Tax giveaways put squeeze on state budget
Posted January 30, 2019 in Press Releases
Years of income tax cuts, expanding tax breaks and the elimination of corporate taxes have put Ohio’s budget in a bind, preventing the state from meeting basic needs and investing in the future, according to new analysis from Policy Matters Ohio.
In almost every year since the tax overhaul of 2005, Ohio lawmakers cut taxes, reducing revenues by an estimated $6 billion a year compared to prior tax law. State tax breaks, which often benefit wealthy people and corporations the most, grew by $1.4 billion (18.5 percent) since 2012, adjusted for inflation. The state foregoes more than $9 billion because of tax breaks.
As a result, Ohio’s tax code is upside down, with the poorest paying nearly twice the share of their income in state and local taxes as the wealthiest. State revenues and expenditures in the General Revenue Fund (GRF) have declined , adjusted for inflation, since 2006.
In 2017, 118,000 more Ohioans lived in poverty than before the Great Recession of 2008. State lawmakers haven’t increased support to meet this need. Instead, they’ve allowed funding to erode in some services and cut other services that help people afford the basics and programs that expand opportunity so more Ohioans can thrive and prosper.
- In 2018, funding for Ohio’s school districts was $199 million higher (2.4 percent) than in 2006, but it fell by $610 million (6.7 percent) from a high in 2010.
- Funding for the Department of Higher Education fell by $505 million (16.8 percent) since 2006. Ohio ranks 45thleast affordable in net cost of higher education as a share of family income and has one of the highest rates of student debt per capita in the nation.
- State dollars that support Medicaid in the GRF dropped by $425 million since 2006 (9.2 percent) although federal Medicaid dollars in the GRF grew with the Medicaid expansion.
- Funding for other human services like protective services for children and the elderly, and work supports like child care assistance, has declined by $270 million since 2006 a drop of 12.9 percent.
- By 2018, counties, cities, townships and villages lost $1.4 billion a year since 2006 as the state cut the Local Government Fund and eliminated some local taxes.
“State policymakers could and should have resources to meet the needs of Ohioans,” report author and Policy Matters Senior Project Director Wendy Patton said. “Instead we’ve chosen to give income tax cuts, which benefit the wealthiest, and tax breaks for special interests, at the expense of the rest of us. The new administration has a chance right the ship so we can support Ohio’s families, rebuild our communities and ensure a strong future for the next generation.”