Dewine asks House, Senate to free up budget bill

Calling it a “major stumbling block,” Ohio Gov. Mike Dewine has asked House and Senate leaders to push their differences over a tax break for small businesses into a separate bill and speed passage of the delayed state budget.

Disagreement over significant House cutbacks in the $1.2 billion annual tax break, and the desire of Dewine and Senate President Larry Obhof, R-medina, to leave it largely intact, helped break down talks this past weekend over the chambers’ differing budget bills and lead to the need for a 17-day interim budget.

House Speaker Larry Householder, R-glenford, has insisted on reducing the tax break, saying it largely has been used to pad entrepreneurs’ profits rather than to create jobs.

In a text to The Dispatch, Householder seemed cool to Dewine’s suggestion. “The House and Senate legislates, the governor administrates,” he wrote.

Dewine told The Dispatch Tuesday evening, “It’s time for us to take a deep breath and hold back from any changes . ... For now, let’s get the budget passed.

“Clearly this whole tax situation has been a huge stumbling block, apparently, for the House and Senate,” Dewine continued. “All I’m saying is let’s put this aside ... and pass a budget.

“If people want to make changes so far as equity and fairness, let’s do that in a separate bill. Let’s get this budget done,” the governor said. “It’s certainly my position we should not be raising taxes on small business.

... I think that would be a mistake.”

Dewine said he had not spoken directly with Householder about his suggestion.

John Fortney, spokesman for Obhof and other Senate Republicans, said, “The Senate is not in favor of raising taxes on small businesses or anyone else. That’s why we voted 33-0 to restore the threshold and cut taxes across the board for all Ohioans. Budget talks continue.”

If Householder agreed to handle the tax break in a separate bill, he would be surrendering his leverage over the item. With it as part of the must-pass two-year state budget, he can force a decision.

The House budget would nearly halve the current business income-tax deduction that allows partnerships, LLCS and sole proprietors to pay no income tax on up to $250,000 in annual income, plus get a 40% tax cut on income over $250,000.

It would eliminate the extra tax break for Ohio’s wealthiest business filers above $250,000 and lower the no-tax level to $100,000, retroactive to Jan. 1.

The Senate budget would keep the tax cut whole for this year, retain the no-tax level at $250,000 in annual income and forfeit the extra tax cut on income of more than $250,000.

In addition, the Senate wants to reduce income taxes across the board by 8% over two years. The House proposes a 6.6% cut.

Business groups have heavily lobbied the legislature to keep all of the tax break.