Ohio Governor John Kasich talks budget, taxes, Medicaid expansion

COLUMBUS, Ohio - When Ohio Gov. John Kasich unveiled in February his $63.3 billion budget, it included some major changes when it comes to taxes in the state.

The two-year plan looks to reduce the state sales tax from 5.5 percent to 5 percent while expanding it to include services; rewrite the state’s severance tax to capitalize on shale drilling and use those funds to lower the state income tax by 20 percent for all Ohioans and 50 percent for small businesses.

The budget also expands Medicaid under President Barack Obama's Affordable Care Act.

A number of these provisions though face opposition not from Democrats, but from Republicans who hold 60 of 99 seats in the House and 23 of the 33 seats in the Senate.

On Wednesday, Kasich touched on a number of these provisions.

On modernizing the severance tax from a 20 cents per barrel tax to a flat 4-percent rate, something Kasich first talked about last year:

“You know it's changed and it's an industry fighting back,” Kasich said. 

“I think big oil has told people ‘Well, you know we won't come to Ohio’ and I understand people are concerned about it because there are areas of the state that haven't had very good employment and when they hear that they go ‘Well, why do we need to do anything?’

“The fact is those scare tactics are used all the time in every single state. What we're proposing in our severance tax is less than the taxes in really all the other producing states. So you just keep at it.

“I'm not giving up on this and if we don't get it this year, then we'll fight next year and if we don't get it in the next year, we'll fight the next year. And at some point, we'll get it because it doesn't make sense to let an out-of-state oil company pay 20 cents on an $80 or $90 barrel of oil. That's just not fair.”

On Tuesday, the Ohio Chamber of Commerce testified before a House committee against the governor’s plan to expand the sales tax base, saying it would shift the tax burden in an unfair way to business.

"I don't understand what their testimony was,” Kasich said. “It's like they're for the status quo, high income tax and no help for small business.

“Look, what this plan does, it says if you're a florist and you make $30,000, you will only pay taxes on $15,000. You will get a 50 percent tax cut off your net income. Why are we for that? Small businesses create more than half the jobs in Ohio, we want them to reinvest in their business. We also want them to hire people.

“The income tax cut is designed to bring down the taxes so we're more competitive. There are a lot of states that have no income tax that are growing like crazy so we have to be more competitive,” he said.

Kasich said what’s important is to build on what’s already started in Ohio.

“If you don't like my plan that's OK, I just don't want to lose the goals because we have a momentum going in Ohio.

“You can feel it in Cleveland, I mean, you can feel the growth and the momentum and the optimism. We have to keep it going and if we fear change and if we stick to the status quo, we'll go backwards and I don't want to have that happen,” he said.

Kasich has come under fire from Republicans for his decision to expand Medicaid, but he argued Wednesday it makes sense.

“What Medicaid expansion allows us to do is reclaim $13 billion of our money. There’s no federal dollars. They’re our dollars that we send to Washington.

“I’m a conservative, I am a Republican, but I don’t operate in that mold. I mean my job, I’m the CEO, I’ve got to make Ohio work and so I’m going to do what I have to do to make Ohio work and let the chips fall where they may,” he said.

"I don't support Obamacare. I don't believe in the individual mandate or some of these insurance things they're doing or having a state exchange where they tell us what to do,” said Kasich.

“The Supreme Court said (this) should be a state choice and my choice is this benefits Ohio.”

Kasich said those opposed need to consider what would happen if Medicaid is not expanded.

“You want to create chaos? Don't pass this and see what happens to the Cleveland Clinic and University Hospital up there in Cleveland. It will be a very bad impact on them and I'm not about to weaken the Cleveland Clinic or University Hospital or any of our other hospitals around this state. That would be a big mistake for us,” he said.