March 27, 2013
COLUMBUS — Ohio House Democrats said Monday they will introduce an amendment to the governor’s sweeping mid-biennium review that will use surplus taxpayer money to offset budget cuts to schools and local police and fire services.
Democrats said at a Statehouse news conference that a combination of overestimated tax revenue, money from the state’s rainy day fund and a proposed severance tax by Gov. John Kasich would help create the fund. It would then award grants to local communities to keep more teachers and emergency personnel employed, as well as alleviate local property taxes.
But it’s too early to tell if the proposed amendment to Kasich’s review will stick, as Republicans themselves prepare to introduce changes.
House Minority Leader Armond Budish, D-Beachwood, and Democratic members of the House Finance Committee took turns explaining how the proposed Kids and Communities First Fund would help ease deep cuts last year to the state’s budget that directly impacted local communities.
“It’s clear that school districts in every corner of the state are hurting. Inner city, rural and suburban school districts are screaming for help,” said state Rep. Debbie Phillips, D-Athens. “And we cannot turn our backs on the kids and communities in Ohio.”
Budish said the fund would make available up to $400 million, created through one-time installments of $265 million in overestimated tax revenue and $120 million from the state’s rainy day fund.
Democrats also estimated $15 million from Kasich’s proposed severance tax increase, which would raise the severance tax on oil and gas extraction to 4 percent in two or three years. The administration estimates the amount collected to rise to between $1 billion by 2016. That could trim income tax rates by 5 percent.
Democrats said an additional $500 million from that severance tax would later sustain the fund long term. But it’s still unclear if the severance tax increase will even take effect.
Several groups have voiced opposition to the plan. The oil and gas industry says it would discourage investment at a time of heightened interest in shale drilling. Kasich has dismissed criticism that the tax would discourage investment. Public safety groups say the money should be reinvested in government programs that have been hit with recent cuts.
Even Ohio House Republicans have reservations. Finance Chairman Ron Amstutz recently said Kasich’s revisions to the state tax code are too complex to handle in a limited time. He said the severance tax increase, which was originally a part of the mid-biennium review bill, would be placed into a separate bill to be considered later. Democrats say their proposed amendment would reinstate it.
Budish repeated that the tax revenue increases are designed to sustain the fund.
“If we don’t improve education and we don’t improve the safety of our communities we’re not going to be attracting new businesses here. We’re not going to keep the existing businesses,” he said. “They’re not going to have the educated workforce they need. And ultimately, the economy of Ohio will falter if we don’t do this kind of an approach.”
Kasich’s unusual mid-biennium review, introduced outside of the state’s normal two-year budget cycle, proposes agency updates and policy changes that include changes to education and health care policy.
House Republicans plan to unveil their changes to the bill in the House on Tuesday.
Kasich spokesman Rob Nichols criticized the Democrats’ proposal, saying severance tax revenues should not be reinvested in government spending. He said the proceeds should be used for an income-tax cut.
“As sure as the sun will come up tomorrow, liberals will oppose tax cuts, since they generally believe government should have more money and taxpayers should have less,” he said in a statement. “That’s not the governor’s policy and it’s not the policy that will get Ohioans working again.”
A message left Monday for Republican House Speaker William Batchelder was not immediately returned.