Spending Plan Clears House Despite Missing Key Provisions

Lawmakers in the Ohio House are moving forward on Governor Kasich's sweeping spending measure after stripping out his tax provision.(Photo: .)
Lawmakers in the Ohio House are moving forward on Governor Kasich's sweeping spending measure after stripping out his tax provision.(Photo: .)

The Ohio House approved a sweeping package of spending and policy initiatives spearheaded by Gov. John Kasich on Wednesday, after stripping out the governor’s signature tax provision on oil and gas.

Click here to hear a report from Ohio Public Radio’s Karen Kasler, including reaction from both Republicans and Democrats.

The midterm budget bill trims state spending by $69 million through cuts and cost-saving ideas, while setting aside $30 million for high-quality nursing homes and $3 million to establish a “healthy Lake Erie” fund intended to benefit businesses, farmers and tourism. It cleared the House 61-33, and heads next to the Senate.

House Finance Chairman Ron Amstutz, a Wooster Republican, said the bill encourages the state’s fragile recovery while protecting slowly growing revenue accounts.

“At the end of this day, what we are doing here is maintaining a steady course in (setting) our budget on a recovery course, while approving a wide range of programs and process improvements for our citizens,” Amstutz said.

Kasich’s fellow Republicans in the House opted to pull his tax hike proposal for more study. It calls for increasing Ohio’s severance tax on oil and gas production by 4 percent and spending the revenue on income-tax relief. The governor continues to fight for the plan.

Rep. Vernon Sykes, an Akron Democrat, said he opposed the bill for what wasn’t in it: money to restore cuts to schools and local governments. He criticized Republicans for failing to spend any of a projected $265 million surplus in the bill.

“Be clear that it is irresponsible, it is unconscionable, to just hold onto this money when so many people are hurting in our communities,” he said.

Rep. Barbara Sears, a Sylvania Republican, defended the decision and criticized Democrats for spending tax dollars “like Monopoly money” and prioritizing an expensive high-speed rail project when they controlled the state’s purse strings.

Amstutz noted that litigation by opponents of Kasich’s effort to privatize state economic development functions, JobsOhio, represents “a $500 million threat to our ending balance” that needed to be taken into consideration when drafting the bill.

Kasich’s administration took the unusual step of crafting the midterm budget bill outside the normal two-year budget cycle, as a way to move forward with policy initiatives the governor launched last year after taking office.

The House vote followed dozens of committee changes made Tuesday. The changes included pulling from the bill a provision that sent Planned Parenthood to the back of the line for federal funding, but keeping a provision that establishes state trooper authority in privately owned correctional facilities.

It moved forward over the objections of local government and school groups that wanted to see the spending plan send more state revenue to police, fire and school district coffers hit by an earlier round of budget cuts. To that end, Democrats sought to create a revolving Kids and Communities First Fund, but were unsuccessful first in committee and again on the House floor.

Under the Democrats’ proposal, Kids and Communities First would initially be funded by projected surplus tax revenue and dollars from the state’s rainy-day fund then, as an ongoing money source, be funded from Kasich’s proposed tax hike on oil and gas extraction.

Kasich wants to hike oil and gas extraction taxes to 4 percent in two or three years. Energy companies swarming the state in search of new natural gas and oil resources in the Marcellus and Utica shale plays would have the option to waive the tax to offset startup costs. Income tax reductions would begin in 2015, and deepen as proceeds rose.

The oil and gas industry opposes the tax increase as a deterrent to industry growth that Kasich is counting on to improve the state’s economy. But the governor has dismissed their concerns, saying they can’t get to the oil and gas unless they come to Ohio.

GOP House leaders spun dozens of additional Kasich proposals into separate bills that are pending in committees. Democrats saw amendments fail Wednesday that would have prevented lease of the Ohio Turnpike, and required licensure and additional rules on the sale and lease of oil and gas rights.

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