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February 4th, 2013 By German Lopez | News | Posted In: News, Budget, Economy, Governor, Taxes

Kasich Budget Expands Medicaid, Cuts Taxes

Governor proposes health care expansion despite opposing Obamacare

kasich_2Ohio Gov. John Kasich - Photo: Provided
Gov. John Kasich released his 2014-2015 budget plan today, and it has a few surprises — some pleasant, some not — for progressives. Despite his vocal opposition to Obamacare, Kasich will be taking up the federal laws incentive to expand Medicaid, the health care program for low-income families. But instead of taking back past cuts to social services, education and local governments, the governor is pushing ahead with income and sales tax cuts.

The Medicaid expansion 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 to pay for the bulk of the share, Kasich’s budget has a trigger to wind down the Medicaid expansion.

The budget also proposes income and sales tax cuts, which would come with some trade-offs.

The state income tax would be brought down 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 has proposed broadening the sales tax to include other “economic activity,” while keeping exemptions for education, health care, rent and residential utilities.

In another slew of tax changes, Kasich’s plan 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.

In the past, liberals have voiced opposition to tax cuts — instead favoring investments elsewhere. Policy Matters Ohio released its own budget proposals Jan. 31, which emphasized “education, health care and human services.” The plan would also increase the income tax for top earners.

City Council Member P.G. Sittenfeld released a statement criticizing Kasich’s budget for not using the extra revenue to scale back local government and education cuts enacted in the 2012-2013 budget: “At a time when local governments around the state are being forced to slash basic services, lay off safety personnel, raise taxes, and sell off assets just to stay afloat, it's out of touch for Gov. Kasich not to reverse his raid on our local government fund. We don’t pay taxes to pad the governor’s soundbites, we pay them to maintain our roads and keep cops on the street. This should not be a partisan issue. It's simply illogical governance to make the state look good while in the process hurting Ohio's cities.”

The budget proposal also includes Kasich’s Ohio Turnpike plan and education reform plan.

 
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