Tax Breakthrough in Ohio

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The Ohio House and Senate passed a bill last night that would delay the last phase of a gradual income tax reduction enacted under the previous governor, which lowered the state's income tax rates by 20% over five years. The current governor, Ted Strickland, proposed this measure in the fall. Despite support from the Ohio Chamber of Commerce and other business groups, the fate of Governor Strickland's proposal was still up in the air until yesterday.

This stand-off made the education community pretty nervous. If a resolution wasn't reached by December 31, that could have meant harmful cuts to fill the state's $851 million shortfall.

The deal finally reached in the Senate will delay the income tax rate reductions and also create a pilot program that will ideally reduce the cost of state-funded construction programs.  Governor Strickland is expected to sign the legislation.

Of course, Ohio isn't out of the woods yet. As Policy Matters Ohio's Research Director, Zach Schiller, says, "While this fills the hole for now, we have a gigantic, yawning gap ahead in the next budget. Even just continuing this, we would have billions of dollars in additional cuts and revenue needed."

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