Yesterday was a train wreck. Speaker Batchelder held a press gaggle in which he declared, definitively, that the CAT tax on gross receipts amendment that the House Finance Committee added on Thursday would be struck today:
Reporter: What about the CAT tax? There seems to be concerns on both sides.
It will be part of the changes, it’s out of the bill. We have a memo from LSC that language we put in is in the law. There have been meetings between the Governor and the industry. We are seeing a lot more action now. The budget will not say anything about CAT and casinos. The memo implies it is already law. It can just be left out of the budget. Then everybody can get their best hole. Led to a quicker review of where we’re going and the Governor wants to do, this was a stimulus. I don’t know what the Senate or Governor will do.
But the House Finance Committed did not strike the CAT language from the bill, according to multiple media reports, because the Kasich Administration pushed to keep it in (in fairness, my understanding is that the Strickland Administration’s position on the CAT tax and the casinos is the same as the Kasich Administration’s.) The Dayton Daily News reports that the casino developers are crying foul and threatening to sue (somehow.)
Among some of the other changes the House Finance Committee made yesterday was to have Office of Management and Budget Director Tim Keen’s authority to privatize “highway services” (i.e.- the Ohio Turnpike) expire at the end of June 2013 as opposed to 2012. So after greatly restricting Keen’s privatization authority to last only a year, the Republicans reversed course and expanded it through the entire biennium. Still, it’s still now only limited to “highways services” as opposed to “everything” that the Administration initially sought.
The House Finance Committee also added a massive property tax give away to the companies that buy Ohio’s correctional facilities Kasich wishes to sell: so long as they have a contract with the State of Ohio to house inmates, they’ll have to pay ZERO real property taxes for the facilities they’re buying from Ohio. Of course, this means that the local governments and school districts would be out of the property tax monies Governor Kasich has been promising the affected communities his privatization plan would bring.
As we discussed yesterday, the House Finance Committee dumped their proposal to give county commissioners authority to privatize county jail operations, the House Republicans rolled back some of their charter school amendments they introduced last Thursday, but they tabled an amendment by House Assistant Minority Whip Debbie Phillips (D-Athens) to remove all of the last minute charter school amendments that major GOP donor industry/for-profit charter school White Hat Management’s lobbyist has admitted publicly they played a major role in getting inserted into the budget.
In fact the most substantive change the House Finance Committee made was to pass an amendment which continued a moratorium on new e-schools until the General Assembly can enact standards for such e-schools. They also reduced Kasich’s “parental trigger” to take over failing schools into a pilot program for the schools within the Columbus Public School District.
The Republicans also restored state funding to veterans organizations, such as to AmVets, the Disabled Veterans of America, the American Legion, the Military Order of the Purple Heart, etc. that Governor Kasich cut.
Cincinnati Democrat State Rep. Alicia Reece blasted the Republicans for not removing the CAT tax/casino amendment in a press release:
State Representative Alicia Reece expressed her frustration that the House reversed its decision to squash a budget provision which applies the CAT Tax to Casinos. The plan could delay the 2012 opening of the Cincinnati Casino, which is estimated to create 5,000 new jobs and bring $250 million of new private investment to Cincinnati.
“We should be working to create jobs and spur economic development,” Rep. Reece said. “This plan could put 5,000 jobs and $250 million of new private investment in jeopardy.”
Assistant House Minority Whip Debbie Phillips, meanwhile, blasted the Republicans over their weak charter school accountability measures:
"I appreciate some of the improvements that were made in the committee process, including the reduction of the parent trigger to a pilot project, the removal of the county jail privatization provisions, and partial restoration of funding for ODADAS. However, I remain deeply concerned about the cuts to many critical services, such as education, health care, mental health care, and local governments, as well as the lack of oversight and accountability for taxpayer funds included in the privatization and the sale of public assets. I will continue to work to try to improve the bill during our floor amendment process.”
