LIMA, Ohio - Gov. John Kasich told Ohioans on Tuesday that the state has seen wholesale improvements since he took office, but now is not the time to "rest on our laurels."
"We must not fear big ideas. We must embrace them," the Republican governor said in a State of the State speech before about 1,700 at Lima's Civic Center. "We can debate them, but at the end of the day, big ideas will renew us, they will restore us."
Making the case for his latest round of sweeping policy proposals in the upcoming budget, Kasich told lawmakers, statewide officeholders and invited guests that big changes he's made to government so far are showing results.
Ohio Gov. John Kasich delivers his State of the State address at Veterans Memorial Civic and Convention Center in Lima on Tuesday.
"I came into office to build a team that would put Ohio to work and reclaim our rightful place in the United States of America as one of the great states," he said. "Ladies and gentlemen, today I can tell you with great confidence that we are succeeding in turning our state around - and it is fantastic."
Kasich is pushing for support of several key proposals, including a plan to overhaul the state's school funding plan, an expansion of Medicaid under the federal health reform law and an overhaul of the state's tax structure in his $63.2 billion, two-year budget.
Kasich cited JobsOhio, the private nonprofit job creation agency that's faced a persistent constitutional challenge, as a vital economic driver that's diversifying Ohio's economy from just one or two sectors to include bio-health, auto manufacturing, financial services, aerospace, IT, agri-business and energy.
Kasich also said Lt. Gov. Mary Taylor's Common Sense Initiative, a regulatory retooling effort, is making things easier on the private sector without undue risk.
"If you use common sense, you in fact can protect people's safety, you in fact can protect our environment and still have job creation in this state," Kasich said.
The administration has also seen the number of state employees drop to the lowest level in 30 years, he said, and reduced redundancy and revitalized worn out programs using private-sector management techniques.
All that, the governor argued, has gotten the state noticed around the globe - including at the recent Global Economic Forum in Davos, Switzerland.
But Kasich said now isn't the time to let up.
"Should we just rest on our laurels? That's what most people think, when we pull out of the depths of where we were, just kind of relax. Should we just put the state on cruise control? Or, I've got another one for you, should we spend the surplus? Just kind of take the foot off the gas?" he asked. "Well, we're going to keep our foot on the gas."
Kasich's plans include overhauling Ohio's tax code to reduce rates for sales, income and small-business taxes, broadening the sales tax base to include a laundry list of new services, and raising the severance tax on high-volume oil and gas drillers swarming the eastern half of the state.
State Rep. Jack Cera, D-Bellaire, said he has some concerns about Kasich's tax proposals, particularly the oil and gas severance tax that would be used to fund a statewide income tax cut.
"First of all, a lot of landowners would pay that severance tax. It doesn't always come out of the industry, and those leaseholders already are being hit with a number of taxes anyway," said Cera. "I would like to see some of that money stay in our area, and right now his proposal doesn't do that ... it gives nothing to local governments or school districts in producing areas. It all goes to the state."
Rep. Andy Thompson, R-Marietta, shared some of Cera's concerns about the proposed severance tax. He believes as much money from oil and gas production as possible should remain in the areas where the resources are found. He believes the current system is the best way to do that.
Citing Carroll County, where he has heard that 550 new millionaires have been created as a result of oil & gas development, he said the industry not only helps individuals and families, but it also supports numerous ancillary businesses.
"If it isn't thwarted, I believe (the industry) will bring additional prosperity to Belmont, Noble and Washington counties," he said. "In Carroll County, local governments are benefiting, sales taxes are increasing tremendously from sales of things like farm equipment, automobiles - things families need, especially family farmers."
Sen. Lou Gentile, D-Steubenville, also believes gas and oil proceeds should be reinvested in the areas where production takes place.
