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Lawmakers clash over tax cut plan

Springfield Republican wants to use part of Medicaid expansion for tax cut.

Sen. Chris Widener, who sits on the Controlling Board and approved funds for Medicaid expansion last week, wants to return some of the projected $404 million in savings to taxpayers.

The Springfield Republican’s bill got its first hearing Tuesday before the Senate Finance Committee. It’s not clear when a vote will be taken on the proposal, which calls for a 4 percent income tax cut for all Ohioans.

Widener introduced his plan just minutes after casting a crucial vote in favor of adding more people to the state- and federally-funded health insurance program for poor and disabled Ohioans. The Ohio Controlling Board, of which Widener is a member, approved the Ohio Department of Medicaid’s request to release $2.56 billion in federal dollars to pay for the expansion through June 2015.

When the expansion was part of Gov. John Kasich’s two-year budget plan, state officials estimated federal dollars would pay for some services currently paid for by the state and make the program more efficient, generating an estimated $404 million over two years.

Ohio Budget Director Tim Keen stood by that number last week and said the administration would consider an income tax cut plan. Kasich has pushed for reducing the state income tax, claiming it’s too high and deters business from expanding in or moving to the state.

Widener echoed Keen during Tuesday’s hearing, telling the committee that his bill builds on the momentum set in the budget.

“I’m a firm believer that Ohio families are the best stewards of their own money and allowing Ohio taxpayers to directly benefit from unbudgeted savings is the economically sensible thing to do,” Widener said.

The budget passed in June cuts the state income tax rate 8 percent retroactive to the beginning of 2013, 9 percent in 2014 and 10 percent in 2015. In 2015, taxpayers earning between $22,000 and $43,800 — the middle bracket in Ohio’s nine-bracket system — would save $30 compared to 2012, on average, according to the Ohio Department of Taxation.

An additional 4 percent across-the-board cut would mean an extra $28 a year, on average, for those taxpayers, according to an analysis by the left-leaning think tank Policy Matters Ohio. The top 1 percent of Ohio taxpayers — earning more than $360,000 — would save $1,437.

Critics say the savings is unlikely to be felt by most Ohioans and the money is better used for public services. Some also argue that the cuts will lead to program cuts down the road.

The Controlling Board’s approval only lasts through June 2015. Expansion could only continue after that if the General Assembly writes it into law, citizens approve it through a ballot initiative or state officials ask the board to approve another two-year funding request.

The income tax cut would be permanent and will cost an estimated $364.7 million in the first year and $382.4 million in the second, according to the non-partisan Legislative Service Commission. Most of that goes into the General Revenue Fund, which funds education, law enforcement and other health services.

A group of Ohio lawmakers and anti-abortion organizations has filed a lawsuit that is now before the Ohio Supreme Court challenging the Controlling Board decision.

Policy Matters released a blueprint for spending the Medicaid savings resulting from the Controlling Board’s action. The think tank suggested $100 million could be spent for 1,000 police and 675 firefighters, $121 million for 1,570 teachers or $11.5 million for 239 caseworkers for seniors.

Citing the reports, Sen. Joe Schiavoni, D-Boardman, said the tax cut doesn’t have a “meaningful impact” for the average taxpayer receiving an extra $20 or $40.

“If you’re going to invest $404 million somewhere, shouldn’t it be somewhere you can see results?” Schiavoni said.

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