Senate Democrats propose ending Ohio small business tax break to fill State budget hole

Senate Democrats on Thursday pitched their idea to patch the $1 billion state budget hole — eliminate Ohio’s small business tax break.

Repealing the business income tax deduction, phased in since 2013, would generate $2.2 billion over the next two years, according to analysis from the nonpartisan Legislative Service Commission.

Democrats said the money would cover the expected revenue shortfall without making cuts and leave another $1 billion to spend on education, health care, local governments, libraries and Ohio’s opioid addiction and overdose crisis.

“Some people will tell you there’s not enough money to go around, but our real problem right now is irresponsible tax policy,” Senate Minority Leader Kenny Yuko of Richmond Heights said at a news conference.

Specifically, Democrats would spend the additional $1 billion on the following over two years:

• $200 million to fight the opioid crisis through expansion of existing programs
• $200 million on health care, including boosting spending on child protective services, food banks and child care
• $250 million on education, so no school district would see state cuts
• $200 million for higher education, to increase state funding to colleges and universities and financial aid for needy students
• $350 million for local governments, libraries and regional transit systems

Republicans, who control both legislative chambers, have said tax hikes are not an option for balancing the budget.

Sen. Michael Skindell, a Lakewood Democrat, said the deduction unfairly rewards a business based on how it’s structured. Most save less than $1,000, Skindell said, not enough to hire new employees. Skindell, an attorney, said he’s personally saved less than $100 a year from it.

Skindell disagreed with the premise that business owners have benefited from even small savings by buying new equipment, giving employees raises or otherwise investing in the business.

Senate President Larry Obhof said the state does not has a revenue problem, despite sluggish state tax revenues. The Senate GOP budget unveiled Monday achieved much of its $1 billion cut through across-the-board agency cuts of 3 to 4 percent and trimming Medicaid spending by $200 million, including a $75 million cut to hospitals.

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