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News & Notes April 23, 2014

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News: Cuts Coming To Mansfield City Schools, NorthcentralOhio.com
Notes: Mansfield schools will likely cut 148 positions as a result of needed budget cuts. the Shrinking economy continues to hurt local government and schools. 

News: Opinion- Ohio Needs a pre-school guarantee, Cincinnati Enquirer
News: A growing chorus around Ohio is echoing a similar tune – pre-school is needed for our students, families, and the health of our economy. If we want every third grader to read at grade level – Ohio needs to engage kids in reading at a younger age. 

News: Ohio’s State Parks Getting Upgrades, Columbus Dispatch
Notes: Budget cuts prevent the state from keeping up-to-date with regular maintenance projects. The American Society of Civil Engineers estimates close to a $1 billion backlog in maintenance and upgrades needed. a $100 million investment is a great first step, but hopefully we will continue to invest over the next few years to make our parks great! Then we need to regularly invest in staff, maintenance, and improvements to prevent a backlog like this from occurring in the future. 

 

What is a Mil anyways?

Good tax imageAll you want to know about property taxes: 

Property taxes are a very direct form of democracy in Ohio – asking Ohioans to fund a specific project like our schools, parks, libraries, public safety, social services, or cultural attractions.

Property taxes are a historical way for local government to collect revenue to fund public services.  Prior to income taxes, property tax was a main source of revenue for our public services. However, this created great disparity of opportunity between communities with a large property tax base and those with a small one – look at the diversity of Ohio’s schools in Appalachia and our urban cities compared to wealthy suburban districts. Through our state income tax, Ohio has made progress in creating more equal opportunity for all to succeed.  Ohio needs a mix of revenue sources to fund services. While property taxes are regressive, we still need them in our current system of funding our schools, parks, and other community services. However, we can offset the regressive nature of property taxes with reasonable state credits targeted at low and middle income Ohioans and with a progressive income tax.

What is a Mil?  A mill is $1.00 for every $1,000 of taxable value of your home. Use .001 to calculate.

How to Calculate
If a property has a $100,000 value – here is how you calculate it.
1. You are only taxed on 35% of the value of your home
.35 x 100,000 = $35.000
2. $35,000 x .001 = $35

For a $100,000 home in Ohio, each mil is $35

The Property Tax Rollback. This was a policy that ‘rolled back’ your property taxes by 12.5%. Previously, a homeowner only paid $30.63 per mil as a result. It started in the 1970s when the Ohio income tax was created. It used income tax revenue to offset some of the regressivity of property taxes. In last years budget, the policy was eliminated for any new or replacement levy. This furthered Ohio’s trend of cutting resources for local communities and shifting the cost for local services onto local communities. A small increase in millage moving forward will increase the property tax load shared by the owner of the property, but not generate substantially more revenue for the local government entity.

Different kinds of levies:

Renewal Levy: Can only go on the ballot in the November before expiration – will keep property tax paid the same. (3 mil levy passed in 2004, for 10 years could be renewed in Nov. 2014 for the 1.5-2 mils that it actually is collecting now. The money collected will remain the same – but the millage is actually less.

Replacement: This levy will renew the previous millage approved. A 2004 3 mil levy is replaced at 3 mils. This will likely cause a property tax increase – because the 3 mils will now be calculated on your homes current value – normally more  expensive.

New: This is much simpler – where the levy will be new mils assessed on your property.

Capital: A levy to fund a capital project means that the revenue generated can only be used for the building, acquisition, or renovation of physical property. Sometimes, voters get confused when they approve a capital levy and then are asked a year later for an operating levy. The funds generated cannot be used for other functions.

Operating: An operating levy can only be used to fund ongoing operational expenses.

Permanent: A permanent levy will be assessed on your property without an expiration. These are best used for expenses that will be ongoing. An advantage of this type of levy is that the entity will not need to come back every 3-10 years asking for a renewal or replacement. It will settle the issue.

