The Ohio House recently passed its version of the state’s $69 billion operating budget. In an expression of bipartisanship not usually seen with massive policy bills like the state budget, the House passed the bill (HB166) by a vote of 85-9. Prior tothe floor vote, the bill underwent some significant changes, including a massive tax overhaul. The bill eliminates the income tax on income below $22,250 and provides a 6.6%reduction in every other tax bracket. The tax cut is offset by changes to the Business Investment Income Deduction (BIID). The deduction is reduced from $250,000 to $100,000. The House also eliminated a 3% flat rate on business income over $250,000, which means that income will now be taxed at the top rate of 4.667%. “What we’re trying to do is we’re trying to reduce the income tax for all Ohioans. If you look at this tax plan that we’ve put forward, if you paid taxes last year and your income hasn’t changed dramatically, you’re going to get a tax cut,” Speaker Householder said of the House’s plan.
Business organizations, including the Ohio Trucking Association (OTA), have criticized the House’s tax proposal, which would increase taxes on small businesses by over $1 billion over the next two years. Opponents warned members of the Senate Finance Committee, that if the changes remain, they will be harmful to the business climate, and weaken the state’s economic competitiveness. In his testimony before the Senate Finance Committee, OTA President and CEO Tom Balzer stated the following, “this tax increase on our members would come on the heels of the fuel tax increase that was included in the transportation budget.”
HB 166 also creates a “Jobs Challenge” program to support workforce training programs. The funds would be used by community and technical colleges to establish partnerships with businesses to train employees in in-demand fields. While the Jobs Challenge program certainly seems like a worthy program, funding for the proposal ($10 million) would come from the Workforce Development Loan Program (WDLP). The WDLP is a popular program for those individuals seeking CDL training. In fact, 951 students have taken advantage of the program to pursue CDL training, this represents 71% of the program’s portfolio. Restoring this funding to the revolving loan fund was also a topic of Mr. Balzer’s testimony before the Senate Finance Committee. HB 166 is now pending in the Ohio Senate, which is expected to put its mark on the bill in mid-June. The bill must be passed by both chambers and signed by the governor by July 1st.