Gov. John Kasich is now actively talking up some of the controversial elements of his spending plan as many leaders in his own party continue to line up against it

Gov. John Kasich doesn’t often do one-on-one interviews on any subject, but he sat down to talk about the budget, which he admits is not going over well with lawmakers, including his Republican colleagues, many of whom don’t like the proposal to pay for a state income tax cut in part with revenue from an expansion of the state sales tax onto some 80 services that are not taxed now.

Tax reform is always something – don’t tax me, tax the guy who’s hiding behind the tree. And so, this is just the usual, this is just the usual kind of hubbub around the issue of tax reform.

Reporter: “But specifically the broadening of the state sales tax. That’s gotten some concerns there.”
Kasich: “Sure.”
Reporter: “You know, you just said it yourself – that Ohio’s taxes are too high, we need to lower them to be competitive. But when you broaden a tax and impose it on services that didn’t have a tax before – isn’t that a tax increase?”
Kasich: “No, because it’s a net $1.4 billion tax cut. And here’s the thing. About 75% of our economy now are services. Do you know you pay taxes on dry cleaning? Did you know that? And that’s a service, okay. What the legislature has seen fit to do is whenever they’re short money they go and tax a service that doesn’t have any lobbyists, and that’s how they plug their holes.

“I want to make sure that we have a modern tax system and use it to reduce taxes to help small business and help us to be more competitive.”

But what are the budget’s chances? Fellow Republican House Speaker Bill Batchelder, who leads a supermajority caucus 60 that includes members who were very supportive of Kasich’s first budget, is clear.

As it is, as it is submitted? That would not be possible.

Batchelder says Republicans’ concerns about the budget are no surprise to the governor.

“He’s aware of this, of course. We speak to each other often. There are a number of things there that have to change,” Batchelder says.

“Some of them are not very significant in terms of the quantity but they’re important to the members of the caucus. Others are very expansive and sweeping in their nature and those would include obviously the tax, obviously Obamacare, and we still have confusion over the language involved in school support.”

The tax Batchelder refers to here is the expansion of the state sales tax, but he’s also said he and many other Republicans don’t like the tax on big oil and natural gas drillers.

And when the Speaker references Obamacare, he’s talking about the expansion of Medicaid to people who make up to 138 percent of the federal poverty level – a plan that Kasich has put forward even though he opposes the Affordable Care Act.

But even as Kasich continues to promote the controversial elements of his budget, he remains confident.

“What do I think at the end of the day? I’m hopeful we’re going to get there. But it’s always a bumpy ride. Change is very difficult.

But he won’t talk about the behind-the-scenes conversations he’s having with the Democrats he needs to pass the Medicaid expansion, or the Republicans he hopes to persuade to support that and the other elements of his budget.

“I would love to talk to you about all the negotiations, but I’m not going to.”

The budget needs to be in place by the end of June. It’s still in a House committee, but the Speaker says he’s urging his colleagues in the Senate to start hearings of their own to make sure that deadline isn’t missed.

Statehouse correspondent Bill Cohen reports on what lawmakers heard in the House Finance Committee, and how the panel will have a big say in what the final tax reform package looks like. Click the play button above to hear his full report.

It’s billed as a $1.4 billion tax cut over three years, but two major business groups still don’t like the sales tax part, and Republicans who control the Ohio House of Representatives are also balking at the idea.

Statehouse correspondent Bill Cohen reports legislative leaders are asking business advocates for some alternative ways to pay for an income tax cut. Click the play button above to hear Bill’s full report.

Statehouse correspondent Bill Cohen has our preview on that and other issues lawmakers are considering. Click the play button above for details.

It’s a familiar sound in laundromats: dollar bills being fed into coin exchange machines, then quarters come plinking out.

Nearly every self-service laundromat in Ohio requires coins to operate the washers and dryers.

A basic wash costs about $2; it’s about the same to use a dryer.

The cost for a trip to the laundromat is pretty straight forward. But the transaction could get a little more complicated if Governor Kasich’s budget passes. Kasich wants to start charging coin-op users a sales tax.

That means in Franklin County, a $2 wash in the future would cost $2.11.

That has laundromat owners wondering how they’ll fairly collect the tax.

Kalpan Patel is the general manager of Sunlight Cleaners on Henderson Road. Patel said there’s only one way he can think of to collect the sales tax from customers.

“We have to raise each machine by a quarter.”

That’s because coin-operated machines do not take dimes, nickels or pennies. Using this example, raising a $2 machine by a quarter is an increase of more than double the proposed sales tax.

Ohio Coin Laundry Association president Duane King said some machine fees are at capacity. If that’s the case, King says owners face costly upgrades or they’ll have to absorb the sales tax.