"I disagree with (Kasich's) assertion that all Ohioans should benefit and share in the wealth from oil and gas development," Gentile said. "I believe the majority should be reinvested in the counties of Southeast Ohio. ... The state should be able to take some of that revenue - a minimal amount - to make sure there is proper regulation and oversight. ... But the majority should go back to the local communities for things they need - infrastructure, social services, work force development and public safety."
Cera also said Kasich's plan to reduce the overall sales tax by 0.5 percent and broaden the tax base to include all services could harm the middle class.
"We're still sorting through to see the effect on working people," he noted. "Pretty much everything would have a sales tax on it."
Kasich also encouraged lawmakers to support his decision to expand Medicaid. The state would see $2.4 billion from Washington to cover those newly eligible for Medicaid over the next two years beginning in July. Kasich said the action is vital to help Ohio's safety net for the poor, and particularly for the mentally ill.
"Some of them live under bridges, some of them live on streets, some of them are in our jails tonight," he said, in a moment that hushed the crowd.
He pleaded with lawmakers, some from his own party who opposed the federal health care mandate and oppose expanded government, to examine their conscience and keep an open mind.
Gentile said Kasich was "courageous" for making this appeal.
"I would like to give the governor credit for being courageous in his decision to make sure low-income families in Ohio have access to health insurance," Gentile said. "There are many in his own party who are not comfortable with that idea."
Cera also thinks it is "wise" for Ohio to pursue the Medicaid expansion, considering the amount of federal funding that will be available to the state if it does so. He said the plan will help hospitals and county mental health agencies, but he hopes legislators can craft ways to encourage state residents to adopt healthier lifestyles and stop relying on emergency rooms to provide primary care.
Thompson disagreed, saying while the state will get federal funds to support the expansion in the short term, "in the long term it will be a big hole in our budget."
Kasich further used the speech to defend the merits of his new school-funding formula, which delivers $1.2 billion more to K-12 education by first raising base funding, then providing add-ons for poor, disabled, gifted and other categories of students. He called it an objective plan that applies equally to all districts based on their property tax wealth, residents' income and individual characteristics of students they serve.
Cera, Gentile and Thompson all expressed disappointment that the plan fails to provide funding increases for most schools in East Ohio.
"Only two schools in my district would receive any increases - Steubenville and Toronto," Cera said. "Once again in his speech, the governor referred to poor districts getting more money. It almost seems like he equates poor with urban and fails to realize rural schools can be poor, too, especially in eastern Ohio."
Thompson said the plan "needs work" and termed it "incomplete." He said legislators need to scrutinize the plan and adopt changes that would provide more funding for poor districts in the Ohio Valley.
"The governor contends that poorer districts will receive increases, but the numbers don't back up the rhetoric ... ," Gentile said. "It's hard to justify huge increases for suburban areas and districts that are more well off when 28 of the 33 districts in my Senate district are flat funded."
All these policies are intended to create jobs, Kasich said - something he characterized as "our greatest moral purpose." In Lima, a city with drastically reduced unemployment and 3,200 new private-sector jobs, Kasich found a "shining example" for the state.
Despite the protests of a handful of union workers outside the speech, Kasich said his tax and spending changes aren't about political leanings - they're practical.
"This is not ideology, this is just the way the world works," he said.
"I appreciate the governor reaching out and talking about how he will work in a bipartisan manner," Cera added. "I like that he brought up the need to get away from name-calling and the bad discourse we see. I agree that people want to see their elected officials working together and trying to solve problems."
Gentile agreed that Democrats and Republicans need to cooperate to do good things for Ohio, but he also stressed a desire for officials to better provide for the poor without favoring the wealthy.
"The governor is touting his $1.9 billion rainy day fund at time when so many local villages and cities are laying off police and firefighters and schools are struggling to keep their doors open," Gentile said. "To me it's unconscionable to take these resources and give them to the wealthiest Ohioans.
"He talks about the need to make sure we all prosper, but this budget would benefit the wealthiest among us instead of the communities and middle class families who really need it."