X-Year Levy - These levies are fairly common and often levied in 3, 5, or 10 year time spans. The levy will expire at the end of the term. These are effective for capital projects where funding needs will be limited or in communities that are hesitant about funding programs.  However, this type of levy will likely come back to voters every few years and ask for a renewal or replacement levy.

News & Notes April 2, 2014

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TAKE ACTION TODAY, AND WRITE YOUR STATE REPRESENTATIVE!

Notes: Local Government officials testified on Tuesday asking the state legislator to restore drastic cuts made during the recession. Governor Kasich continues to think the choice is between funding police, fire, and community services or cutting state mental health services. The reality is the choice is not between which services, because Ohio has plenty of resources. The choice remains between investing in public services or cutting income tax rates – primarily benefiting the wealthiest Ohioans.

Some committee members appear to support a bare bones budget, that lacks the resources to invest in great public services that lead to stronger communities. They fail to recognize that this strategy will not serve Ohio’s communities, inspire innovation, or attract new investment opportunities.

News: Local government officials seeking reversal of state cuts, Columbus Dispatch
News: Local Government Funding, Corrections, Unemployment Filing Draw MBR Testimony, Hannah News
News: Local Officials Decry state cuts: Bipartisan group rallies at statehouse, Toledo Blade

 

Tax Cuts Questioned

leg letter 5Should Ohio’s primary goal focus on cutting the top marginal income tax rate (impacting 2-3% of Ohioans), or should we focus on how to build a strong economy with safe neighborhoods, great public schools, and enough jobs for everyone.

Newspapers across Ohio question the tax cut goals.  The Columbus Dispatch wrote that only .4% of Ohioans pay over 5% and people left Ohio for warmer climates – not income tax rates. The Cincinnati Enquirer and Toledo Blade ran Opinion Editorials questioning the efficacy of tax cuts, and the Brent Larkin of the Cleveland Plain Dealer wrote a great piece highlighting the choice before Ohioans. We can invest in real economic growth strategies such as lower tuition for Ohio’s colleges and providing preschool to more kids. Likewise, legislative leaders on both sides of the aisle continue to express concerns around funding programs to treat opiate addiction, preschool access, and collaboration to provide resources for local governments. Other legislators even question the regressivity of the recent tax reform package.

After nearly a decade of tax cuts, Ohioans have not felt the impact. Ohio passed a massive 21% income tax cut package in 2005 and since then Ohio has lost jobs and the nation has gained. Simply put – tax cuts don’t create jobs. We want good middle class jobs in Ohio. This doesn’t mean jobs should shift across the boarder into Cincinnati from Kentucky but we should invest in developing a world class education system and foster community ingenuity to create jobs.

Click if you agree: Ohio should invest in our communities over tax cuts that primarily benefit the wealthiest Ohioans!

News & Notes March 21, 2014

Screen Shot 2013-07-23 at 9.22.50 AMHAPPY FRIDAY!

News: How Ohio fails community college students, Akron Beacon Journal 
Notes: The Governor’s top priority continues to focus on the income tax rates for the richest .4% of Ohioans. Maybe it is time that we focus our attention on the thousands of college students that need an affordable education. 

News: Aliens or Tolls are Necessary to fund new Brent Spence Bridge, Channel 9 WCPO Cincinnati
Notes: The Governor unveiled a $2.4 capital budget earlier this week, however he did not allocate funding for the new Brent Spence bridge that will improve infrastructure and traffic into Ohio from Kentucky. This is another step to make Ohio’s tax system more regressive – and shifting the cost of public services away from the wealthy. 

News & Notes March 20, 2014

Screen Shot 2013-07-23 at 9.22.50 AMNews: Kasich’s proposed budget would provide more for prison staffing, repairs, Columbus Dispatch
Notes: A small increase is better than none at all, Ohio needs an additional 400 prison guards not just 87 – which is provided in this budget bill. Ohio has the resources to invest in creating secure prisons and promoting rehabilitation, but every time we cut the income tax we take a step back. 

