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News & Notes June 23, 2014

Screen Shot 2013-07-23 at 9.22.50 AMNews: As Ohio Expands Tax Cuts, the Poor get Poorer, Cleveland Plain Dealer
Notes: “So, today’s Statehouse irony: The tax cuts that give General Assembly Republicans a platform leave middle-class Ohioans treading water – and unfilled potholes in front of country clubs.” READ MORE

News: Tilt of the Governor, Akron Beacon Journal 
Notes: The Governor signed another tax cut last week costing the state over $400 million. 50% of the cut will go to the wealthiest 5% of Ohioans. 

News: Ohio’s Economic Recovery, Not a Simple Tale, Columbus Dispatch
Notes: The national recession and recovery have more to do with Ohio’s economy than state level decisions. Tax cuts simply have not worked in improving Ohio’s economy. In fact, Ohio is lagging much of the nation. The simple reality is that governor’s have the most impact in creating great public services that will be the foundation of a strong economy into the future. Investments into reliable infrastructure, schools, and public safety are prudent ways to grow an economy over the long term. 

News: Wages flat in Ohio, decline locally, state job growth below national average, Cleveland Plain Dealer
Notes: The unemployment rate does not reflect Ohio’s unemployment picture for Ohioans. Ohio’s unemployment rate is dropping because too many people have been unemployed for so long that we stop counting them. Job growth is slow and far too many new jobs are part-time and low wage. This will continue to drag the rest of Ohio’s economy downward. 

Governor Signs Budget Bill: 50% for the 5%

Ohio Continues a trend – Cut taxes for the wealthy and not investing enough in our communities. 

 

hb483
On Monday June 16th, Governor Kasich signed HB 483 also known as the Mid-Biennium Review (MBR). This legislation continues a decade long trend that prioritizes tax cuts for the wealthiest Ohioans. The bill cuts taxes in by about $400 million over the next 12 months (July 2015 – June 2016). Over $200 million of this cut (50%)  will go to the wealthiest 5% of Ohioans.  The poorest Ohioans will probably not receive any of this.

 

 

Tax cuts just don’t work. 

The tax changes include an increase to a tax credit for some business owners – that has no evidence showing it is effective at creating jobs. We need to review tax breaks and loopholes and keep the ones that work, and get rid of the ones that don’t.

Tax cuts continue to benefit the wealthy the most.

The bill cuts Ohio’s income tax by 1% (reducing the top marginal tax bracket 5.39% down to 5.33% in 2014 instead of 2015). The top 1% will pay an average of $400 less in income taxes – while those in the middle will only save $8 a year. We need the wealthiest Ohioans to pay their fair share – the more we cut the income tax, the father we get from that goal.

Some Good? Maybe. – put it’s really small.  

The bill does provide a larger tax credit for those who make less than $80,000 a year and an expanded Earned Income Tax Credit (EITC). However, the EITC remains non-refundable – excluding those Ohioans most in need. These two changes will put about $2 a month into middle income Ohioans pockets. While signs of a positive step, these changes fall short of helping many Ohioans.

Most importantly – we are not investing in our communities! 

$400 million is a substantial amount of revenue that could be invested into affordable housing, social services, K-12 education, reducing college tuition, or building alternative transportation options. While the bill did invest $36 million into expanding some social service programs – close to $500 million was requested by multiple advocacy organizations asking for resources to meet the current need.

 

Last Minute Tax Cuts Pass

time to investThe Ohio legislature passed HB483 on Wednesday, June 4th, approving $400 million in tax cuts.  The tax cuts  benefit the wealthiest Ohioans the most and drain funds needed to invest in the great public services that strengthen our communities. Dozens of individuals testified throughout the Mid-Biennium Review process on where Ohio needs to invest – adult protective services, addiction treatment, housing, children services, local governments, infrastructure, food security, education, prison security and much more.

A QUICK SUMMARY OF THE TAX CUTS: 

Pass Through Entity Tax Cut: Ohio has no corporate income tax, but some business owners – such as lawyers and accountants in private practice – claim their business income on their personal income tax returns. These individuals are exempt from paying tax on their first 75% of income (up from 50% in HB59).
The Problem: This tax cut is intended to spur job creation – but businesses expand business based on consumer demand, not tax cuts. This will re-direct $290 million into the pockets of mostly wealthy individuals who have no intent to hire new people. 

