax relief targeted at small businesses.
The move by the Ohio Senate Finance Committee came as a political blow to Kasich, who pledged to reduce the statewide income tax if elected. The Ohio House had retained 7 percent of the 20 percent permanent income tax cut originally proposed by Kasich. It was among dozens of changes the Senate is making to the House budget bill.
Senate President Keith Faber, a Celina Republican, said income tax relief will continue to be debated as budget deliberations progress.
Rather than embrace the broader income tax cut, the Senate chose to restore a small business benefit also proposed by Kasich. That proposal would allow individuals to deduct up to $375,000 in net annual business income for income tax purposes. The Senate tax break is worth roughly $1.4 billion, compared with the roughly $1.5 billion price tag for the House's income tax plan.
Asked why the Senate's tax cut was better than the House's plan, Faber said, "Because it's about creating jobs and growing the state's economy."
Faber said the state already recently had a 4.2 percent, across-the-board income tax cut, and senators wanted to help the small businesses that were adding to the job market.
Key Senate Changes to Two-year Ohio Budget
- TAXES: Delivers $1.4 billion targeted tax cut to small businesses by exempting individuals' first $375,000 of annual business income from the state income tax. Removes a 7 percent permanent income-tax cut statewide worth $1.5 billion.
- STUDENT VOTERS: Removes a provision requiring Ohio universities to charge lower in-state tuition to out-of-state students who request the documents necessary to register to vote in the state.
- E-SCHOOL FITNESS: Exempts students at online schools from meeting the state physical education requirement to graduate.
- LICENSE PLATES: Establishes a History License Plate program whose proceeds would fund state historical grants. Creates an Ohio coal license plate.
- SCHOOL BUSING: Eliminates a provision that prohibited school districts from using public transit buses for transporting K-5 students.
- COSMETOLOGY COMPLAINTS: Establishes a complaint process at the State Board of Cosmetology in which students and former students of a school of cosmetology could file allegations of possible law violations.
- LIQUOR DEFINITIONS: Revises the definitions of
"intoxicating liquor" and "mixed beverages" to allow the Department of Liquor Control to regulate food substances, such as chocolate, containing alcohol.
- SPEED LIMITS: Expands the roadways that allow 70 mph and 60 mph speed limits, so long as they were built to the standards and specifications of interstate highways.
- SPIDER MONKEYS: Removes spider monkeys from the list of animals regulated under Ohio's recently passed exotic animal law.
- POLITICAL DISCLAIMERS: Eliminates a requirement that candidate or legislative campaign funds disclose on political publications the home or business address of the candidate or the committee chair, treasurer or secretary.
- HISTORICAL LANDMARKS: Repeals state law requiring the Ohio Historical Society to maintain state registries of archaeological and historic landmarks. Exempts the society from exceeding certain annual purchase maximums. Removes a restriction on permitting a new construction and debris facility within 500 feet of land listed on the state historic landmark registry.
With rosy state revenue adjustments expected next month, the stage has been set for a potential tax compromise incorporating elements of both plans when the two chambers come together in late June to reconcile their budget differences.
As anticipated, Senate budget changes did not include expansion of Medicaid under the federal health insurance overhaul. Senators also left out a tax increase on high-volume oil and gas drillers proposed by Kasich and expansion of the state sales tax to include professional services like lawyers. The bill keeps a provision effectively de-funding Planned Parenthood by putting it at the back of the line for public funds.
Faber said the idea of changing Medicaid is not dead but will be taken up in a separate bill. A placeholder measure could come in the next two weeks.
Republicans senators are split over whether to extend Medicaid coverage.
"I have yet to see a proposal that I can tell you there's a majority of my caucus that supports," Faber told reporters.
Roughly 366,000 low-income residents would be eligible for Medicaid coverage beginning in 2014, should the state decide to expand the program under President Barack Obama's health care law. Ohio would get $13 billion from the federal government to cover program costs over the next seven years, according to the Kasich administration.
Senators held off making any immediate changes to school funding, though the Senate president said the chamber would have its own version of the formula in the next week.
"We're looking at some significant increases in funding for K-12 over the current system," Faber said. "But where that ends up is still in a matter of flux. Stay tuned."
Facing political pressure from both parties, senators removed a budget provision that would have forced universities to offer in-state tuition to out-of-state students who request the documents necessary to vote in the state, which had been criticized for its potential to suppress votes.
Universities often provide documents, such as utility bills, to serve as students' proof of residency when they register to vote in the presidential swing state. The provision had required universities that continue to provide such documentation to charge those students lower in-state tuition.
The Inter-University Council of Ohio, which represents the state's 14 public universities, estimated that more than 29,000 students would fit that description. And the measure could have cost universities up to $370 million.