Lower state revenue raises budget challenge

Written on Apr 20, 2017

OSCPA staff report

Gov. John Kasich and Republican leaders from the Ohio House and Senate held a joint news conference last week to announce how they were addressing a revenue shortfall of more than $600 million.

They’re starting by cutting $400 million per fiscal year off the revenue outlook – $800 million total – for the coming biennium, with additional cuts expected by June, when Kasich’s budget bill needs to be approved.

Kasich along with House Speaker Cliff Rosenberger, R- Clarksville, and Senate President Larry Obhof, R-Medina, promised to cooperate to produce a balanced two-year spending plan.

The Office of Budget and Management predicted a $592 million shortfall for 2017 while the proposed budget – HB 49 – was being written. But since then actual shortfalls have already surpassed $600 million, and there are still three months to go in the fiscal year.

Kasich and the legislative leaders did not discuss initial details of their plan, though they acknowledged a need to address drug addiction.

The governor said the revenue shortfall probably makes a net tax cut unlikely, though he held out hope that offsetting increases elsewhere could still make an income tax cut possible.

Later in the week Democrat lawmakers criticized Republican priorities and urged legislators to rule out further tax cuts.

After a two-week break, the legislature returns to Columbus April 25 when the House is scheduled to release its substitute version of HB 49. Committee hearings and testimony will follow, with a second round of amendments to be considered early the following week. The full House is expected to vote on HB 49 on May 4, sending the bill to the Senate.

OSCPA priorities unaffected… so far

HB 49 includes the much-needed change of centralized collection and administration of municipal net profits taxes, which would result in simplicity and savings for Ohio businesses. Though last week’s discussion of budget cuts won’t affect this bold proposal, it is still vocally opposed by city and village officials and at risk for significant negative changes. For the huge percentage of OSCPA members who, for years, have clamored for this type of change: you need to speak up NOW! Doing so is as easy as leaving a phone message with your state representative or sending a letter or email, and will have a meaningful impact. Need help? OSCPA’s government relations team is standing by to help.

4 comments

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  1. Full Paying Taxpayer | Apr 24, 2017
    More auditors are needed. Too much goes unpaid to be subsidized by we Full Paying Taxpayers. I understand there is a 10/1 payoff per auditor. Yet, we have less auditors by far under this administration. Where in our business community would this ever occur? 
  2. Municipal CPA | Apr 21, 2017
    Heads up municipal governments.  The remittances that are coming in from the OBG have two to three day holds on them.  Talking about holding back out money!  The state has a deficit and they are playing games with remittances.
  3. Another city CPA | Apr 20, 2017

    How many times has the State of Ohio raided the municipal government's coffers via tax breaks and elimination of various taxes that would inure to the local governments?  Let me count the ways.  Franchise tax and personal property tax were eliminated and replaced by the CAT tax.  The local governments were supposed to received a share of the CAT tax.  Did it happen?  Why, of course not.  Then the coup de gras, the elimination of the estate tax that should have been more graduated that it was.  20% of that revenue went to the state, and 80% to the local governments.  Rip city again.  The share of local government fund?  Where did that go?  It was used to "balance the budget" that was allegedly left by the previous governor.  This is administration is Robin Hood in reverse.  Rob from the poor and give to the rich. 

    I agree with Debra, the state government wants to keep their hands in the municipal government coffers.  Given an opportunity to grab money is the mantra in Columbus.

  4. Debra. City CPA | Apr 20, 2017
    It is funny to see the article about the State's revenue shortfall and the blurb about centralized collection on the same page.  One of the many reasons city and village officials don't want the State to handle their collections is every time the State has a shortfall of revenue it "takes or reduces" what it collects for and sends to the cities and villages. 

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