Some say Governor Kasich’s budget plan will make Ohio more competitive and allow job growth for small businesses in Southeast Ohio. Others remain unconvinced.
{{tncms-asset app="editorial" id="5bd0be0a-ad90-11e4-a434-2bbf121b140e"}}
Ohio Governor John Kasich’s recent budget proposal has been described alternatively as a “move forward” and “more of the same” for Southeast Ohio.
The budget proposal, which was released Tuesday, outlines Kasich’s suggestions for how to appropriate state funding in 2016-2017.
The task now rests on the state legislature to approve the budget, and will take turns being debated on the General Assembly and the State Senate floors.
State Senator Lou Gentile, D-Steubenville, who serves on the senate budget committee, said he was “skeptical” of the new budget. He said there is still a lot that can happen between now and June 30, when the legislators must approve the final draft of the budget.
“It’s very early in the process,” he said.
Kasich’s budget proposal features several items that might keenly affect Southeast Ohio and Athens.
Sales tax increase and income tax breaks
Kasich’s budget proposal suggests increasing sales tax in Ohio to 6.25 percent in exchange for a 23 percent decrease in income taxes.
Gentile called this a “reverse Robin Hood” approach to taxation because sales taxes tend to disproportionately affect mid- to low-income households more than they affect high-income households.
He said that, although the proposal is touted by Republican leaders as a way to encourage job creation, this tax change would be regressive and would not be likely to cause very much change in the economy.
Richard Vedder, professor emeritus of economics at Ohio University, said this tax change is what Ohio needs to make the state competitive against others.
Vedder said that one of the main reasons he thought Kasich’s tax plan was equitable was because it also included an increase in personal tax exemptions for individuals making less than $80,000 a year.
“The governor, I think, was being very sensitive about this,” he said.
Small business tax cuts and job growth
Another of Kasich’s proposals was to completely cut income taxes for businesses making less than $2 million in annual gross receipts.
Gentile said he was skeptical of the overall effect this tax cut would have, even if it did cut costs for small businesses.
He said a change like that was unlikely to enable a business to hire another full-time employee, and so it would have no effect on job growth or unemployment.
Wendy Patton, senior project director at Policy Matters Ohio, a non-profit economic research institute, said that simply eliminating a class of taxpayers would not be beneficial.
“There is no correlation between employment and tax breaks,” she said.
But Vedder said he thinks Southeast Ohio stands to benefit from this tax break.
Southeast Ohio is the poorest part of the state, and three or four of the counties with the highest unemployment lie within 50 miles of Athens, he said.
“I think our area probably … could gain as much as any area, because we could use the most entrepreneurship,” he said.
Vedder added that budget and tax changes alone would not create jobs in and of themselves, but that this was a good start.
“If you look at it in its totality, I think it’s a very strong budget,” he said.
wp198712@ohio.edu
@wtperkins