News: Expanded Medicaid won’t save Ohio promised $400 million, Columbus Dispatch
Notes: Fiscal responsibility requires legislators to be responsible and not count their chickens before they hatch. SB 210 wanted to push through an income tax cut based on this additional funding that is not going to materialize. Ohio policymakers need to be cautious and not rush to tax cuts without considering the long-term fiscal detriment they will have on our communities. 

 

News & Notes March 19, 2014

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News: Tax cut defines Kasich’s budget review, but other ideas matter more, Cleveland Plain Dealer:
Notes: The Editorial Board highlights that their is ‘scant evidence’ that income tax rate cuts will help Ohio’s economy and address the totality of the MBR. 

News: With Higher Taxes, How Many Smokers Would Quit, Cincinnati Enquirer
Notes: A 60 cent increase will have a minimal public health benefit. Many public health advocates argue for a larger increase to promote cessation efforts. In addition, none of this new revenue will be invested into cessation efforts, despite a CDC report that shows Ohio needs to invest about $145 million. Senator Bill Seitz, (R-Green Township) also raises an issue of regressivity – that this new tax will primarily impact low income Ohioans to finance an income tax cut for the wealthiest Ohioans. 

News: Lt. Governor Candidate Blasts Kasich Tax Proposal, City Beat
Notes: Lt. Governor candidate Sharon Neuhardt discussed the proposed tax cut package in the MBR – highlighting that it will not benefit low and middle income Ohioans.

News: Kasich unveils $2.4 billion construction budget, Dayton Daily News
Notes: The Capital Budget uses bond revenues to finance infrastructure projects across Ohio. The Governor advocates that this bill will create jobs and improve our communities. It is important to note that the scale of this bill is relatively small compared to the general revenue fund and these investments are  a similar amount to the income tax cut proposed in the MBR. 

 

News & Notes March 14, 2014

Screen Shot 2013-07-22 at 9.20.51 AMNews: Fight over tobacco taxes begins in Ohio, Dayton Daily News
News: Ohio Gov. Kasich’s tobacco tax plan praised, scorned, Toledo Blade
Notes: Public health advocates support the increase in tobacco taxes to reduce the number of smokers. From a public health standpoint – this makes a lot of sense. However, from a tax and budget standpoint, an increase in tobacco taxes will reduce revenue in the future (as people stop smoking). Over the years, tobacco taxes continue to decline as fewer people smoke. New revenue from tobacco taxes should be used to offset the regressivity of our tax structure or invest in public health expenses that result from smoking. 

News: Governor calls for $53.5 million in new prison spending as inmate population grows, Plain Dealer
Notes: The MBR will invest new money into our corrections – primarily to for ‘institutional operations’. This will mean the creation of about 87 new jobs as prison guards. OCSEA estimates that the need is much larger, and Ohio actually needs about 400 new prison guards to address the current incarceration levels. Instead of another income tax cut, we could hire the professionals needed to address the need, and invest in efforts to prevent recidivism at the levels needed. These public investments will go farther in improving Ohio than another income tax cut. 

News: Ohio loses on big oil, natural gas bids, NBC4
Notes: Governor Kasich is absolutely correct that Ohio’s business taxes and proposed severance tax increase did not cause Ohio to lose these contracts. Very rarely do businesses make location decisions based on tax rates. Instead, they look at many other factors, costs, access to materials and a skilled workforce. We need to build our skilled workforce to develop our own businesses instead of competing with neighboring states. 

News: Schooling the Governor, Toledo Blade
Notes: College is expensive. If we make it less expensive, more students can attend, have lower debt, and begin their adult lives sooner. Sadly, the Governor and many others are focused on the theory of income tax cuts make jobs. Sadly, a high quality workforce matters more than a 2.2% or 2.4% effective income tax rate. 

News: Kasich’s tax reform proposals may take some selling, but insiders, experts say persistence will sway governor’s fellow Republicans, Plain Dealer
Notes: Raising revenue on the left hand to cut the income tax on the right hand. Let the debates begin. 

