Ohio Gov. John Kasich signed a $62 billion two-year state budget into law Sunday, but used his line-item veto to erase 22 items, including $30 million in extra funding for nursing homes, an attempt to block extending Medicaid coverage to more people, and mandatory collection of state sales tax on Internet purchases.
He also vetoed an $8 million per year tax break intended to bolster companies developing aerospace vehicles. “Although aerospace is a valued industry in Ohio, there is no justification for such a broad expansion of this exemption,” Kasich said in his veto message.
Kasich did not remove anti-abortion provisions, despite pressure from groups such as NARAL Pro-Choice Ohio and Planned Parenthood.
The budget changes what Ohioans will pay in income, sales and property taxes. Republicans said the changes will add up to a $2.7 billion tax cut over three years.
“We are proud of our tax cuts because we think this is another installment in Ohio’s comeback,” Kasich said. He did not field media questions at the bill signing.
Beginning Sept. 1, Ohio’s sales tax rate will increase to 5.75 percent, up from the 5.5 percent, and sometime later this year, withholding tables will be updated to reflect a 8.5 percent cut in the income tax rates for the current year so workers will see a little more money in their take-home pay. The income tax rates will be cut 9 percent next year and 10 percent in 2015.
Certain small businesses, such as S-corporation and partnerships, will be given a 50 percent break on the first $250,000 in revenues. Republicans said the lower tax rates will help spur job creation in Ohio.
The 5,557-page law also makes changes on property taxes. The state will no longer pay 12.5 percent of the cost of new property tax levies, which school district officials worry will make it more difficult to pass millages. And the homestead property tax exemption will be limited to homeowners who are at least 65 and earn less than $30,000 a year.
Republicans said 98 percent of Ohioans will get a tax break. But Democrats and others complained that the new tax structure penalizes low-income Ohioans and rewards the rich.
The new law also increases K-12 funding by $717 million over two years, boosts the speed limit on some state highways and allows corporations and unions to give unlimited cash to Ohio legislative caucuses to cover operating expenses.
Abortion foes scored big wins in the budget bill with some of the changes coming late in the legislative game.
“It took great compassion and courage for our Governor and pro-life legislature to stand up to the abortion industry that blatantly pressured them,” said Mike Gonidakis, president of Ohio Right to Life, in a written statement.
The new abortion language requires that physicians providing abortions first use external ultrasound to try to detect a fetal heart beat and inform the woman of the probability of bringing the pregnancy to term. Also, all ambulatory surgical centers will be required to have transfer agreements with hospitals but the state health department director, who is appointed by the governor, can block such agreements. And federal family planning money that flows through the state will be re-prioritized so that groups including Planned Parenthood will be at the back of the line and unlikely to receive the government funding.
“Ohioans want doctors and medical experts to make medical decisions and set health regulations, not politicians like John Kasich,” said Stephanie Kight of Planned Parenthood in a written statement.
The budget bill also defines an “unborn human individual” as “an individual organism of the species Homo sapiens from fertilization until live birth.”
Kasich’s 22 vetoes zeroed in on special interest provisions such as a tax break for investors who buy coins and bullion, an exemption of spider monkeys from the banned exotic animal list and authority for natural gas utilities to bill customers for the cost of cleaning up contaminated facilities.
It is noteworthy what lawmakers tossed out of Kasich’s original budget proposal: higher taxes on oil and gas exploration, an expansion of goods and services subject to the state sales tax, a 20 percent income tax cut and a bigger tax break for small businesses, and a substantial expansion of Medicaid to extend health care coverage to 275,000 more low-income Ohioans.
Lawmakers pledged to continue working on the Medicaid issue, but left Thursday for an extended summer break.