Yesterday, April 9, the Finance & Appropriations Committee of the Ohio House of Representatives made several major changes to Governor Kasich’s biennial budget bill. The substitute version of the bill removes both the proposed expansion of the state sales tax to virtually all services, and the proposed increase in oil and gas severance taxes.

The substitute version of House Bill 59 would establish an immediate, permanent 7 percent income tax rate cut, which Rep. Ron Amstutz, chairman of the House Finance & Appropriations Committee, said during a news conference Tuesday would equate to $1.5 billion over two years. However, the income tax cut “would be achieved without the broadening of sales taxes to services as the governor had proposed.” Instead, "anticipated revenue growth and the sizeable projected year-end carryover balance from the current fiscal year" would be used to cover the income tax reduction.

The Governor’s proposal called for a 20 percent reduction in personal income tax rates over three years, and a significant reduction in the tax rate for small business owners. Based on statements from Rep. Amstutz and others, it appears that House Republicans plan to continue to work toward these goals, even as the bill proceeds to the Senate. Further changes to the tax provisions appear likely prior to enactment.

The House Finance & Appropriations Committee will hold hearings on the substitute version of the bill for the remainder of the week, with votes by the committee and the House floor expected next week.

The Ohio Senate has announced that hearings on Sub. H.B. 59 will begin on April 16 – even before the House completes its work on the bill. A Senate floor vote on the bill is tentatively scheduled for June 5.

For full text of Sub. H.B. 59 and a summary of the proposed changes, please visit our Ohio Budget Bill resource center.