Income Tax Cut: HB59 (June 2013) included a 10% income tax cut phased in over 3 years – with the final phase in coming in 2015. HB 483 speeds up the tax cut to all go into effect in 2014.
The Problem: The original tax cut was based on a theory that tax cuts lead to jobs – despite research and evidence to the contrary. This will provide nearly $100 million primarily for the wealthiest Ohioans. 

EITC: The bill expands Ohio’s Earned Income Tax Credit from 5% of the federal level to 10% of the federal – a step in the right direction.
The Problem: While this is a step in the right direction, an EITC is most effective when it is refundable. Without refundability of the credit, many will not benefit from this policy. This will provide only $17 million for low and middle income Ohioans. 

Personal Exemption: The personal exemption amounts will be increased for individuals making less than $80,000 a year. This policy will reduce the tax load for middle income Ohioans by about $73 million a year.
The Problem: It is important to make Ohio’s tax system less regressive and credits and exemptions for low and middle income Ohioans is an important step. However, this overall plan will only provide about $36 or $3 a month to middle class families.

Tax cuts just haven’t worked in Ohio – we need to invest in the foundation of a strong economy – great schools, reliable roads and infrastructure, and safe communities.

News & Notes June 2, 2014

Screen Shot 2013-07-22 at 9.20.51 AMNews: Bad Budget Business, Toledo Blade
Notes: The typical middle class household will pay $24 less next year in taxes  as a result of an 11th hour budget deal. For this $2 a month, we will not invest over $400 million into our schools, public safety, or our community parks. A few more teachers in classrooms, or an extra police officer on our street are just some of the sacrifices we make to finance a tax cut for the wealthiest 1% of Ohioans who will receive over $1,800 a year. 

News: More Millions, Akron Beacon Journal
Notes: A summary of continuing a failed tax cut strategy. Simply put, tax cuts just haven’t worked in Ohio.  Government investments are investments in our priorities as the people of the state. 

News: To Help Poor Neighbors, Ohio needs to rebuild the Safety Net, Toledo Blade
Notes: The federal government cuts programs, the state cuts programs. Fiscal responsibility does not mean forcing the ones with the fewest resources to suffer in difficult times. Fiscal responsibility means that Ohio policymakers identify ways to meet the needs of the community in a responsible manner, and not forcing the poorest Ohioans to bear the brunt of a bad economy. Asking the wealthiest Ohioans to pay their fair share to support our community is a good first step toward fiscal responsibility. 

 

Cuts Hurt Ohio Updated

CHO image

Great public services strengthen our communities, and we need the revenues to pay for them.

One Ohio Now in collaboration with Policy Matters Ohio and Innovation Ohio release an updated CutsHurtOhio.com - a website that allows residents around Ohio to see the impact of continued state budget cuts on their local schools and local government.

Ohio is investing $1.8 billion less in our communities and schools than in 2010. For a strong economy and good jobs we need reliable infrastructure, a well educated community and a good quality of life for all Ohioans, continued budget cuts take Ohio in the wrong direction.

News & Notes May 23, 2014

Screen Shot 2013-07-22 at 9.20.51 AM

News: Expert: Doubling Ohio’s EITC a good move but its still not enough, Public News Service
Notes: The Earned Income Tax Credit (EITC) is a tax credit that is targeted at low and middle income families. A refundable tax credit will provide people that qualify a refund. For example, if a working single mom for tax year 2014 has a tax liability for $100 but qualifies for a $200 EITC, they would have their tax liability reduced to $0 and then receive $100 back. Without a refundable credit, a person will only have a $0 tax liability and loses the remaining $100 of their credit. 

News: Local elected officials to hold tour to urge restoration of local government funding, Akron Beacon Journal
Notes: Local leaders continue to struggle to meet fulfill their duties to their local communities after billions of dollars of state budget cuts. Local leaders are touring the state because the cuts have hit every corner. 

