Veto cancels tax break for aviation firms

It marked second time Gov. Kasich has vetoed effort to exempt firms from paying sales tax.

For the second time in about a year, Gov. John Kasich this week vetoed a new tax exemption aimed at promoting southwest Ohio’s aerospace industry.

Ohio Sen. Chris Widener, R-Springfield, introduced an amendment to the $62 billion state budget that would have exempted companies from paying sales tax on goods and services they purchase in the furtherance of aerospace research and development.

But Kasich vetoed the exemption, which would have cost the state between $7 million and $8 million a year. The governor wrote that while aerospace is a “valued industry” in Ohio, other industries doing research and development wouldn’t get a similar benefit, and that the exemption goes against the governor’s goal keeping Ohio’s sales tax base broad.

Kasich vetoed an identical amendment introduced to the mid-biennium review state budget update in June 2012.

Widener is a founding member of the Ohio Aerospace Caucus, a group of Miami Valley state legislators that seek to promote aerospace job growth in the region and throughout the state. An aide said Widener was not available for comment.

State Rep. Jim Butler, who co-founded the Aerospace Caucus with Widener, said he was “disappointed” with Kasich’s latest veto. The Oakwood Republican said the tax exemption, which was expected to cost the state between $7 million and $8 million a year at first, would have helped promote jobs surrounding Wright-Patterson Air Force Base.

“It would have given us a competitive edge with other states in the country with whom we are competing,” Butler said.

State Rep. Rick Perales, R-Beavercreek, the co-chair of the aerospace caucus, said the tax exemption would have provided a boost to the aerospace industry but, “I understand clearly the governor’s position, and in a budget where there are many demands, not everyone’s going to get what they want.”

Butler noted that Kasich allowed another sales tax exemption through — one specifically written for the Toledo Mud Hens, a minor-league baseball team.

“Nothing against the Mud Hens, but why is it OK to have a sales tax exemption for that, but for something that’s as vital as aerospace research and development is for Southwest Ohio, you wouldn’t fit it in there?” Butler said.

Kasich spokesman Rob Nichols said: “You’ll find examples like the Mud Hens, but as a rule, we want to lower the rates and broaden the base, and you can’t do that if you keep doing these one-offs.”

Richard Stock, director of the Business Research Group for the University of Dayton, said Kasich made the right move. The government has not always succeeded at trying to pick economic winners, he said.

“There’s always a cost to something like that, and no one’s come up with the justification on why the return on investment on that particular industry (aerospace) would be better than doing it for any other particular industry,” Stock said.

Dale Kirby, immediate past-president of the Dayton Area Defense Contractors Association, said his organization has not taken a specific position on the exemption or the veto.

But, he said, “The fact that you had a conversation via a proposed exemption and a veto of an exemption is healthy because we’re talking about it, and it’s on our radar in terms of a new aerospace industry that could be extremely vital in many ways to Ohio.”