Ohio Senate budget freezes tuition, cuts small-business tax

COLUMBUS (AP) — Majority Republicans in the Ohio Senate proposed changes to the state budget Monday that would increase taxes on tobacco, freeze tuition at state universities and eliminate state taxes for certain small business income.

A revised bill was still being written, so the full impact and comprehensive details of the GOP’s plans were not yet finalized.

The Senate version of the state’s two-year budget spends about $71.3 billion, slightly less than what the House passed.

Senate leaders told reporters at a news conference that their measure increases higher-education funding by $240 million, maintains a 6.3 percent cut to the state income tax and restores Medicaid health coverage for certain pregnant women and women with breast and cervical cancer. Senators also want to boost police training and provide help to businesses affected by lakes in economic distress, such as Buckeye Lake.

Small businesses would see additional tax relief under the Senate’s proposal. The plan would eliminate taxes on the first $250,000 in business income and cap the tax rate on amounts above $250,000 at around 3 percent.

Senate President Keith Faber said the net tax cut amounts to $1.7 billion, which is roughly $500 million more than the House budget.

“We’re continuing to build on our commitment to fund what matters and return what isn’t essential,” said Faber, a Celina Republican.

Majority Republicans in the House removed major elements of Gov. John Kasich’s tax proposal from the spending bill in April, including increases on certain business and sales taxes, along with higher taxes on cigarettes, and oil and gas drilling that were intended to fund an income tax reduction. Representatives want to create a commission to study such potential tax changes.

Though senators stuck with much of the House’s tax changes, their plan would boost the cigarette tax from $1.25 to $1.65 a pack and increase the tax on other tobacco products at an equivalent rate. It would not apply to electronic cigarettes.

As expected, the Senate didn’t restore a proposed tax increase on oil-and-gas extraction backed by Kasich.

“We’re making good progress,” said Sen. Bob Peterson, a Sabina Republican who chairs the Senate’s Ways and Means Committee. “It’s coming together. We’re going to have a plan ready for next week.”

Hearings on the Senate changes are scheduled to start Tuesday. The legislation faces a June 30 deadline.


Associated Press writer Julie Carr Smyth contributed to this report.