Gov. John Kasich’s 2014-15 budget contains a few surprises for progressives — some pleasant, some not — including a proposal to take up the Affordable Care Act’s incentive to expand Medicaid.
The budget proposes state income and sales tax cuts, which would come with some trade-offs. The income tax would be lowered by 20 percent across the board, and the sales tax would be cut from 5.5 percent to 5 percent. To balance the cuts, Kasich proposed broadening the sales tax to include other “economic activity” — raising concerns for some small businesses — while keeping exemptions for education, health care, rent and residential utilities.
The expansion of Medicaid, the health care program for low-income families, would add more Ohioans to the state-federal health care program by raising the eligibility threshold to 138 percent of the federal poverty level, up from 90 percent.
The budget summary claims the expansion makes financial sense for the state as long as the federal government picks up most of the tab. As part of Obamacare, the federal government takes all the costs for newly insured Medicaid recipients for the first three years. After that, the federal government’s share is brought down to 95 percent and ultimately phased down to 90 percent. If the federal government reneges on its promise, Kasich’s budget has a trigger to wind down the Medicaid expansion.
Kasich’s plan also proposes revamping the oil and gas severance tax. It would eliminate the tax for “small, conventional natural gas producers,” but imposes a 4 percent tax for bigger oil and gas producers.
Kasich’s budget received an unusually warm reception, but some critics argue the increased revenue from the broader sales tax and severance tax should be used to put money back into previously defunded programs, including education and local governments.