News: Cities start to challenge Ohio Gov. Kasich on lost local government funds, WKSU News
Notes: There are multiple philosophies on what components we need for a strong economy. Presidents Eisenhower   and Truman understood the foundation of a strong economy was strong public services. Their administrations invested into building infrastructure across this nation that was the foundation for a half century’s worth of economic prosperity. It is up to the states to maintain and continue to enhance much of that investment now – but we are allowing it crumble beneath our feet. Continued cuts to local government is a step backward, not forward. 

News & Notes May 22, 2014

Screen Shot 2013-07-23 at 9.22.50 AMNews: Latest ‘compromise’ on raising severance tax for Ohio oil and gas drillers is more like a giveaway: editorial, Cleveland Plain Dealer
Notes: Ohio’s Senate is likely going to stall the severance tax bill and hopefully they will improve it over the summer. Otherwise, Our legislature has given a gift to the oil and gas lobby while failing to create economic security for Appalachia, create resources for those now and adequately address potential environmental concerns. 

News: Ohio Senate Approves bill to expand business, income tax cuts, Plain Dealer
Notes: This bill will now go to the House for an up or down vote or to conference committee. The different components interact with each other – making the total cost of the bill $402 million. With that money, we could have restored the cuts to our K-12 schools, fund a massive expansion of Pre-K, fund all the social service funding requests, or adequately fund the third grade reading guarantee. Instead, the money will mostly go to the wealthiest Ohioans. 

The estimates by the Legislative Services Commission are as follows
1. Business Tax Cut: Costs $290 million. This cut will primarily benefit sole proprietorships like wealthy attorneys or accountants who have a large amount of income from their business on their personal tax returns. Most business owners will not see much of this money.
2. 
Income Tax Cut: Costs $100 million. Income taxes are based on your ability to pay, and will primarily benefit the wealthiest Ohioans.
3. Personal Exemption: Costs $73 million. The expansion of the personal exemption will primarily go to middle income families.
4. EITC: Costs $17 million. Expanding the EITC, but not making it refundable is a wasted opportunity. Many low and middle income families will not be eligible for this because it is not a refundable credit. 

It is important to note that these amendments were introduced into an appropriations bill on Tuesday during committee, approved and passed by the full Senate on Wednesday – without any notice that these would be included. 

 

 

 

Severance tax moves to House Floor

Screen Shot 2014-05-13 at 3.22.33 PMThe Ohio House Ways & Means Committee voted 11-10 to approve HB 375. The bill moves to a full House vote on Wednesday May 14th.  This is a complex bill, resulting from 9 hearings, months of debate, and numerous witnesses. The vast majority of witnesses called on the state to invest more in their communities for education, social services, infrastructure and providing opportunity for an impoverished region to have hope again.

Simply put, the committee referred a bill with a low rate (2.5% reduced further by tax credits) and a small amount of money for a handful of initiatives. Texas has a rate of 7.5%, West Virginia has a rate of 5%. Our 2.5% rate remains very small. Representative Hill (R-Zanesville) voted against the bill because it just didn’t invest enough into the communities impacted by fracking and struggling to get by. Amendments to dedicate revenue toward local government, pay off a federal loan, and to invest in workforce development were defeated. Instead the majority of this new money will benefit the wealthiest Ohioans with an income tax cut.

The bill does provide a starting place for the Senate and Conference Committee. The bill creates a legacy fund which – if properly capitalized – could provide long-term economic stability and be a ‘game changer’ for the region. Currently it will never fulfill its potential. The bill also allocates some revenue for local governments.  Rep. Cera (D- Bellaire) pointed out that this revenue will be divided between over 20 counties and not go that far as he introduced an amendment to allocate 50% of the revenue to impacted communities instead of 15%. The bill does make a good step forward for environmental activists by allocating resources to plug orphan wells.

Moving forward, the media, candidates and interests groups talk about this bill very differently. Some will call it a tax increase, others a tax cut. Yes it is a tax increase on drillers, but a tax cut for the wealthy. Most importantly it is a failure to strengthen our communities with great public services that are needed.

It’s Fracked

fracking well

Fracking has impacted communities in Eastern and Southern Ohio. Drilling companies come in, take the oil and gas from underneath our feet, and sell it. Yes, jobs have been created, but many of those are filled by out of state workers. Rents have sky-rocketed, traffic accidents are up, and there is a high level of concern over environmental damage in the short and long-term. What can be done to help now and to plan for the future? 

