Review of $9B in Ohio tax breaks launched under pressure

COLUMBUS, Ohio (AP) - State legislative leaders acted under pressure recently to launch a panel of their own making that’s supposed to investigate the $9 billion-plus in tax credits, deductions and exemptions Ohio doles out each year.

Senate President Larry Obhof named his appointees Tuesday to the Tax Expenditure Review Committee lawmakers, and House Speaker Cliff Rosenberger named his Wednesday, The Columbus Dispatch reported (https://bit.ly/2ue8REv).

Both Republicans had blown past deadlines for naming the panel’s members and getting its work started; the first meeting was supposed to happen by June 19.

Policy Matters Ohio, a liberal think tank in Cleveland, brought their oversight to light. The group’s research director issued a release Monday spotlighting the delay.

“It’s past time for the General Assembly to get serious about limiting or eliminating unneeded tax breaks,” said Zach Schiller, the group’s research director. “A first step is for legislative leaders to name members to the committee and for it to start work.”

Schiller’s announcement was followed up by media inquiries into the matter, the newspaper reported, and soon thereafter the appointments were made.

The committee was created under legislation approved unanimously in December. Its charge is to review state tax expenditures to determine, at least once every eight years, whether they are meeting policy objectives and how they affect economic development. The committee now has 11 months to produce its first report.

The panel was intended to study the expenditures outside the state budget process, but Rosenberger’s spokesman said writing the two-year spending blueprint took priority over the past six months.

“This was a challenging budget cycle,” he said. “Where all areas of the state’s tax structure would be a significant part of any budget cycle, it was especially true this year.”

Besides Policy Matters Ohio, the Center for Community Solutions and the Ohio Society of CPAs also have advocated a tax expenditure examination. From 2016 to 2019, it’s estimated that Ohio’s income tax expenditures will grow nearly 22 percent to $2.4 billion.

Two-thirds of the state’s tax expenditures are in the sales tax, and Republican Gov. John Kasich has tried more than once to expand the sales tax onto exempted products and services, such as lobbying. The GOP-led Legislature has rejected those efforts.

Some of the biggest sales tax exemptions include sales to churches and certain nonprofits, property used in manufacturing, prescription drugs and equipment purchased by electricity providers, farmers and mining companies, the Dispatch reported.

Those appointed to the tax committee are: Sens. John Eklund, R-Chardon, chairman of the Ways and Means Committee, Scott Oelslager, R-Canton, chairman of the Finance Committee and Vernon Sykes, D-Akron, the longest-serving Senate Democrat; and Reps. Tim Schaffer, R-Lancaster, chairman of the House Ways and Means Committee, Gary Scherer, R-Circleville, a CPA and vice-chairman of Ways and Means, and John Rogers, D-Mentor-on-the-Lake, top-ranking Democrat on Ways and Means.

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Information from: The Columbus Dispatch, https://www.dispatch.com