Ohio’s Latest State Budget

DAYTON, Ohio (February 2017) – Ohio Governor John Kasich has now presented the details of his 2017-2019 biennium state budget for the Ohio legislature and others to review. This budget must be completed by June 30^th of this year and per our Ohio constitution is mandated to be balanced.

This new financial plan, Governor Kasich’s last as he is term limited, will most likely be a big part of his legacy agenda for Ohio. It has several interesting nuances that the General Assembly must review before the final iteration is completed by mid-year. But it is safe to say, there will certainly be some negotiating on the final product between the Governor and the legislature. Here are several recommended changes by Governor Kasich that may affect consumers and businesses over the next 2 years if passed:

An average 17% state income tax cut
Centralized municipal income tax collection by the state
Increase in cigarette taxes by $0.65 per pack
Increase tax on beer and wine by 1 cent per drink
Retail sales tax increase of 1/2 percent from 5.75% to 6.25%
Broadening retail sales taxes on services like cable TV; landscape design; interior design; travel agents and more
Reducing the consumer sales tax trade-in tax credit by 50% for cars and boats

Also this budget will:

Reduce the number of state tax brackets from 9 to 5 brackets
Higher education tuition in public colleges and universities will be frozen and colleges must provide students with up to $300 per student for books

Naturally as you look at this first draft, to reduce taxes (state revenue), you must increase taxes elsewhere to balance the budget. We just can’t rely on an organic growth that will make up for any new spending or cuts in revenue (taxes).

We go through this “dance” every other year. Some years, like 6 years ago when Ohio was in a very deep hole coming out of the “great recession”, it was extremely difficult to balance the budget. Though Ohio has certainly grown since 2011, it has not grown at a rate that would allow enough tax growth to offset growth in state expenditures. Plus priorities change things all the time and we need to adapt to an ever-changing environment.

And so the dance begins anew. Priorities are debated. Fiscal constraint is debated. And over the next 4 months almost every line item will be examined and debated. But if there is at least one positive, it’s this. Ohioans were smart enough when they passed amendments to our state constitution back in 1851 that with few exceptions (such as time of war; infrastructure or by a specific vote of the people), we could not create debt. This has since been interpreted – and re-interpreted – as balancing our general fund each year. Many states don’t, certainly not our federal government, but we do.

So I say good for Ohio. We dance and debate; but in the long run, we don’t spend more than we make. Thank you forefathers for your insight. Your efforts have kept our heads above water and our butts out of the fire.

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Phillip L. Parker, CAE, CCE

President & CEO

Dayton Area Chamber of Commerce