Ohio budget chief: income tax cut remains on table

COLUMBUS, Ohio (AP) -- Ohio Gov. John Kasich wants to cut tax rates on incomes and small businesses, and his administration is open to suggestions from lawmakers about how to do it, the state's budget director said Tuesday.

Budget Director Tim Keen said in an interview with The Associated Press that based on discussions he's had with legislative leaders, he believes the income tax cuts will remain in the budget.

His comments come as the Republican-controlled Ohio House is preparing its changes to Kasich's $63.2 billion two-year state budget proposal. The first year of the two-year period begins July 1.

Kasich, a Republican, campaigned in 2010 on a pledge to reduce Ohio's income tax. With re-election just a year away, he would have to make that happen in the budget currently in the works.

Kasich's plan would lower the state's income tax 20 percent over three years and reduce the tax rates on consumer sales and small businesses. He's proposed doing so by raising the severance tax on large-scale oil and gas drilling and by applying sales taxes to a new list of services as varied as the services offered by lawyers, accountants, amusement parks and rock concerts.

Republicans and the Ohio Chamber of Commerce have raised concerns about extending state sales taxes. Business leaders have argued the new sales taxes on their services will be burdensome to impose, unfairly double-tax them in places and ultimately harm the bottom line.

GOP Rep. Ron Amstutz, who chairs the House budget-writing committee, said last week that substantial changes are planned for Kasich's tax overhaul proposals. He said he anticipates the House's version will replace the governor's proposed sales-tax expansion as a way of paying for the income tax cuts.

House Speaker William Batchelder also has signaled that the House will remove Kasich's proposed tax hike on drilling.

Keen declined to give details about the discussions the administration has had with legislators on possible alternatives to achieving the statewide income-tax cuts.

But "The idea is that if people have a different way to go about this, let's have those conversations," he said.

Asked whether there was anything more the administration could say to persuade lawmakers to keep the severance tax increase in the budget, Keen said he wasn't sure.

The Kasich administration has said that the tax on large-volume oil and gas drillers is modest compared to the levies in other states, and it would help keep Ohio competitive.

Still, the administration is not bracing for a budget that looks drastically different from the one it's proposed, Keen said.

"The discussion is really about how large of a tax cut and to what extent there should be tax reform elements included in this bill," he said.