$900 Million Tax Hike on Ohioans

Governor Strickland & House Democrats stick taxpayers with the bill

COLUMBUS— House Republicans today offered a number of alternatives to legislation put forward by Democrats that will retroactively increase the tax burden on Ohio’s families by 4.2 percent in 2009. Currently, state income tax rates are to be reduced by a total of 21 percent over a five-year period, according to House Bill 66 of the 126th General Assembly. Governor Strickland and House Democrats have supported increasing the state income tax to fill the void created by their budget shortfall.

“Sticking working citizens with more taxes will only deepen Ohio’s economic woes,” said House Republican Leader William G. Batchelder (R-Medina). “At a time when Ohioans need real solutions, this administration has only handicapped our economy and families further by sticking them with an unexpected retroactive $900 million bill.”

House Bill 318 was initiated to fill an $851 million budget deficit caused by the Democrats’ gambling with school funding by relying on an unconstitutional video lottery terminal provision in July’s biennial budget. House Republicans have repeatedly expressed concerns with the use of one-time money in the state budget that would result in the bill seen today, which expands government, imposes a higher tax burden and continues the expansion of government without providing for any cost-efficiency measures.

"House Republicans have worked diligently to offer real cost containment proposals to our colleagues across the aisle," said State Representative Ron Amstutz (R-Wooster). "The difference was clearly illustrated today through House Bill 318: Democrats' solutions are to rely on tax increases."

In an effort to provide sustainable changes to fill the budget deficit, House Republicans proposed amendments to House Bill 318 on the House floor that would streamline government agencies and consolidate spending; minimize waste, fraud and abuse in the Medicaid system; remove the provision that calls for a tax increase; allow local school boards to decide whether or not to accept unfunded state mandates; create a committee to maximize hospital employment and sustainability. These suggestions were rejected by House Democrats.

Additionally, House Bill 318 contains a provision originally championed by Representatives Seth Morgan (R-Huber Heights) and Terry Boose (R-Norwalk) that would reduce the salaries of state legislators by 5 percent, a proposal introduced in June of this year. The salary reductions would be effective starting in 2011, as permitted by the Ohio Constitution.

Unlike Morgan and Boose’s House Bill 210, the salary reduction clause of House Bill 318 strips out key pieces of the Republican proposal. It fails to apply to both the executive and legislative branches, and it omits a sunset provision that uses Ohio’s economy as the benchmark. For those reasons, House Republicans were reluctant to support House Bill 318 because it completely stripped the merit of their original idea to an oversimplified adaptation.

House Bill 318 passed from the House by a 55-44 vote. The bill now moves to the Senate for further consideration.

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What does House Bill 318 mean for Ohio?

- An income tax hike of 4.2% for all Ohioans.

.- HB 318 sticks Ohioans with a bill of nearly $900 million in unexpected taxes, while more than 10 percent of our population is unemployed.

- This legislation will retroactively raise the income tax rates on Ohioans, eliminating a reduction they has been effective since January 1, 2009. This will not promote job creation, especially among small businesses.

- HB 318 is a tax increase, crafted to temporarily ease the ever-growing deficit caused by the Democrat spending problem while hemorrhaging jobs from Ohio.

House Republicans offer the following solutions to avoid an unnecessary and detrimental tax increase:

Income Tax Increase Removal

- This amendment, offered by Rep. Seth Morgan (R-Huber Heights) would remove the income tax increase from HB 318.

- This amendment will save Ohio citizens and business from a $900 million tax increase.

State Government Reorganization (HB 25)

- This amendment, offered by Rep. John Adams (R-Sidney), would consolidate the executive branch from 24 departments into 11 in order to reorganize and streamline operations as a cost savings measure.

- The proposed plan is a sound cost-saving option which does not raise taxes or incur more debt. The plan is estimated to save taxpayers approximately $1 billion annually.

Medicaid Reforms (HB 240)

- This amendment, offered by Rep. Dave Burke (R- Marysville), aims to fix inefficiencies in the Medicaid system to reduce costs. In 2006, the Auditor of State conducted a Medicaid performance audit and provided recommendations to improve Ohio’s Medicaid program and reduce costs without slashing critical services. The audit found more than $400 million could be saved annually; to date Governor Strickland has refused to act on more than $302 million in savings.

School District Mandate Relief

- This amendment, offered by Rep. Randy Gardner (R-Bowling Green), would provide local control to school districts when faced with unfunded state mandates.

- This amendment would provide relief from mandates, at no cost to the state, by allowing school boards the ability to decide if they have the ability to meet the requirement, instead of ODE making the decision for them.

Hospital Employment and Sustainability Committee

- This amendment, offered by Rep. Troy Balderson (R-Zanesville), would create the Joint Legislative Committee on Hospital Employment and Sustainability.

- The proposed amendment will study the impact of HB 1, and the more than $700 million in new hospital taxes it contained, on the ability of Ohio hospitals to survive and employ Ohioans.