Major Changes Proposed to Ohio’s Budget

MBR tax cuts

The Mid-Biennium Review (MBR) contains three tax cut proposals. The first tax cut targeted at low income people is an expansion of the Earned Income Tax Credit (EITC). The second proposal is an expansion of the personal exemption for people making less than $80,000 a year (middle income). Finally, the most expensive proposal is a phased in 8.5% cut to personal income tax rates which benefits the wealthiest Ohioans the most.

 

 

 

EITC: Total $94.2 million
Fiscal year 2015: $29.9 million
Fiscal year 2016: $31.4 million
Fiscal year 2017: $32.9 million*

Personal Exemption Expansion: Total $426 million
Fiscal year 2015: $142 million
Fiscal year 2016: $142 million
Fiscal year 2017: $142 million

Personal Income Tax Cut: Total $2.186 Billion
Fiscal year 2015: $461 million
Fiscal year 2016: $816 million
Fiscal year 2017: $909 million

All data from the Legislative Services Commission analysis of the MBR (HB 472)
*LSC did not provide a 2017 estimate of the cost of the EITC so this is an estimate.

**There is overlap in the EITC and the personal exemption credit. Without refundability of these credits, there will be less benefit to low and middle income individuals than might be inferred by combining the numbers above. If both the personal exemption and EITC are implemented, the anticipated cost is $453 million over three years.

 

News & Notes March 13, 2014

Screen Shot 2013-07-23 at 9.22.50 AMOn Wednesday March 12, Budget Director Keen and invited cabinet level officials to present alongside him for the Mid-Budget Review (MBR). Keen described cost savings from restructuring of state debt and minor new investments – primarily designating funds within departments for specific projects. The major component of the bill is a $2.1 billion tax over 3 years that will primarily benefit the wealthiest Ohioans. While the plan raises new revenue in some good ways to pay for the tax cut, Ohio does not need anymore income tax cuts that have not worked for Ohioans.

Cutting Words, Akron Beacon Journal Highlights the need for public investments over more failed tax cuts.

Serving a Bigger Vision, Columbus Dispatch Editorial Board Ignores the critiques of tax cuts and continues to believe that they will bring more jobs.

Oil and Gas Drillers once Again Protest Kasich Tax Hike, WKSU Drillers don’t approve of the Governor’s 2.75% proposal for a severance tax – especially alongside the CAT increase. It is important to remember that 80% of this revenue is used to offset an income tax cut – primarily benefiting the wealthiest Ohioans.

Kasich’s Proposal provides much to discuss, Columbus Dispatch Provides a quick list of some of the small policy changes that are the bulk of the actual bill. Most of these items are nominally related to an actual budget.

Batchelder leery of Fracking Tax Hike, Columbus Dispatch Speaker Batchelder indicates caucus support for a cigarette tax increase, some support for the increase in the Commercial Activity Tax, and he has little support for an increase in the severance tax. He predicts more than 11 bills and is unsure whether the House will finish work by April 10th spring break.

Proposed tobacco tax hike debated by groups, Akron Beacon Journal Chairman McClain says that the MBR may be divided up into as many as 15 bills.

Grover Norquist’s Americans for Tax Reform finds Gov. John Kasich’s tax plan ‘less than inspiring’, Plain Dealer, Norquist is against tax increases to pay for income tax cuts. He would rather cut the income tax and cut services immediately instead of waiting for the unsustainable revenue to fall.

Kasich Defends Cigarette tax, Dayton Daily News Kasich says that the money for an income tax cut has to come from somewhere. ‘And if you cannot get them done right away, that’s fine.’ Ohioans need to ask, why do we need to cut the income tax anyways?

Kasich’s Tax Plan Faces Tough Legislative Test, Toledo Blade Rep. Terhar asks what it would take to keep the tax cut but lose the tax increases during a hearing on Wednesday – indicating a possible tepid reception in the House for this proposal. Senate President Faber draws distinctions on how the Commercial Activity Tax impacts different businesses.

With Kasich’s MBR, tax policies are front and center in race for governor: Ohio Politics Roundup, Plain Dealer, An overview and compilation of the tax plan proposed. “Let the Debate begin”