![416eff1001c09f03c7202612dc366f67_787_442](https://innovationohio.org/wp-content/uploads/2016/10/416EFF1001C09F03C7202612DC366F67_787_442.jpg)
Trump’s Tax Dodge Highlights Ohio Tax Policy That Hurts Communities
![416eff1001c09f03c7202612dc366f67_787_442](https://innovationohio.org/wp-content/uploads/2016/10/416EFF1001C09F03C7202612DC366F67_787_442.jpg)
What you need to know about Ohio Politics and Policy
Journal News – City Manager John Jones said state budget cuts have decimated the city’s general fund by almost $200,000 per year. There are 13 people on the police force serving the city’s population of 12,500, including the chief, he said. That’s down from 17 people a decade ago when there were about 4,500 fewer people to protect.Gallipolis: 1 percent income tax increase for public safety expenses
Gallipolis Daily Tribune – Members of the public have asked why the city has seemingly lost so much money over the years. According to the three city officials, much of the funding has been loss due to cuts in state funding and tax law changes. According to budget records, in 2011, the city had access to $3.97 million to operate departments. Funding dropped to roughly $3.93 million in 2012. It fell further to about $3.55 million in 2013.Elyria: ½ percent income tax increase for multiple expenses
Newsnet5 – [Councilman] Jessie blamed an economic downturn and cuts to the state’s local government fund and the estate tax — cuts that have cost Elyria about $2 million a year. “Our governor can say he’s balanced the state’s budget and he’s done it on the backs of every city and municipality in the state,” Jessie said.Toledo: ¼ percent income tax increase for road repair
Toledo Blade – …state government has cut its aid to Toledo — often a matter of returning tax dollars Toledoans send to Columbus — by more than $83 million since 2008. Toledoans have benefited less than richer Ohioans from the state tax cuts these spending reductions helped pay for. Two-thirds of Toledo’s general-fund budget goes to personnel costs. Seven out of eight jobs funded by the budget are in public safety — police and fire protection and courts. Few Toledoans would suggest that the city should have fewer police officers and firefighters, or that their pay should be cut.Cities across Ohio are dealing with difficult budget constraints as a result of policy changes at the state level. Starting in 2011, Governor Kasich and the Ohio legislature enacted cuts in revenue shared with local communities, eliminated the estate tax, and phased out reimbursements revenue lost in the last round of state tax cuts in 2005. Distributions from the Local Government Fund were cut in half, dropping from $647 million in 2004 to $347 million in 2014. Overall, cities are estimated to lose a total of $495 million per year thanks to the collective changes in policy. While cuts have been made to our cities, state lawmakers have elected to deposit over $2 billion into the state’s rainy day fund. Maintaining a cushion for a rainy day, while prudent, should not come at the expense of adequate local police & fire protection, parks and a safe and well-maintained infrastructure. The sound bite of tax cuts and creating a $2-billion-dollar rainy day fund may sound good on the campaign trail, but the real world consequences, including higher taxes at the local level, must be considered as well.
Yesterday, Ohio Gov. John Kasich unveiled his latest two-year budget proposal, featuring a large cut in the state income tax, paid for with increased taxes on everyday purchases, on business activity and on oil and gas extraction.
This is not the first time Kasich has proposed cutting the state income tax — the state’s most progressive tax. The tax is designed so those at the top income level pay the highest rate. The state’s estate tax on inherited wealth was eliminated completely in the Governor’s first budget.
To pay for these tax cuts that primarily benefit the wealthy, the Governor’s budget proposes raising the state’s regressive sales tax and expanding it to more services — including parking and cable TV subscriptions.
People with low-incomes spend much of their income on things that are taxed. As a result, they pay a much larger share of their income on taxes in states with regressive tax systems that rely heavily on sales taxes to fund state spending. According to the Institute on Taxation & Economic Policy, the poorest 20% of Ohioans pay nearly 12 percent of their income on state and local taxes, compared to just 5.5% paid by the top 1%.
We crunched the numbers, and here’s how dramatic the shift has been in just six years.
Combined, the state’s income and estate taxes have declined from 45% of state general revenue to just 28%. At the same time, sales taxes have increased from 43% to 53% and now picks up the largest share of the cost of state government.
2012 | 2013 | 2014 | 2015 | 2016 | 2017 | |
Sales Tax | 42.6% | 40.2% | 45.5% | 47.2% | 52.0% | 53.3% |
Income & Estate Taxes | 44.7% | 45.7% | 40.3% | 39.2% | 29.2% | 27.6% |
Other Taxes | 12.7% | 14.1% | 14.2% | 13.6% | 19.0% | 18.9% |
House Bill 5: Impact Analysis Understanding the cumulative financial impact of House Bill 5 in the context of the last four years of funding cuts to local communities
For Immediate Release: November 20, 2014 Contact: Keary McCarthy, (614) 425-9163
HB 5 Continues Assault on Local Services, Pushes Total Cut to Communities to $495 Million a Year IO report shows cumulative impact of HB 5 and previous 4 years of cuts to communities
COLUMBUS – Innovation Ohio released a report today that shows the cumulative financial impact of House Bill 5, along with previous cuts to local communities passed in the last two state operating budgets. The report estimates that passage of House Bill 5 alone would cost communities $82 million a year, and when combined with previous cuts, the total impact on local services approaches nearly half a billion dollars annually. “Our state is only as strong as our schools and local communities,” said Innovation Ohio President Keary McCarthy. “Taken in context with the last four years of significant funding cuts to local communities, passage of House Bill 5 could have serious impacts on services that keep our streets safe and our communities strong.” Over the last four years, the state has cut an estimated $413 million each year for Ohio’s cities and villages through reductions in Local Government Funding, reimbursement losses for TPP and KWH tax, and the elimination of the estate tax. Combined with an estimated $82 million in annual revenue loss from House Bill 5, the total impact on municipal services is estimated at $495 annually or nearly $1 billion of a two-year budgetary period. “Republican and Democratic leaders in the Dayton region stand united in our belief that continued cuts to local communities have seriously harmed our ability to provide essential services such as police and fire protection, road paving and infrastructure repair,” said Dayton Mayor Nan Whaley. “Loss of these services impact the quality of life for our constituents and the ability of our small businesses to thrive.” The report shows the estimated impact of House Bill 5 for 187 municipalities that have provided impact assessments, along with the specific funding cuts from the estate tax elimination, cuts to the Local Government Fund, and TPP and KWH reimbursement losses. The report also shows these cumulative estimated losses as a percentage share of the municipal budget. For the cities of Dayton and Cincinnati, these cumulative losses represent nearly 10 percent of its overall budget. “House bill 5 needs to be amended to stop cutting resources for local governments,” said Cincinnati Mayor John Cranley. “The death by a thousand cuts coming from Columbus must stop.” For the cities that did not report estimated impacts from HB5, Innovation Ohio calculated the revenue impact per capita for the cities for which estimates are available to the population of the state’s remaining 429 communities that levy an income tax. Combined, we estimate the potential statewide impact of HB 5 on cities and villages that levy an income tax at over $82 million each year. “The state legislature’s continued attempts to cut funding and hamstring communities is making it harder to keep our streets safe and our taxes low,” said Marion Mayor Scott Schertzer. “Passing House Bill 5 without making reasonable changes that would limit the financial impact for communities would be yet another hit that everyday Ohioans will undoubtedly feel.”Read the report: “House Bill 5: Impact Analysis“