Ohio’s Stagnant Job Growth

While the Kasich administration and Republican lawmakers have been quick to celebrate what they call an “Ohio miracle,” an IOEF analysis of new jobs data reveals that Ohio’s job growth is not just stagnant, but has fallen far behind that of most other states over the past year.

Research Highlights:

  • Over the past 12 months, Ohio’s economy added only 16,000 jobs — a growth rate of 0.309 percent
  • Over the past year, Ohio ranked 47th nationally in employment growth. Only Wyoming, Alaska and Maine performed worse.
  • This represents a sharp drop-off in employment gains: compared to the prior 12 month period, Ohio’s job growth has declined seven-fold.

Read the full analysis here.

Analysis: Ohio Charter Schools Spend More on Administration than Traditional Public Schools

Billed as more efficient than traditional public schools, a new Innovation Ohio Education Fund (IOEF) analysis of publicly-available data shows that Ohio’s charter schools actually spend far more than traditional public schools on administration,  leaving less for classroom instruction.

Research Highlights

  • On average, charter schools in Ohio dedicates over 28% of their total spending to administrative costs that do not deal with the education of students
  • This compares to just 11.5% spent on administration by traditional public districts
  • The best charters spent 20.5% on administration, while the worst spend nearly 40%
  • Deductions from traditional public schools for charter school will increase by $34 million annually if the budget currently pending in the Ohio General Assembly is enacted.

Read the complete analysis here.

 

Challenges Presented by the Expansion of the Sales Tax on Services

Governor Kasich’s sales tax proposal is a drastic change to Ohio’s tax policy. This brief details a number of problems posed by the administration’s proposal to tax many services that were never taxed before.

Research Highlights

We looked at four possible challenges this policy may create and the implications for each:

  • Administrative and compliance concerns for both businesses and the state;
  • Tax “pyramiding” that will exacerbate the burdens placed on businesses;
  • Encouraging Ohioans to purchases services from other states;
  • Potential legal challenges from industries that will cost the state.

Read the complete brief here.

72 services taxed under Kasich budget; comparison with other states

Only four states have a tax system that presumes all services are taxed with certain named exceptions. Governor Kasich’s current plan — contained in his FY 2014-2015 budget — to tax services would make Ohio just the fifth.

The proposal would subject 72 broad categories of services to additional taxation by the state and local taxing authorities.

We looked at sales taxes on services in all 50 states and the District of Columbia and found that the Governor’s proposal will put Ohio among a small group of states that tax certain services, including:

  • Haircuts are taxable in only seven states.
  • Just seven states charge a tax on debt counseling.
  • Advertising sales (radio, print and television) is taxable in only four states.
  • Bail bonds are subject to sales taxes in just four states.
  • Just three states subject service charges of banking institutions to sales taxes.
  • Only five states tax accounting, architectural, engineering and legal services.
  • Six states tax investment counseling and tax preparation services.

Here’s our chart looking at the taxability of 72 broad categories of services that the Kasich budget would make taxable.

Budget Issues Briefing: Sales Tax Changes

The proposed two-year state budget (House Bill 59) has a number of tax reform provisions that, when combined, will result in less revenue. Today we look at changes to the state sales tax proposed in the plan.

Research Highlights:

  • Sales taxes will be reduced from 5.5 to 5.0 percent
  • Services and activities will now be taxable, impacting the price of things like sporting and cultural evens, cable TV, haircuts, mailbox rentals, legal and accounting services.
  • The plan will generate $1.7 billion in additional revenue annually, used in the proposal to pay for income tax cuts for individuals and business owners
  • County and transit sales tax rates are reduced by 10 to 40 percent, but the state will guarantee 10 percent growth due to the tax on services. Local sales tax levies, including renewals, are prohibited for three years.

Read the complete issue briefing.

Budget Issues Briefing: Oil and Gas Drilling

Innovation Ohio Education Fund has reviewed the components of the proposed two-year state budget (House Bill 59) related to taxation and oversight of oil and gas drilling in Ohio.

Research Highlights:

  • After changes included in H.B. 59, Ohio’s oil and gas severance tax rate — 1 percent for natural gas and 4 percent for oil — remains among the lowest in the nation
  • Drillers will pay a $25,000-per-well impact fee to local communities, who must pay it back over time through reduced property tax collections
  • Existing fees on drillers are repealed, shifting the cost of industry regulation to all taxpayers

Read the complete issue briefing.

Budget Issues Briefing: Turnpike

Innovation Ohio Education Fund has reviewed the components of the proposed two-year state budget related to borrowing future Turnpike toll revenue to fund construction projects around the state.

Research Highlights:

  • House Bill 51 allows the Turnpike to fund projects in other parts of the state
  • Renames and changes the make-up of the Turnpike commission
  • Permits the Commission to fund projects advanced by the Ohio Department of Transportation
  • Preserves wide bonding authority for the Commission
  • Preserves the Commission’s authority to raise tolls at its discretion
  • Permits expenditures nearly anywhere in Ohio

Read the complete issue briefing.

Report: Deficit Reduction & The Fiscal Cliff

Why Tax Rates Must Go Up For The Wealthy

Because Congress failed to agree on a package of fiscal reforms last year, roughly $600 billion in tax increases and spending cuts are set to take effect on January 1, 2013. The so-called “Bush tax cuts” will expire on December 31 of this year, and that will mean huge tax increases for the middle class, about $2,200 a year per family on average. Economists say that this fiscal tightening, combined with massive, mandatory budget cuts called “sequestration,” could, if allowed to continue for the entire year, push the economy back into recession and cause the unemployment rate to rise to 9 percent.

To avoid this “fiscal cliff,” Congress and the President must reach a deficit reduction agreement before the end of this year. Though Democrats and Republicans agree on the need for new revenue, there is sharp disagreement over how much is needed and how it should be raised.

In our report we detail the reasoning behind our view that the Bush tax cuts for the top 2 percent of incomes in the U.S., while those for the middle class and lower incomes should be preserved. We also describe some of the Ohio-specific negative outcomes of going over “the cliff.”

Innovation Ohio Education Fund Policy Areas

You can view our latests reports here.

Below are our guiding principles for each of the policy areas we monitor.

Open and Efficient Government

  • Every Ohioan has the right to know how their tax dollars are being spent and who is behind the decision-making process.
  • Taxpayers deserve an efficient government focused on spending public funds in a fiscally responsible manner.

Economic Development and Jobs

  • A modernized physical infrastructure and common sense regulatory framework is critical to job creation and the promotion of economic opportunity for all Ohioans.
  • Empowering local communities to implement sustainable, regional strategies for economic development is crucial for attracting a vibrant, professional workforce.

Education

  • A strong and thriving workforce is directly connected to a commitment to an educational system focused on quality education, improving student success and opportunities for life-long learning.
  • All Ohioans should have access to an affordable higher education and a university system committed to excellence.

Healthcare and Human Services

  • Access to affordable health care and support services is necessary for providing economic security and opportunity for the middle-class.
  • While many worthwhile programs compete for state financial support, the commitment to ensuring the health and safety of Ohio’s most vulnerable citizens must remain a top priority.