Taxpayer Rip-Off of the Week Award: The Kasich Budget’s “Secret Six”

For Immediate Release:
April 12, 2011

Contact: Dale Butland
614-783-5833

INNOVATION OHIO’S TAXPAYER RIP-OFF OF THE WEEK:
THE KASICH BUDGET’S “SECRET SIX”
LITTLE KNOWN BUDGET PROVISIONS MAKE OBM DIRECTOR A CZAR;
FAVORED CONTRACTORS WOULD PAY NO BUSINESS TAXES

Columbus—Innovation Ohio, a progressive think tank headquartered in Columbus, today presented its second “Taxpayer Rip-Off of the Week” Award to the “Secret Six” pages of the Kasich budget which would not only give the Administration unprecedented contracting authority, but also exempt winning contractors from paying any state or local business taxes, including the state “CAT” that all other businesses are required to pay.

Squirreled away between pages 261 and 266 of HB 153 (Kasich’s proposed two-year budget) are 200 seemingly innocuous lines that would make OBM Director Tim Keen the most powerful unelected person in Ohio. These passages authorize him to contract out—for up to 75 years—ANY state service to ANY applicant that he alone deems “qualified” to “more efficiently and effectively provide those services.” Best of all, contractors Keen picks as winners would pay no business tax on gross receipts or on any income “derived from providing public services.”

There is no requirement that the favored bidder be current on taxes, operate a safe workplace, pay a legal wage or even be an Ohio company that employs Ohioans. Nor is there any prohibition against awarding contracts to major Kasich campaign contributors. And awards would not be subject to review or approval by the state Controlling Board or anyone else.

Said Innovation Ohio’s Communications Director Dale Butland:

“With these “Secret Six” pages, the Governor’s proposed budget takes “taxpayer rip-off” to a whole new level. They transform the OBM Director into an unaccountable modern day Czar, vested with unchecked power to contract out any state service to any company he alone deems ‘qualified.’ The lucky companies get a contract for up to 75 years and—as an extra bonus—don’t have to pay taxes on the money they earn!

“So let’s review. A generous Kasich campaign donor behind on his taxes—who operates a call center in Bangladesh paying workers $4.00 per day—would pay no business taxes on income from a state contract providing job re-training advice to unemployed Ohioans over the phone.

“Of course, public scrutiny, legislative oversight, and tax fairness don’t mesh with privatizing state services ‘at the speed of business.’ It’s a ‘new day and a new way.’ And transparency and fairness are so yesterday.”