Oil and gas drillers pay an extremely small tax for the right to have access to the resources of Ohio. Ohio is one of the lowest tax states for oil and gas drilling in the entire country. The Governor, environmentalists, local officials and many others have agreed that the industry needs to pay their fair share.

HB 375 was introduced last winter with the intent of raising the severance tax. The bill will receive its 9th hearing on Tuesday May 13th. However, this bill falls short on our moral obligation to be good stewards of limited resources and to adequately plan for the future.

Instead, this Bill (in its 3rd version):

  • Cuts the rate in half for some wells. The Cost Recovery Fee will be eliminated and vertical (traditional) wells will continue to pay $0.10 per barrel of oil and $0.015 per Mcf of natural gas.
  • Imposes a 2.5% rate on gross receipts of oil and natural gas from fracking wells (after exempting the first $10 million). This will leave Ohio well below other states in the region and across the country. For example, West Virginia has a rate of 5%, Texas a rate of 7%.
  • Regulatory initiatives The proposal will allocate $21 million toward ODNR regulation, geological mapping, and plugging orphan wells. Some of this work was funded under the old tax structure as well.
  • Creates new tax credits and loopholes for businesses and investors that could cost the states general operating budget $10 million in 2016.
  • Creates a legacy fund. The concept is simple – the oil and gas will run out at some point, but lets use the revenue now to plan for the future. Local communities could start accessing the funds in 2025, but if we do not put aside enough now, it will be under-capitalized and ineffective at long-term financial security. It will only receive $1.5 million in 2016. North Dakota – in 3 years has built up a principal amount of $1.3 billion. Since 1976 New Mexico has a principal amount of $4.1 billion, and Wyoming $6.3 billion. With a strong principal, communities can benefit for decades on the interest of those investments.
  • Local Government and Infrastructure will receive about $22 million in 2016. Local communities have to deal with massive infrastructure needs to handle the fracking industry – including bigger roads, sewage systems, more maintenance, more car accidents, more work for public safety, and social needs such as rise in drug and prostitution, increased rents and much more. $22 is well short of the need that exists.  These investments will probably not replace the cuts these communities have seen over the past 4 years.
  • Tax Cuts primarily for the wealthy. Estimated at $54 million in 2016. Most Ohioans will receive such a minuscule amount of this money that it will likely have no impact. This revenue should be used to strengthen the legacy fund, assist local governments. Others have proposed also using the revenue to invest in alternative energy, environmental stewardship, education and training (to make sure that Ohioans qualify for these drilling jobs, and other projects.

As a state, we have a moral obligation to the next generation to adequately plan and be good stewards of our limited resources. We need revenue to invest in Ohio’s future not for a $4 income tax cut today. 

News & Notes May 8, 2014

Screen Shot 2013-07-23 at 9.22.50 AMNews: Ohio Lawmaker panel offers another frack-tax proposal, Youngstown Vindicator
Notes: Shortly after lawmakers enjoyed the Ohio State University Marching Band (TBDBITL) playing Hang on Sloopy, the House Ways and Means introduced a 3rd version of HB 375 – a bill to update taxes on oil and gas fracking. Witnesses from Eastern Ohio voiced their support for a much higher rate to fund their communities and help with some of the negative impacts that fracking has had on the region. 

News: Raise taxes or cut services in Chagrin Falls, Plain Dealer
Notes: Often, the Ohio budget looks like a collection of random letters and accounts. The PLF and LGF don’t really have much meaning to most of us – but our county, city and township leaders know what these letters mean. The elimination of the estate tax and a 50% cut to the Local Government Fund (LGF) have left communities across the state trying to fill major budget holes. Chagrin Falls needs to replace $1 million in state budget cuts or cut services like parks, police, and road maintenance. 

News: Ohio Voters approve majority of school issues, Channel 3 Cleveland
Notes: 27 of 65 requests for new money were approved while 75 of 84 renewal school levies passed. In Ohio, revenue for schools does not increase automatically as your house value increases.  New money eventually is needed otherwise districts cannot keep pace with rising fuel, food, and building costs.