Budget proposal calls for growing economy
Gov. John Kasich’s budget proposal includes a combination of economic stimulus and borrowing. That may sound familiar, but the governor’s approach is different than what we’ve seen on a national basis.
Instead of turning to crony capitalism or redistributing wealth, Kasich aims to stimulate Ohio’s economy by cutting tax rates. Suggested tax reforms would cut the tax rate for small businesses in half and reduce income tax rates by 20 percent over three years. Meanwhile, the sales tax would drop from 5.5 cents on the dollar to a nickel.
Yet the next two-year budget calls for spending $63.1 billion, a noticeable rise from the $55.5 billion budgeted for the 2011-2013 fiscal years. No, that isn’t just based on wishful thinking about lower tax rates boosting tax collections.
Sure, economic growth and more revenue from gambling (although lower than expected) are forecast. But Kasich’s administration wants to impose the lower sales tax rate on a wider range of services. The plan is to collect the lower tax on a broader base, thus producing more revenues.
However, the proposal also calls for borrowing. The budget foresees bonding of the Ohio Turnpike and the state liquor operation through Kasich’s private nonprofit JobsOhio. While that would include avenues for paying off bonds – turnpike tolls and liquor sale profits – it still would involve spending future income in the near term.
But if the governor’s plan for encouraging economic growth and helping the needy works, it could give Ohio a growing economy and an expanding middle class. The proposal unveiled Monday isn’t just a budget, it’s a plan to expand the economy and economic opportunity.