Economic Development

State Officials Stump for Governor’s Budget, Tax Proposals

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YOUNGSTOWN, Ohio – Three officials from the state government came here Monday to help small businesses in the Mahoning Valley, they said, and to that end directed their audience’s attention on the benefits of Gov. John R. Kasich’s budget and tax proposals.

Ohio’s tax commissioner, Joe Testa, the director of the Ohio Development Services Agency, David Goodman, and the project manager in the Ohio Department of Job and Family Services, Tanya Calbert presented their “Small Business Seminar” to members of the Youngstown Warren Regional Chamber gathered at the Covelli Centre.

The three are traveling across the Buckeye State as advocates for Kasich’s budget that proposes “a $500 million net tax cut over the next two years,” Testa said.

The governor’s budget proposal would lower the tax burden on some, especially small-business owners, while raising taxes on others, such as those who use tobacco products.

Much of the tax burden, if adopted by the state Legislature, would shift to consumption from income, Testa said. Should the Kasich administration persuade the state senators and representatives of the merits of its budget, the top rate on income taxes would fall to 4.1% from 5.9%, where it has stood since 2011 when the governor took office. Overall, residents of Ohio would see a 23% reduction in their state income taxes in the next biennium, he said.

On the other hand, the state sales tax would rise to 6.25% from 5.75% and the types of goods and services subject to the sales tax would increase. In addition, the state tax on cigarettes would rise to $2.25 a pack from $1.25 and the tax on cigars, pipe tobacco and chewing tobacco, today less than the tax on cigarettes, would be made commensurate with that on cigarettes. Testa said the Kasich administration wants to “equalize the taxes on tobacco.”

Kasich also wants the Legislature to hike the severance tax on extracted oil and natural gas to 6.5%. Ohio has the lowest severance tax in the country, Testa and Goodman noted, and raising it to 6.5% would “put Ohio midrange” among the states where energy companies drill for oil and gas.

Ohio seeks to be the most pro-business state in the country, Goodman told T. Sharon Woodberry, Youngstown director of community planning/economic development, who attended the event. That encompasses cutting taxes, cutting red tape and attracting and retaining talent, he said, noting “Ohio’s Commitment to Small Business,” which lists those goals on the PowerPoint presentation.

Under Kasich’s proposals, small businesses with $2 million or less in annual gross receipts – 98% of the number of businesses in Ohio — would see the income taxes on their first $250,000 in profits fall to zero while preserving the 50% cut in taxes on profits that exceed $250,000.

On the other hand, the commercial activity tax, or CAT, would rise to 0.32% from 0.26%, or an increase of $600 per $1 million in sales, Testa said. Should the Legislature concur, it would be “the first-ever revision to the CAT,” the tax director noted.

The unit discount the state tax department gives small merchants for handling the collection of the sales tax would continue unchanged, Testa said, while larger merchants, such as department store chains and restaurant chains, would be reduced. Testa did not say by how much.

Under the Invest Ohio program, Goodman said, an investor – which includes the owner of a business investing in his own enterprise – could get a 10% tax credit on the first $10 million invested.

Residents of Ohio deemed low- and middle-income would be given more relief on their income taxes. Personal exemptions would increase to $4,000 per member for families with $40,000 or less in income, Testa said. Families with between $40,001 and $80,000 in annual income would have personal exemptions of $2,850 per member.

The state personal exemption is $1,950.

Still under review is a means test for families whose income is $100,000 and more. Some deductions would be eliminated including “certain retirement [contribution] deductions,” Testa said.

It fell to Goodman and Calbert to review the programs the state has in place to help small businesses grow and thrive.

The Development Services Agency has overhauled its website that lists the 70 programs it administers, Goodman said, and “They are described in English.”

When he became director two years ago, he said, he asked for a description of each of the programs and was handed a stack of papers he had trouble understanding.

His goal, he said, is to increase business owners’ awareness of the 70 programs with “none left underutilized.”

Two programs Goodman promoted are “Incumbent Workforce Training” and the “Career Exploration Internship.”

The former, three years old, has helped more than 120,000 employees of Ohio companies have the state government subsidize up to 50% of the training costs so the workforce develops or improves its skills, he said.

The latter would have the state reimburse an employer up to $5,000 per intern provided the intern is a junior or senior in high school, works at least 20 hours per week and the internship lasts a minimum of 200 hours. A job as seemingly simple as making ice cream cones, Goodman said, could interest a high school student to want to know more about the business than filling cones with ice cream.

The student might want to learn how the business is run, including learning how the books are kept.

Calbert reviewed how the Department of Jobs and Family Services can help businesses recruit the qualified employees they seek. In 2007, she said, her department contracted with Monster.com to allow employers to have access to two million resumes without paying a fee. An employer must register to take advantage, she said.

Employers can post help-wanted ads on Monster.com through Jobs and Family Services but her department must first review such ads. The review should delay a posting only four or five hours.

Many employers have either forgotten or are unaware of all the programs Jobs and Family Services offer, Calbert said, including staff development. Her department offers online skills testing and training at no charge and those who pass the tests are certified, at no charge, in those skills.

Some 130,000 employers last year qualified for a work opportunity tax credit that allows reimbursement for on-the-job training, she said, expressing disappointment that they did not apply for the tax credit.

Pictured: David Goodman, director, Development Services Agency; Tanya Calbert, project manager, Ohio Department of Job and Family Services; Joe Testa, Ohio tax commissioner.

Published by The Business Journal, Youngstown, Ohio.