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Gov. Kasich wants to raise sales, cigarette, beer, wine taxes; give income tax cut

Ohio Gov. John Kasich’s last budget proposal is loaded with tax cuts and hikes and big ideas that — if adopted by lawmakers — will impact smokers, drinkers, consumers, students, families, taxpayers and, well, just about every single Ohioan.

Kasich is pitching a package of tax changes, including collapsing the number of personal income tax brackets, cutting income tax rates, boosting exemptions for families making less than $80,000 a year, hiking the state sales tax to 6.25 percent, putting an extra one-cent tax on each can of beer and glass of wine, increasing cigarette taxes to $2.25 per pack and increasing taxes on other tobacco products, and allowing businesses to file a single municipal tax return, even if they operate in multiple cities.

The sales tax, which currently sits at 5.75 percent, would be applied to more services, such as lawn care, face lifts, interior decorating, cable TV subscriptions, travel packages, repossession services and lobbying, according to the Kasich budget highlights.

The governor also is proposing increases in taxes on oil and natural gas production, but acknowledged that — like in previous years — legislators are likely going to reject it.

Kasich, speaking at a budget briefing Monday, said the tax changes as well as prudent fiscal management will make Ohio more business friendly.

Ohio House Minority Leader Fred Strahorn, D-Dayton, said in a written statement that Kasich’s proposal hinges on “the same failed economic ideology that has been holding Ohio back from sharing in the economic growth and stability our nation has experienced since the recession. Tax shifting from the wealthy few to the working and middle class has sidelined Ohio, and predictably failed to bring back middle-class jobs.”

RELATED: Medicaid spending would increase 6.2%

Ohio Senate Minority Leader Joe Schiavoni, D-Boardman, agreed. “Once again Gov. Kasich has shortchanged our schools and local communities and shifted more of the tax burden onto working families. All Ohioans deserve a fair shot, not just a wealthy few.”

Debate on the $144 billion two-year spending blue print will begin in the Ohio House this week. Lawmakers in the House and Senate are expected to agree on a final version by June 30, which marks the last day of the current state fiscal year.

The proposal marks the highest state spending in Ohio history. A big chunk of it — $56.9 billion over two years — is state and federal funds for Ohio Medicaid, a health insurance program that covers nearly 3 million low-income and disabled Ohioans. Kasich’s budget plan assumes that the federal government will not repeal the Affordable Care Act without replacing it, a move that the governor opposes.

Kasich wants federal permission to impose a $20 monthly premium on Medicaid patients who aren’t parents or pregnant and he says states need more flexibility for negotiating drug prices paid through the Medicaid program. Medicaid reimbursement rates for nursing homes and hospitals will be trimmed back, according to Kasich’s proposal.

The governor’s budget offers a modest increase in funding — $200 million — for K-12 education and tinkers with the school funding formula for districts that have lost 5 percent or more of its student body count over the past six years. It also calls for high school students to earn college credit if they complete approved pre-apprenticeship programs and creates a scholarship fund to encourage adults to finish credential or college degree programs.

RELATED: More details on Kasich’s plans for higher education

If Kasich’s plan is adopted, Ohio would be the first in the nation to require public universities and colleges to provide textbooks for students. The schools would be allowed to charge up to $300 per year to offset the costs.

Additionally, Kasich wants a two-year freeze on tuition, general fees and special fees charged by public colleges and universities.

The governor emphasized a number of areas where he wants Ohio to invest in technologies, including testing self-driving cars, expanding the use of drones, improving cyber security, moving state government to cloud computing, and applying data analytics to solve problems.

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