Presenters Nicholas Bates One Ohio Now Zach Schiller Policy Matters Ohio Who is One Ohio Now A coalition of over 80 nonprofits labor organizations associations and others who have come together to advocate for great public services by making sure we have the revenue to support them ID: 575038
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December 18, 2012Presenters: Nicholas Bates, One Ohio NowZach Schiller, Policy Matters OhioSlide2
Who is One Ohio Now?A coalition of over 80 non-profits, labor organizations, associations and others who have come together to advocate for great public services by making sure we have the revenue to support them. Slide3
What do we Stand For:Reviewing Corporate Tax LoopholesA Strong Income Tax
Appropriate Revenue’s from our Natural Resources
Reinstate Tax on Corporate ProfitsSlide4
Why does the state budget matter to me?
The state pays an average of about half of the cost of K-12 in school districts across Ohio
It helps keep police and firefighters at work
It helps pay your local property taxes
It helps provide medical care to 2.46 million Ohioans
It licenses practitioners from barbers to nurses
It supports human services from adoption assistance to food banks to programs that allow seniors to stay in their homesSlide5
Features of Ohio’s biennial operating budget
The main budget is the General Revenue Fund (GRF) budget, which covers two years, or a biennium
Fiscal years or FY 2014-2015
Key dates
Gov. Kasich will submit his budget proposal to the legislature in early February.
The budget must be passed by June 30.
Ohio’s budget must be balancedSlide6
Budget timetableThe Governor’s budget proposal is submitted to the Ohio House of Representatives.
The House considers the budget proposal and makes changes and adjustments. They vote on it, probably in April.
The budget bill then is passed to the Senate for consideration.
Senators consider the budget proposal from the House, and make changes and adjustments. They vote on it, probably in early June.
A “Conference Committee” irons out the differences.
The governor may veto items in the budget, which the General Assembly can override, before signing it by July 1. Slide7
Ohio’s GRF Tax Revenues FY2012Slide8
Where the money goes(includes federal support for Medicaid)Slide9
Today’s financial pictureRainy day fund has $480 million
Based on state projections, another
$400 million is expected to be available by the end of
this fiscal year
Total FY2013 GRF budget: $28.4 billion, including $8.2 billion in federal funds
Next budget will have to make up for new tax breaks, tax cuts and one-time revenuesSlide10
What happened last time?
Tax cuts continued, expanded
Big cuts in K-12 support, local governments
Some human services reduced, but many attacks fended off
Inadequate services continue (e.g. state support for handling abuse and neglect of the elderly is practically nonexistent)Slide11
The state shifted its budget problems on to schools and local governments
Schools have cut teachers and courses because of $1.8 billion in cuts during this two-year budget
Services from recreation to road repair have been curtailed as aid to local governments has been sliced. For specifics on your county, see
http
://
www.policymattersohio.org/county-budgets-nov2012
Across Ohio, local levies for senior and children’s services, health, mental health and developmental disabilities will bring $210 million less in FY12-13 than in FY10-11 Slide12
Tax cuts
Tax cuts from 2005 are costing the state $2.5 billion a year—that’s nearly a dime out of every budget dollar
These cuts went mostly to businesses, which no longer pay a tax on corporate profits, and affluent individuals, who got most of a 21% income-tax cut
Last budget: Estate tax eliminated, new tax breaks approved for investors, others Slide13
2005 Tax Overhaul
21% cut in Income Tax over five years (completed 2011)
Phase-out of Corporate Franchise Tax, Ohio’s corporate income tax
• Phase-out of Tangible Personal Property Tax, a local tax on machinery, equipment, inventory, furniture and fixtures
• Creation of Commercial Activity Tax on Ohio gross receipts
Effect of these changes: $2.5 billion in annual tax cuts Slide14
2005 Income-tax Cut: Who benefited?Slide15
Has Tax “Reform” Worked?
Ohio has lost
223,000
jobs since June 2005, or
4.1%
of its total. The nation has
eked out a tiny gain of nearly 100,000 jobs over that time.
Ohio has lost a greater share of its manufacturing jobs than the U.S.
Though Ohio employment has grown at a better rate recently, this hasn’t made up for the big shortfall. Slide16
Taxes and the state economyThere is no direct relationship between tax rates and economic performance.
Public services that maintain the quality of life and support critical economic development goals also impact the business climate.Slide17
State and Local Taxes as a Share of Income, Non-elderly Taxpayers, 2007Slide18
Why We Need a Strong Income Tax, 2
Vital to Ohio economy and quality of life
Accounts for 44% of state taxes and 31% of the operating budget – more than the state spends on K-12 education
Crucial to capital investment and debt repayment – 5% capSlide19
Tax exemptions, credits and deductions (aka “tax expenditures)
More than $7 billion a
year
Some, such as the sales-tax exemption on prescription drugs, go to individuals; most go to businesses
No review mechanism exists; many
loopholes have gone unexamined for
decades.
In 2012,
the legislature has created or expanded tax credits or exemptions for companies that employ people at home, convention centers, financial institutions, motion-picture producers, and firms that do work for direct marketers,
among othersSlide20
Tax Expenditures: Some examples
Wealthy individuals who buy shares in jet aircraft pay little sales tax on their purchases
Big companies (but not small ones) that lost money years ago can write it off against the Commercial Activity Tax
Utilities buying mandated pollution-control equipment receive a sales-tax exemption, worth $17 million this year
Govs
. Voinovich and Taft unsuccessfully sought to limit property-tax rollbacks to affluent owners Slide21
Top Issues Coming in Next BudgetTAX SWAPIncome tax and Severance TaxSchool Funding FormulaMedicaid ExpansionSlide22
Other issues to be aware of:Elimination of the Estate TaxLocal Government (LGF, PLF) Program Shifts, agency merger’s, funding formula’s….WHAT ELSE ARE YOU PAYING ATTENTION TO?Slide23
Approach:Non-Profits: We don’t take partisan stances, Instead: Great Public Services Lead to Stronger CommunitiesConnect advocacy efforts on individual issues to the issue of sustainable revenue.
Change public discourse using social & traditional media.
Community conversations
Talk to legislatorsSlide24
Messaging It’s Time to Get Ohio Back on TrackReference the PastDefine Income Tax Cuts
Provide an Alternative
More tax cuts are fiscally irresponsible—we need a balanced approach
Don’t accept bad trades/options
Income tax cuts shift responsibility from wealthy to everyone else.
Jobs, not cuts
The Budget is a
Moral DocumentSlide25
Any Questions?Contact: Nicholas BatesOutreach Director
614-216-6306
nick@oneOhioNow.org
www.oneohionow.org
THANK YOU!