This morning a cadre of House Democrats (Foley, Antonio, Wilburn and Hagan) also issued a press release demanding that the Republicans abandon their pursuit of an estate tax repeal while local governments continue to feel the brunt of the GOP’s budget cutting:
Citing poor timing due to extensive cuts to local government funding, the Democratic members agreed it was time for Republicans to stop giving favors to their wealthy friends at the expense of middle class taxpayers.
"Republicans are participating in class warfare, and they’re backing the rich,” said Rep. Foley. “Ending the estate tax is just another in a long line of actions that benefit the wealthy, from Senate Bill 5 to tax cuts for the rich, at the expense of middle class workers and local governments.”
The estate tax began in 1968 and only affects Ohio’s most wealthy residents with estates valued over $338,333. In fiscal year 2009 the estate tax generated $333.8 million in revenue. Most of the dollars are distributed to local governments (80%), with the remainder (20%) going into Ohio’s General Revenue Fund. In fiscal year 2009, $269.4 million was allocated to local governments from the estate tax.
Data from the Ohio Department of Taxation shows that in fiscal year 2009 only 8,003 estates fell into the tax brackets which require payment of the estate tax, most with net taxable value of above $500,000. Over 2,000 estates had taxable values of between $1 million and over $3 million.
“There is not an ounce of common sense in the notion to eradicate the estate tax which would take one million dollars annually out of the City of Lakewood,” said Rep. Antonio. “These funds pay for essential services that are already likely to be severely reduced because of budget cuts imposed by the Kasich administration.”
Democratic House members also debunked a myth that the estate tax causes Ohioans to flee the state. According to Ohio Historical Society data, Ohio has previously ranked as #4 in the country with the most native-born citizens. Ohio ranked 4th behind Louisiana, Michigan and Pennsylvania with 75% of our population as native Ohioans.
“The elimination of the estate tax is just another shining example of the Republicans placing ideology before sound public policy, individual wealth before equity, and patronage before sanity,” said Rep. Hagan. “The fact that they’re crippling local governments so a handful of their wealthy friends can become even wealthier is despicable. They’re passing the state’s financial hardships off to local governments, and they know it. It’s a great way to rid themselves of any legislative responsibility and focus on winning elections. How will they pay for their millions in proposed spending increases over the next biennium? Cap. Square is feeling less like a democracy and more like a hypocrisy.”
According to testimony heard during Finance Committee budget deliberations, some Ohio municipalities will be forced to make drastic cuts to their budgets if the estate tax is eliminated. Most notably, Loveland Mayor Robert Weisgerber testified that without the estate tax his city will have to eliminate all their part-time police officers and cut a dedicated detective position. The current detective was instrumental in apprehending a man who robbed the Chase Bank in Loveland.
Also testifying in committee against the elimination of the estate tax was Mr. Martin R. Kolb a resident of Shaker Heights. A self-described Republican who supported John Kasich for governor, Mr. Kolb said he believes “it is a poor business decision” to eliminate the estate tax. Springfield Township Administrator Mr. Michael Hinnenkamp added in his testimony that, “if this were a football game, adding the repeal of the estate tax language to this bill is the equivalent of piling on-or unnecessary roughness.”
“Estate tax repeal would devastate the quality of many communities and force requests for more local tax levies throughout practically every community and municipality in Ohio,” said Rep. Winburn.
The House Finance Committee passed the budget on a party-line vote last night. It’s scheduled for House vote on tomorrow. The State Senate, whose leadership had all but called an estate tax repeal dead, has already begun its hearings this week.
Given that Speaker Batchelder has already talked about in yesterday’s gaggle of nursing homes getting additional funding when the budget goes into a conference committee, it means that there’s already an expectation that the Senate Republicans will depart from the House Republicans in some areas in which a majority of the House would prefer to work out a compromise in a conference committee rather than accept the Senate’s changes wholesale. The budget must be ready to sign into law by the end of June when the State’s fiscal year ends.