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Tax Hikes, Funding Cuts from Last Year's Budget Taking Hold

Bad economic growth, increasing local taxes mark one-year anniversary of budget
July 1, 2014
Democrat Newsroom

House Democratic Leader Tracy Maxwell Heard (D-Columbus) and members of the Democratic caucus today marked the start of the state’s new fiscal year and the one-year anniversary of the largest General Revenue Fund budget in state history. Gov. Kasich signed the last state budget bill on June 30, 2013. At the time, House Democrats stood in opposition to the budget, saying the toxic mix of tax hikes on working and middle class Ohioans and funding cuts to schools and communities would not create the economic opportunity Kasich and his Republican colleagues promised.

Republicans used property and sales tax increases along with funding cuts to schools and communities to target tax cuts at the state’s top income earners—a policy they say helps the state’s economy. Still, Ohio’s job creation rate trails the national average, and the state ranks 38 out of 50 over the last year in job creation according to the Arizona State University W.P. Carey School of Business.

“Instead of strengthening Ohio’s communities and prioritizing our schools, last year’s budget continues down a misguided road marked with more spending, but fewer results,” said Leader Heard. “The fact remains that a strong middle class, vibrant communities and a robust public education system drive economic growth, but Governor Kasich and his allies continue to turn a blind eye to reality for economic policies that favor a wealthy few.”

In recent weeks, news outlets throughout Ohio have reported that the state continues to shift the tax burden to local homeowners, seniors and farmers. Republicans accelerated the problem through the last state budget when they cut close to $600 million more from Ohio schools compared to 2011 levels. They also continued to cut funding for local communities, bringing the total amount of cuts since 2011 to some $1.1 billion.

“Communities across Ohio are suffering under Governor Kasich’s state budgets,” said Rep. Kathleen Clyde (D-Kent). “One year after he signed the most recent budget, Ohioans are still wondering why he raised taxes on the middle class, made cuts to local communities, hurt public schools and harmed women’s health. What Ohioans want from their state leaders are policies that strengthen schools, create jobs for our middle class and respect families’ medical decisions.”

Locals have largely viewed the cuts as irresponsible, while the moves have allowed the state to reduce its responsibility for education and essential services. Increasingly, communities and schools are forced to seek more levies from local taxpayers to make up the difference. The non-profit policy think-tank Innovation Ohio calculates that local taxes for schools alone have gone up 34 percent since Gov. Kasich and his legislative allies started cutting funding in 2011.

“If we truly wish to grow our economy and create jobs, the right course of action is to invest in education and infrastructure, but this requires taxation that is fair and shared,” Rep. John Patterson (D-Jefferson) said. “The current administration’s plan has clearly shifted the tax burden to the middle class."

In addition to cuts, Republican lawmakers and Gov. John Kasich increased the state’s sales tax by 4.5 percent while raising property taxes by 12.5 percent for new and replacement levies. The Kasich Administration estimates the sales tax hike will cost Ohioans at least $425 million over the course of the year, and the 12.5 percent property tax increase could cost local taxpayers millions more.

“It’s mind-boggling that, in the largest budget in state history, Republicans still could not find room for investment in public education or our middle class,” said Rep. Robert F. Hagan (D-Youngstown). “Our local communities are hurting, but their calls for help continue to be met with cold indifference from our GOP-controlled state government.”

During last year’s budget debate, House Democrats attempted to invest in middle class Ohioans and reverse the trend of shifting taxes to middleclass homeowners and seniors. Democratic lawmakers have also unsuccessfully pushed the GOP-controlled state government to prioritize schools and communities by restoring state funding to pre-Kasich levels.

“Historic cuts to local schools and communities force an extra burden on Ohio taxpayers with an increase in local tax levies across the state,” said House Democratic Whip and State Rep. Michael Ashford (D-Toledo). “With slow economic growth and a lack of good-paying jobs, regular families in Ohio cannot afford the extra tax burden that the state has placed on them. And our state’s slow economic growth shows this.”