At a ceremony on the last day of June, Ohio Gov. John Kasich signed into law the FY2014-15 state budget.
The budget includes $2.7 billion in tax cuts and $1.5 billion in new funds for education.
“Ohio has come a long way in two years and it hasn’t happened by accident. Our work to eliminate an $8 billion shortfall, cut taxes, strengthen education, and reform Medicaid has helped fuel our economic recovery and get people back to work,” Kasich said. “We’ve got more work to do, however, and this budget builds on that foundation by cutting taxes $2.7 billion and dedicating significant new resources for education.”
In terms of agriculture, there are a number of highlights in the budget.
“Once again I think the governor and the state legislature have put the state in a good position to continue to grow our economy and put our people back on track. This budget is very significant for agriculture for a number of reasons,” said Chris Henney, president and CEO of the Ohio AgriBusiness Association. “In our opinion, we are most excited about the state’s Commercial Activity Tax (CAT) provision for licensed grain handlers. We have been trying to get this playing field leveled for grain handlers since the CAT tax was instituted a number of years ago. Businesses that are organized as a co-op have been exempt from paying it on the grain they handle and the independent elevators and feed mills have had to pay it. You can see that certain businesses were put at a disadvantage.”
The CAT Tax exemption that protects the critical $1 million threshold at which the 0.26% CAT tax is applied goes into effect immediately and will provide tax relief this harvest season. For the CAT tax, businesses with gross receipts of $1 million to $2 million would pay a flat fee of $800 in addition to the .26% CAT rate; businesses with gross receipts of $2 million to $4 million will pay a flat fee of $2,100 in addition to the .26% CAT rate, and businesses with gross receipts above $4 million will pay a flat fee of $2,600 in addition to the .26% CAT rate, according to OFBF.
Other tax changes in the budget, according the OFBF, include:
• A 10% across the board personal income tax rate reduction phased in over three years beginning in tax year 2013;
• A targeted income tax exclusion for owners/partners/shareholders in a pass-through entity equal to 50% of each owner’s share of pass-through entity income up to $250,000;
• Sales tax increase from current 5.50% to 5.75% beginning Sept. 1.
• Means testing the homestead exemption real property tax program – eligibility at $30,000 or less Adjusted Gross Income and eliminating the 12.5% residential/agricultural property tax rollback for new and replacement levies.
• The budget bill does not change the severance tax rate nor broaden the sales tax base to include services as originally proposed.
There were other big wins for agriculture in terms of education and research funding in the budget, according to Brandon Kern, Ohio Farm Bureau Federation director of state policy.
“From the beginning of the budget process, we had identified a number of priority issues that we were going to advocate for largely revolving around a couple of different areas — agricultural education and workforce development and a lot of research programs that directly benefit the agricultural community. We are advocating for increased funding for Ohio Agricultural Research and Development Center in Wooster and the Ohio State University Extension program. Both of those programs received pretty significant increases in funding and we are happy to see those programs supported,” Kern said. “We also saw support of programs directly related to water quality issues that are increasingly important to our industry. Programs like the Ohio Sea Grant, Heidelberg’s Water Quality Lab, and the Clean Ohio Fund all received funding that we had been advocating for. In terms of Clean Ohio, the legislature appropriated the final $52 million that is available that had been approved by voters back in 2008. Those dollars help with farmland preservation, green space preservation and brownfield remediation.”
The Ohio State University’s Agricultural Technical Institute (ATI) and high school agricultural education also fared well in the budget.
“With ag education, we had to go to work for ATI that was facing a pretty significant cut in funding. We are really happy to report that ATI will be in a much better place than they would have been,” Kern said. “The legislature added a stop-gap in the first year of the biennium that will keep their funding at at least 96% of what they are currently receiving. So they are guaranteeing that they won’t have any more than 4% reduction in their funding. We were able to advocate for some additional dollars for ATI as well.
“We were also able to advocate for career technical education at the high school level that was a big winner. Of course, agriculture and environmental sciences are a part of that. The legislature put in place a weighted formula, which agricultural education is in the top tier, which basically means that they are going to generate the most dollars per student enrolled in those agricultural education programs when compared to any other career tech program. We are really happy about that. That is a recognition that these programs are preparing our young people for the jobs of the future in our industry.”
Other highlights of the new budget include:
• A new plan to inject up to $3 billion in federal, state and local funds into Ohio’s highways;
• A new college and university funding formula to increase graduation rates;
• Reforms to Medicaid to reduce fraud, increase care quality and restrain costs.
Overall, Kern said the state budget looks strong for Ohio agriculture.
“We see the budget package as a whole as a very positive thing,” he said. “Certainly in a budget bill, there are some things that are not quite ideal, but in this case, I think as a package, this budget is a very positive thing for agriculture in Ohio.”