COLUMBUS - Gov. John Kasich's last main shot to shape Ohio's future kicked off Monday, as the term-limited governor proposed a plan for state spending and taxes.
Some of Kasich's proposals have increasingly put him at odds with his fellow Republicans who control the Legislature, but he hopes to get them to buy into some of his ideas this time around.
The two-year budget must pass before July 1, when it takes effect. Here's what you need to know about Kasich's priorities.
1. Lower some taxes, increase others
Kasich is continuing his quest to lower the state's income tax and replace the lost tax revenue with an increase in the sales tax and an expansion on the places Ohioans must pay it.
The governor's proposal would cut the number of income tax brackets in Ohio from nine to five. Most Ohioans would see a small tax cut. Some with incomes of no more than $42,100 would see a small increase, at least for the first year, but Ohioans with incomes of up to $80,000 would also see an increase in their personal exemption. Paired with an increase in a tax credit for low-income Ohioans, 350,000 Ohio taxpayers will find themselves newly without an income tax bill, Kasich's administration says.
Ohio's top income tax rate would fall from nearly 5 percent for those earning more than $210,500 to 4.75 percent in 2017 and 4.33 percent in 2018 for those earning more than $200,000.
Kasich also would increase the state's sales tax rate half a percentage point. The sales tax would expand to apply to cable TV subscriptions, elective plastic surgery, lobbying fees, landscape and interior design fees, travel packages, among other things.
Worth noting: Kasich has tried this multiple times before, only to have fellow Republicans in the Legislature toss the idea out of the final budget. They've called it "tax shifting," hesitant to pass a tax increase on any sector of business. In some years, as a compromise, they've approved small increased in the state's sales tax rate.
2. A little more for schools, except those that are shrinking
Ohio schools will receive $200 million more over the next two years than they currently receive from the state. Overall, the increase is less than that in some previous years, and schools with declining student population could lose money.
Schools that lost more than 5 percent of their student population from 2011 to 2016 would lose 1 percent of their state aid for each additional percent lost, up to a 5 percent cut.
"If the school district has fewer students, they should get fewer dollars," Kasich said. Republicans in the Legislature traditionally have balked at most cuts in money sent to Ohio's schools.
Kasich also wants to mandate the placement of three, non-voting business leaders on each school board.
3. Some no-go's for the GOP
It's not just sales tax and education. Kasich is also proposing an increasing in the tax on oil and gas produced via fracking and tobacco taxes. The former was shunned in the past by GOP lawmakers and the latter was scaled back. He also is proposing an increase in the alcohol tax to adjust for inflation since it was set in 1992 – an increase of 1 penny for a 12-ounce beer and 1 cent for 5 ounces of wine.
Kasich's clout has waned in the months following President Donald Trump's election, both among Ohio Republicans and nationally. That means less heartburn over sinking a gubernatorial proposal.
The Ohio governor acknowledged some of his proposals are likely dead on arrival.
" 'Why does he keep putting this severance tax in when he knows it's not going to pass?' " Kasich said people are asking. "I don't believe this Legislature is going to enact higher severance taxes, but the day will come when they will. ... At some point, some enterprising young politician is going to put it on the ballot."
Still, he said, lawmakers will have a chance to look at all of his proposals and pick some that seem more attractive, such as collapsing tax brackets and lowering income taxes.
4. How to pay for Medicaid
Adults above the poverty line – who don’t have children and aren’t pregnant – would pay a $20-per-month premium for Medicaid. That would be capped at 2 percent of their household income and would require a waiver from the federal government. Kasich proposed this two years ago, and Medicaid recipients told The Enquirer they would be willing and able to pay the premiums.
Kasich estimates that would save Ohio $200 million.
Kasich and lawmakers generally are flying blind as they plan for Medicaid spending, which comprises a significant portion of Ohio’s budget. Trump and the GOP-controlled Congress promise to repeal Obamacare, which includes Ohio’s expansion of Medicaid to lower-income individuals. But it's unclear what the federal replacement for Obamacare will look like and how that will affect Ohio's Medicaid costs.