Count Larry Obhof as less than keen about Gov. Mike DeWine’s proposed increase in the state gas tax. On Tuesday, the Ohio Senate president described the additional 18 cents per gallon as “generous.” The Medina Republican wondered about how the governor and his team arrived at that figure, though Jack Marchbanks, the director of the state Department of Transportation, has made the reasoning plain in at least three public settings.
Obhof raised the prospect of taking more time to “make sure we get it right,” even suggesting “some of these issues become part of a broader tax reform discussion for the operating budget.” He told reporters, “I absolutely support doing an offset,” by which he means an accompanying reduction in the state income tax. All of this expected, Republicans having long reaped political rewards for branding Democrats as the party of tax increases.
State lawmakers also have a duty to look closely at the proposals of the governor. At the same time, their words and actions deserve scrutiny, too. In this instance, it is worth recalling that the Republican majorities at the Statehouse have reduced taxes for the past dozen years, totaling some $3 billion a year, the benefits skewing heavily to those households at the upper income rungs. State income tax rates have been slashed by one-third since 2005 while job growth has scored below the national average.
The massive income tax break for “pass through” entities, such as partnerships, S corporations and limited liability companies amounts to $1 billion annually.
Now the governor has put forward a proposal that would cost typical motorists roughly $100 per year, or $8 and cents per month. That amounts to a minor increase for those benefiting most handsomely from the string of income tax reductions, including the recent federal tax cuts.
More, the governor is doing so to address a problem — the state’s insufficient investment in roads and bridges. He is breaking away from the recent practice of borrowing to support the transportation system, including the flimflam in tapping Ohio Turnpike revenues, the state today carrying $390 million per year in debt service. The governor was right this week to describe his approach as “conservative … because we are going to be paying as we go.”
That isn’t to say there’s no room for making adjustments in view of a gas tax increase. Those households at the lower income rungs have experienced practically no relief from state tax cuts, the bottom one-fifth actually seeing a tax increase of $140 a year on average compared to the wealthiest 1 percent enjoying an average tax cut of $40,790 a year.
In that way, Democrats in the Ohio House responded appropriately on Wednesday, proposing a stronger state Earned Income Tax Credit, adding features that have made the federal version so effective at lifting working families out of poverty. The state credit would become refundable, and it no longer would have a severe cap, both changes expanding its reach and bringing relief where the higher gas tax would bite.
Another worthy offset would be a more substantial increase in state support for public transit. The governor has proposed additional funding, yet the $40 million in all falls far short of the state transportation department recommendation of $120 million in 2015. That gap is a reminder of the past decade of disinvestment across the state and the case for restoring a top income tax rate of 7.5 percent, or slightly higher, for the wealthiest households. The state’s system of roads and bridges is just one area in which Ohio must make up for lost ground.