“If they don’t upgrade the machine and [they] start absorbing that, well it’s actually a tax on gross receipts for owner/operator of the establishment,” King said.

In Iowa, coin-operated laundry users have been charged a sales tax for years. And as King mentioned, many owners absorb the cost. That’s the case for Daryl Johnson, who is president of the Iowa Self-Service Laundry Association, and a laundromat owner.

“We looked at the sales tax as a gross receipts tax; that there wasn’t going to be any real legitimate way of collecting it from the customers except by doing periodic price increases,” Johnson said. “And it’s just uncollectable. There is absolutely no way to properly collect that sales tax.”

And Johnson said the market cannot always absorb price increases to account for the sales tax. He said the reality is: “The only way that this tax gets paid, is out of the profits of the coin-operated laundromat.”

Some laundromat owners are moving toward machines that accept credit or debit cards. But this is a tiny segment, only about two percent nationally. These readers could easily charge a sales tax, but they cost tens of thousands of dollars. And Johnson said in the long run, Iowa business owners who go this route generally lose customers because they’ll choose $2 a load over one that costs $2.14.

“Business A has the ability to collect the tax; business B doesn’t. Business B gets the business. Even though business owner A has invested in all this equipment to be able to accept credit cards, set the system up,” Johnson said. “The reality of it is, it’s going to cost more for the customer to do the exact same load of wash, they’re going to the other store.”

Back in Ohio, Ohio Tax Commissioner Joe Testa said there are methods in place for coin-operated vendors such as soda and candy machines, which are taxable. Testa says coin-operated laundromats would adopt similar tactics. And he rejects the notion that businesses essentially would pay a gross receipt tax.

“I don’t think it’s all that complicated. Again, they take, they have some kind of record-keeping mechanism now for their collections now, it’s just a matter of that service then becomes taxable at whatever the local rate is,” Testa said.

The Ohio Coin Laundry Association has hired a lobbyist to fight the proposed sales tax.

Sunlight Cleaners owner Kalpan Patel called the proposal unfair for people who cannot afford their own washer and dryer. And Patel expects it to cost him money.

“It’s not a luxury to have clean clothes. It’s a necessity. It is what it is. They just have to come here, and that’s what they’re using. And if they get taxed on it then it’s going to hurt everybody. It’s going to hurt them personally, and it’s going to hurt business owners because we’re going to lose some revenue on top of that,” Patel said.

Iowa Self-Service Laundry Association president Daryl Johnson predicts some Ohio coin-op owners will be forced to close. And he warned the quality of the stores will decline.

“[In] the state of Iowa there’s a lot of operators that don’t have attendants, can’t afford attendants And you walk into a bordering state, laundromat, they have free wi-fi, they have full-time attendants, they have all of these other offerings, it’s because the cash-flow and the revenue is there to be able to support improving the wash experience for the customers.”

The Ohio legislature is currently holding hearings on the governor’s budget proposal including taxes on services. A budget must be signed by Kasich by June 30.

Monday was the first day of legislative hearings on the proposed $63 billion budget for the two-year period beginning July 1.

The budget contains a 20 percent cut to the state income tax, while increasing sales tax revenue by applying the tax to several new sectors and services such as haircuts and legal fees. Gov. Kasich calls it a $1.3 billion overall tax cut, while a liberal think tank has said the shift would increase the overall tax burden of many Ohioans, including the poor.

“Everywhere I go, I can’t get away from these taxes. I can’t leave the state because if I try to, (the state) will tax the travel agent who gets me out of here and the agent that gets me a ticket back,” said Dem. State Rep. Dan Ramos.

The plan has the backing of most Republicans and small businesses, which would benefit from a lower income tax. Small business lobbyist Roger Geiger.

“The more money you put in the pockets of small business owners and entrepreneurs, the more they’re willing to expand their business,” said small business lobbyist Roger Geiger.

But Geiger says his industry would object to the state requiring new jobs at businesses receiving tax cuts.

Click the play button above to hear more from Monday’s first day of legislative discussion on the proposed budget.

Click the play button to hear more about the study, and a response from a top Ohio Republican.

But they’d also face a five percent sales tax on services that have previously gone un-taxed. If you’ve been trying to figure out whether you’d be a net financial winner or loser, you’re not alone. Statehouse correspondent Bill Cohen has been wondering the same thing. Click the play button above to hear his report.

But, at the same time, a reduced five percent state sales tax would be applied to many services that are now un-taxed. Statehouse correspondent Bill Cohen reports on who would pay more for that. Click the play button above to hear his full report.