COLUMBUS — An across-the-board income tax cut, more transparency on health care costs and a 50 percent increase in the law’s minimum base salary for teachers were among the latest wave of state budget changes by the Ohio House on Wednesday.
Part of a two-year budget that got bipartisan support, the latest changes eliminate taxes on income below $22,500, erasing the state’s bottom two tax brackets. The budget also proposes a 6.6 percent tax reduction on all remaining income brackets, which would put the new top tax rate at 4.67 percent, down from the current 5 percent, on income above $222,200.
The tax plan, which House Republicans say is a net $108 million annual tax cut, also significantly scales back the current business-income tax deduction that allows partnerships, LLCs and sole proprietors to pay no income tax on up to $250,000 in income, plus get a 40 percent tax cut on income over $250,000.
The House budget eliminates the extra tax break for Ohio’s wealthiest business filers and sets the new deduction level at $100,000, which, according to state Tax Department data, means 86 percent of business filers would still pay no income tax.
Business groups have opposed the change.
“Any economist will tell you that the key to economic activity in the state is disposable income,” said House Speaker Larry Householder, R-Glenford. “The more you can create across-the-board cuts, the more disposable income there will be and the more our communities will benefit.”
Senate President Larry Obhof, R-Medina, declined to comment on the tax changes, but one provision in particular appears unlikely to survive in the Senate.
The House wants to eliminate the state’s $40 million annual motion-picture tax credit, which provides tax credits for up to 30 percent of money spent making movies within the state. However, the full Senate on Wednesday voted 32-0 to go in the other direction, approving a bill that would expand eligibility for the tax credit to certain live theater productions, and expand they type of expenses that qualify for a credit.
The unusual bipartisan support that won Householder the speakership in January continued Wednesday with a rare unanimous Budget Committee vote, setting up a full House vote Thursday. From there the budget proposal goes to the Senate. A final budget plan needs to be signed into law by Gov. Mike DeWine by June 30.
The $68.9 billion budget contains about $675 million more for schools, a doubling of funding for child protective services and a significant increase to help counties pay for indigent defense costs.
“This is the first budget I will vote for as a member of the minority party,” said Rep. Jack Cera, D-Bellaire, one of the legislature’s longest-serving members and the Finance Committee’s top Democrat. He thanked Householder for “the work and courage to attack some difficult issues in this budget” and thanked DeWine for an initial budget that “addressed a number of issues that those on this side of the aisle have been concerned about and we’ve not seen addressed over the last several years.”
Finance Chairman Scott Oelslager, R-Canton, added: “I think we’ve shown the world that both parties can get together and work constructively. ... I think we’ve done a really great thing for the state of Ohio.”
The minimum teacher-salary schedule in state law has not been increased in nearly 20 years, but under changes approved Wednesday, the minimum salary for a new teacher with a bachelor’s degree would go from $20,000 to $30,000. All other salary steps also were increased by 50%.
“It just seemed like the right thing to do,” Householder said.
Barbara Shaner, of the Ohio Association of School Business Officials, said that in 2017, state data showed 10 school districts had a starting teacher salary under $30,000, but it appears that, in practice, not one currently is paying less than that.
While the increase may not directly impact current teacher salaries, Shaner and other public school associations agreed that teachers unions would likely use the higher rates as leverage in contract negotiations.