Home Finance Kasich’s budget proposal increases education funding, changes income tax threshold

Kasich’s budget proposal increases education funding, changes income tax threshold

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Gov. John Kasich released his two-year budget proposal for Ohio on Monday, saying he hopes his final budget will help Ohio maintain economic growth in the face of national uncertainty.

The new budget, which allocates more than $144 billion over two years, is slightly larger than the previous one. However, Kasich said in his press conference that some areas would see tighter budgets because of less expected revenue.

““The most important thing is that we continue our economic strength and our economic stability,” Kasich said.

The Ohio House will start debating the budget Wednesday, and state representatives and senators will likely change various parts of the proposal. The final version must be approved and signed by June 30, 2017.

Here are some of the proposed tax and budget changes and their effects. 

Education:

K-12 school districts will receive a 1.2 percent budget increase next year and a 1.4 percent increase the following, although the governor’s proposal would also reduce funds to districts that have lost students.

The budget increases total funding for the Department of Higher Education by 1 percent for the 2018 fiscal year and 1.8 percent for the 2019 fiscal year.

Ohio public colleges and universities will have to cover the cost of student textbooks during the 2018-2019 school year, although schools will be allowed to charge students up to $300 to cover the cost.

It also includes a tuition and mandatory fee freeze at state colleges and universities for the next two years.

Taxes

The new budget proposes a flatter income tax that has five brackets instead of nine. Overall, it would create a 17 percent income tax reduction and, among other changes, increases the threshold for the low-income tax credit from $10,000 to $15,000. This means that people who make less than $15,000 would not need to pay an Ohio income tax.

The income tax deduction would be offset by various other tax increases. These include a 0.5 percent sales tax increase and a new sales tax on certain services, such as non-medically necessary cosmetic surgery and cable subscriptions. It would also increase the cigarette tax from $1.60 per pack to $2.25 per pack and increase taxes on alcoholic beverages.

Additionally, Kasich once again proposed a new severance tax on oil and natural gas in the state, but he said he did not expect it to be accepted by the General Assembly.

Medicaid

Childless, non-pregnant adults could be asked to pay a Medicaid premium of $20 per month to help cover potential costs of repealing the Affordable Care Act. This, Kasich said, could save the state more that $200 million over the two-year period.

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