COLUMBUS, Ohio (AP) - Gov. John Kasich said Friday he's exploring an overhaul of Ohio's tax code to eliminate loopholes and other "special deals" that could be responsible for high state tax rates.
The Republican governor said he is still fighting to deliver a modest statewide income tax cut with revenue from a severance tax increase on high-volume oil and gas drillers - an idea that remains stalled in the Legislature. That included rolling out a new endorsement of the plan as "fair" by former long-time state Agriculture Director Fred Dailey, a respected fiscal conservative, farmer, and businessman.
But Kasich told reporters even with that severance tax proposal in place he'd like to see the income tax rate go lower. He said Ohio's state and local income tax burden puts it in the top third nationally.
"I'm a believer in tax reform," he said. "I'm a believer that you can in fact bring about lower income tax rates if you are willing to look at those people who have been in one way or another exempted from taxation, or given special deals, or for whatever reason been able to get things through the Legislature that keep the income tax high."
He said his reform plan is still in its infancy.
Kasich said he was not yet ready to say whether he would be able to put together a tax reform package that reduces the state's overall tax burden, as opposed to paying for income tax reductions through equivalent tax hikes in other areas.
Fellow Republican Bob Taft signed Ohio's most recent major tax overhaul in 2005. It included a phased-in 21 percent income tax cut, a reduction in the state sales tax, elimination and restructuring of some business taxes.
Kasich was adamant in his view that raising taxes on drillers is the right thing to do. "Frankly, this is a bluebird that flew in a window for us." He said the tax will primarily fall on out-of-state energy companies who are eagerly exploring the eastern half of the state for new oil and gas stores.
Tom Stewart, executive vice president of the Ohio Oil and Gas Association representing drillers, disputed Kasich's characterization.
"In fact, hundreds of homegrown Ohio-based energy producers and hundreds of thousands of Ohio landowners, in most cases farmers in economically depressed areas, will be burdened with a huge tax bill if the governor's proposal comes to fruition," he said in a statement. "While we appreciate Fred Dailey's kind regard for the oil and gas industry, we do not believe that other farmers and royalty owners will share his enthusiasm for a tax increase."
Stewart, whose organization is lobbying to block the tax, said he has spoken to lawmakers of both parties who are reticent to raise taxes on companies exploring for oil and gas pockets in shale deposits under eastern Ohio.
Kasich said he believes he has some Democratic support for the plan in the GOP-controlled Legislature. He said Friday he would not consider dropping the income-tax cut in order to get the severance tax hike through the Legislature - even to win Democratic votes.
"I wouldn't think highly of it because we don't need to grow the government," he said.
Many Democrats propose using revenue from the tax on hydraulically fractured, or fracked, wells for local governments and schools, rather than to the small income tax cut Kasich has planned.
"I agree with Gov. Kasich, we should determine a fair frack tax rate, but we shouldn't shortchange our schools and local communities along the way," said House Minority Leader Armond Budish, a Beachwood Democrat.
Anti-drilling activists said raising taxes on the high-pressure drilling technique of hydraulic fracturing doesn't make it safe.