by MARC KOVAC | RPC CAPITAL BUREAU

Columbus -- Gov. John Kasich unveiled a two-year spending plan Feb. 4 that includes tax cuts for small businesses and individuals, a tax hike on oil and gas production and increased health care services for low-income residents.

Kasich said the biennial budget legislation will "create jobs, create economic growth" and "run government in a more efficient and effective manner."

He added later, "The purpose of this is to make sure Ohio remains competitive. We've had too many businesses, too many people that have left this state and taken their wallets with them. But we also believe that by significantly reducing the taxes for small business, we will continue to see economic growth."

The budget totals more than $63 billion in general revenue spending, up from nearly $56 billion in the current biennium. It includes more than $31 billion for Medicaid and $14.8 billion for primary and secondary schools.

Kasich's proposal would halve taxes for small businesses on their first $750,000 in earnings, cut income taxes by 20 percent over three years, cut the state sales tax rate to 5 percent from 5.5 percent and increase taxes on oil and gas production.

It would expand sales taxes to cover services, though exclude health care, construction, residential property rental, day care, insurance premiums and some others. Lawyers, architects, accountants and lobbyists are among providers that would be subject to sales taxes for the services they provide.

State Tax Commissioner Joe Testa said the proposal includes a temporary rollback in local sales taxes, with the state guaranteeing at least 10 percent increases in collections.

"There will be some special interests who will not think [the sales tax plan] is better," Kasich said. "I just want to make it clear: When they win, the people of the state lose. When they win, the tax cut comes down."

Kasich also is touting a "good management dividend," a temporary 4 percent income tax cut that takes effect when the state's rainy day fund reaches $1.5 billion. Kasich said he expects the fund to reach close to $2 billion at the end of the current fiscal year, thanks in part to a $500 million payment from JobsOhio due to bonding of the state's liquor enterprise.

For more highlights from the governor's budget proposal, visit our website at www.auroraadvocate.com.