Ohio

Kasich’s Budget Proposal a Mixed Bag, Says AFP Ohio

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Americans for Prosperity – Ohio (AFP Ohio) Policy Director Seth Morgan issued a statement declaring that “the Governor’s biennial budget proposal offers Ohioans a mixed bag” several hours after Governor John Kasich’s fiscal 2014-15 budget was released on February 4. While Kasich, a Republican, seeks to cut Ohio’s income and sales taxes, his second biennial budget plan also embraces a number of policies AFP Ohio and other conservative groups firmly oppose.

Kasich proposes that a portion of his income tax cut be paid for by increasing taxes on horizontal hydraulic fracturing – or “fracking” – oil and natural gas wells in eastern Ohio. The governor’s proposed sales tax cut from 5.5 percent to 5 percent would be partially paid for by applying the sales tax to businesses which are currently exempt.

Perhaps most importantly, Governor Kasich wants to expand Medicaid eligibility as called for by President Obama’s 2010 Patient Protection and Affordable Care Act (PPACA) although the U.S. Supreme Court’s June 28, 2012 ruling gave states the ability to opt out.

“The promise of tax reforms and reductions are positive but paying for them in part with increasing severance taxes on farmers with oil and gas under their land is a mistake,” Morgan wrote. “Additionally, increasing the number of Ohioans on the rolls of Medicaid is not real health care reform and will ultimately trap Ohioans in a system that badly needs patient-centered reform.”

A summary document accompanying the governor’s full budget proposal explains that expanding Medicaid “avoids leaving Ohioans’ federal tax dollars on the table and keeps the federal government from simply giving them away to other states.”

“Importantly, Ohio will roll back this extension if the federal government changes the rules,” the governor’s office claims.

Advocates of PPACA insist expanding Medicaid is a bargain for states because the federal government has promised to cover 100 percent of states’ costs for several years before phasing Washington’s share down to 90 percent. At publication, the national debt stands at more than $16.4 trillion without accounting for existing unfunded entitlement liabilities.

Kasich’s budget summary also pitches the benefits of increasing the oil and gas severance tax, selling the governor’s proposal as a way to “modernize the antiquated severance tax so all Ohioans benefit from Ohio’s shale gas boom.”

Media Trackers reported extensively on Governor Kasich’s lobbying to increase the severance tax on fracking, as the governor spent much of 2012 traveling the state to promote a policy that would spread the wealth of Ohio landowners whose property contains shale oil and natural gas.

Kasich has repeatedly identified ExxonMobil and other out-of-state oil companies as the target of his severance tax plan, insisting a rate increase would prevent Big Oil from taking all its profits outside Ohio.

As expected, the governor’s budget proposal claims an increase in the severance tax to “1 percent for natural gas, and 4 percent for oil, natural gas liquids, and condensate” would still leave Ohio at a competitive advantage relative to the effective tax rates paid by drillers in other states.

In AFP Ohio’s February 4 response to the governor’s budget proposal, Morgan concluded, “We look forward to engaging with Ohio’s policy makers to limit the reach of government into Ohioans’ lives and pocketbooks.”

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