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State of the State: 3 key areas Kasich touched on

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Gov. John Kasich drew a crowd of around 1,100 in Wilmington, Ohio — a town hit particularly hard during the recession — for his State of the State address, which covered key points in his 2016-2017 budget proposal.

Kasich stressed the need for an attractive state that would bring new business and build a brighter future for the younger generation now entering the workforce. His plan includes an income tax cut, reform in the severance and cap taxes, investment in K-12 education, public assistance reform and training in skilled jobs for low-income Ohioans.

RECAP OF OHIO’S SUCCESS

Kasich began his address with Ohio’s success story:

“We’ve gone from very high taxes across the board to the largest tax cuts in America,” he said. “We’re seeing wages grow faster than the national average and the unemployment rate has dropped to the lowest level in more than a decade.”

Ohio was one of the six states to cut taxes in both 2013 and 2014, according to the American Legislative Exchange Council’s State Tax Cut Roundup. The top marginal rate is at 5.33 percent, and Kasich hopes to take that down to 4.1 percent over the next two years.

But while Kasich touted an increase in private sector jobs of over 300,000 over the past four years, the Joint Economic Committee said the jobs gain was a national low point for private sector employment.

Ohio’s unemployment rate is at 4.8 percent, 0.8 percent lower than the national rate and 0.1 percent lower than Athens County’s unemployment rate.

“From here we are now poised to take what I believe are major leaps forward so we can begin locking down the progress we’ve made and preparing for the challenges that are looming all too close on the horizon,” Kasich said.

THE “CHALLENGES”

Ohio’s workforce is getting older, Kasich said. As baby boomers age and retire, a younger generation will enter employment.

“Understand the implications of not being able to refill those jobs with young people,” he said.

Kasich believes income taxes are the main thing restricting Ohio’s growth. As this generation graduates college and searches for exciting employment, Kasich said they are driven away — to places like Naples, Florida — where there is no income tax.

In his opinion, income taxes “punish risk taking, investment and job creation.” Jobs of the future, like “telemedicine and the medical devices that make it possible, logistics, financial services (and) IT services,” are supposedly being driven out of Ohio due to high income taxes.

Kasich is also concerned with students in low-income areas not getting the same level of education as those in higher-income suburban areas.

Public assistance, especially concerning welfare, is another place Kasich is seeking reform.

“Welfare should not be a way of life,” he said. “It should be a way station so we can get you up on your feet and you can become independent.”

KASICH SOLUTIONS

1. TAXES

Kasich’s general tax plan relies on a smaller income tax and an increase in consumption taxes. Ohio would see a $500 million tax cut overall.

Income tax

Kasich proposed an income tax cut of 23 percent.

“We’ve already cut Ohio’s income tax rate from 5.9 to 5.33 percent,” Kasich said. “Our budget will take it all the way down to 4.1 percent over the next two years.”

Consumption Taxes:

While specific numbers were not disclosed, Kasich plans to make up lost revenue from the income tax cut with increases in the sales tax, the severance tax for oil and gas, and tobacco taxes.

“Our current system doesn’t reflect our current reality,” Kasich said, referring to the severance tax. “Ohio’s severance tax was created decades ago, long before Ohio’s shale boom was ever envisioned … It isn’t fair to Ohioans, because these resources are being depleted. They’re never coming back.”

2. EDUCATION

Kasich’s plan for K-12 education reform is a redistributive model; higher-income, suburban districts would lose their funding to districts in low-income areas. Charter school sponsors would be reevaluated and potentially banned.

K-12 education:

“It’s about distributing precious resources as best we can to be in a position where kids can all have an equal chance,” Kasich said.

Testing hours would be cut by 18 percent, high performance schools would see more flexibility on teacher evaluations and high schools would be encouraged to offer College Credit Plus to prepare students for college.

“If we’ve got high performing schools, let’s not hassle them,” he said. “Let’s give them freedom to do whatever they want to do.”

Charter schools:

Higher-performing sponsors would receive better schools; sponsors who are trying and struggling would be incentivised “with some facility upgrades;” and failing sponsors would lose their schools and potentially face being banned.

3. HEALTH

Kasich allots budget increases for the Department of Developmental Disabilities and the Department of Mental Health and Addiction Services. He vaguely addressed Ohio’s infant mortality rate, which is the second highest in the country, by saying, “We’ll gain on this.”

Developmental disabilities:

The Department of Developmental Disabilities would see a 8.9 percent budget increase in 2016, giving the department a total budget of $2.8 billion, according to Kasich’s proposal. The following year would see another 9.7 percent increase to $3 billion.

“Some of them are in institutions. We’d like to get them in a home,” Kasich said. “We want a developmentally disabled community setting to be far better, and we want to do that.”

Mental health and addiction:

The Department of Mental Health and Addiction Services would see a 4.7 percent increase from 2015 — a total budget of $692.7 million. The following year would have a 0.9 percent increase from 2016, amounting to $698.7 million.

Ohio lawmakers have until the end of June to review and send the 2016-2017 spending plan back to Kasich.

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