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1. Director Keen provides testimony to Finance Committee

Office of Budget and Management Director Tim Keen provided testimony to the House Finance Committee this week following the release of Governor John Kasich’s budget. Director Keen said revised revenue and spending estimates by the department result in a projected General Revenue Fund (GRF) ending balance of $1.7 billion. The Executive Budget proposes an estimated transfer of nearly $1 billion to the Budget Stabilization Fund (BSF), which would bring the balance of the fund to the statutory target of five percent of Fiscal Year 2013 revenue. The proposal would deposit $415.9 million into the Income Tax Reduction Fund (ITRF), which would result in a temporary reduction in Personal Income Tax rates of approximately four percent for calendar year 2013 tax liabilities.

Director Keen’s testimony centered upon the inclusion of Medicaid expansion and tax reform in the Executive Budget. Read more about the governor’s proposals in our budget update.

Below is the schedule for additional budget hearings next week:

  • February 11: House Finance Transportation Subcommittee will hear testimony from the Department of Public Safety and the Public Works Commission
  • February 12: House Finance Committee will hear executive testimony on tax provisions of budget proposal
  • February 13: House Finance Committee will hear executive testimony on education provisions of budget proposal
  • February 13: House Finance Transportation Subcommittee will hear testimony from the Development Services Agency, Department of Natural Resources and Rail Development Commission
  • February 14: House Finance Committee will hear executive testimony on health and Medicaid provisions of the budget
  • February 14 and 15: House Finance Transportation Subcommittee will hear public testimony

2. Administration releases list of services to be taxed

The Kasich administration has released additional details regarding the expanded list of services that would be subject to the state sales tax under the Executive Budget proposal. Those services the administration deems to be connected to the essentials of life, such as medical care and education, would continue to be tax exempt. The budget would reduce the state sales tax rate from five and a half percent to five percent. If adopted, the proposal would add roughly $53 billion to the sales tax base in FY 2015.

The following services are among those newly subjected to the state sales tax:

  • Accounting services
  • Architectural, engineering and related services
  • Legal services
  • Debt counseling
  • Packing and crating
  • Investment counseling
  • Loan broker fees
  • Lobbying and consulting
  • Mailroom services
  • Parking lots and garages
  • Property sales agents (real estate or personal)
  • Public relations and management consulting
  • Real estate management fees
  • Real estate title abstract services
  • Service charges of banking institutions
  • Software programming
  • Tickertape reporting (financial reporting)
  • Tax return preparation
  • Advertising agency fees (other than ad placement)

Click here to view the full list of taxable services under the proposal.

3. Task force releases report on manufacturing

The 21st Century Manufacturing Task Force has released a report on the status of manufacturing in Ohio—including more than 40 action items that could be taken to improve the state’s manufacturing competitiveness. Led by Representative Kirk Schuring (R- Canton), the task force spent five months conducting hearings across the state at various manufacturing facilities.

Workforce development, research, energy costs, reduced regulation, and changes to the state’s tax structure are among the areas identified for improvement. Citing the need for young Ohioans to understand that a career in manufacturing offers significant income and job security, the report suggests the creation of a program to fund co-ops and apprenticeships in the industry jointly funded with public and private dollars.

The following are among the action items identified in the report:

  • Encourage the development of the infrastructure necessary to build a delivery system to accommodate the increased use of compressed natural gas vehicles
  • Promote more combined heat and power activities to lower energy costs and improve emissions
  • Develop a program to assist high-energy manufacturers to stabilize or lower their energy costs over a long period of time
  • Coordinate state regulations with federal regulations to avoid confusion and conflict in achieving compliance
  • Encourage a uniform municipal tax policy to be adopted to eliminate multiple tax filings
  • Creation of tax incentives to promote capital investment, research and development, and energy efficiencies
  • Explore new ways to fund improvements and repairs to Ohio’s highways and bridges

For more information, please contact:

Michael Caputo

(non-attorney professional)

216.348.5770

mcaputo@mcdonaldhopkins.com

Rebecca M. Kuhns

(non-attorney professional)

614.458.0043

rkuhns@mcdonaldhopkins.com

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