As Kasich ramps up his plans for a budget corrections bill, what he is calling his “mid-biennium budget review”, Plunderbund’s Budgetwatcher is back at work.
The latest post at BW discusses Kasich’s announcement about fee increase on fracking operations that would conveniently provide an approximately 1.6% state income tax cut to Ohioans right about the time Kasich runs for reelection.
Kasich is touting this as a $500 million tax break for Ohioans, but as Budgetwatcher points out, the average Ohioan’s taxes would only “be reduced by $21, or 40 cents per weekly paycheck.“
40 cents per week will not have a drastic – or even a minimal – impact on anyone’s life. But this money could have a big impact in others areas. Kasich made huge cuts in his so-called “Jobs Budget”, cuts that some predicted could cost Ohio up to fifty thousand jobs.
One such cut was the Local Government Fund, which was reduced by almost exactly the same amount: $555 million.
Personally, I think maintaining public safety services seems like a better use of that 40 cents per week. But hey, I’m just a crazy liberal, right?
Thing is: conservatives shouldn’t like this plan either.
For starters, Kasich kicked off his campaign for Governor with a number of promises including the total repeal of Ohio’s Income Tax. That’s a 100% tax reduction. But he seems to have completely abandoned that plan, instead replacing it with this ridiculous 1.5% cut.
Reggie Fields of the Plain Dealer covers the other issue conservatives will have with this plan, pointing out that “Kasich signed a pledge with the influential Americans for Tax Reform vowing to ‘oppose and veto any and all efforts to increase taxes.'”
And despite the fact that Kasich has, according to Fields, consulted with ATR about his plan, there’s no doubt many conservatives will consider this a tax hike on business.
There’s one more angle here that’s worth discussing and that’s local tax increases and school and other levies that have been increasingly passing around the state. These too can be considered tax increases and a great many of them can be directly traced back to Kasich’s budget cuts. Getting 40 cents per week from the state while your local taxes are going up doesn’t really count as a tax cut in my book.
Kasich’s goal with the fracking fees and income tax cut are clear: set himself up for the next election as the guy who cut your taxes. But as we’ve seen, this proposal is going to make absolutely no one happy.
Voters don’t particularly care if they see 40 cents more in their checks but they do care that their local taxes are going up and their police and fire departments are being cut. At the same time the oil gas industry and pro-business groups will have a difficult time supporting big new fees on industry.
Kasich thought he could put this plan to together in order to check off the “tax cutter” box for his reelection bid in two years. Unfortunately for him, this plan is a lose-lose for everyone affected.
Realistically, it’s hard to see how he could even get this passed in its current form. Kasich already convinced legislators to take on one disastrous piece of legislation (Senate Bill 5) this year. It really doesn’t make a lot of sense for them to support a tax/fee hike on one of their biggest campaign contributors without providing some sort of substantial benefit to another group that might actually result in votes.
Then again, I could be totally wrong. As we’ve consistently since Niehaus and Batchelder took the helm in the General Assembly, things that make sense rarely make it on the legislative agenda.
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