Posted on 02/02/2003 8:53:00 AM PST by Deadeye Division
Taft’s bonehead tax plan
Gov. Bob Taft’s grab-bag approach to balancing the state budget through selective tax increases has stirred up a hornet’s nest in Columbus, for predictable reasons. By picking and choosing which services to extend the sales tax to, he has managed to upset almost everyone.
This approach carries certain risks, including such a chorus of complaints from individual oxen being gored that the whole package may be dead before it even reaches the General Assembly.
And there are serious political consequences for Mr. Taft and his ambition for a U.S. Senate seat some day. He could go down in Ohio lore indelibly tattooed as "Governor Taxt."
If his scattershot proposal is really an attempt to crystallize support for a permanent increase in the sales or income taxes, he’s being disingenuous. If he’s serious, it’s a bonehead tactic.
We recognize that state government’s fiscal problems are real and serious, at least in the short term. Which brings us to a partial solution. Instead of extending the sales tax to a host of services, a more palatable course would be for the legislature to impose a temporary surcharge on the sales tax to tide the state over until the economy improves. Increasing the sales tax from 5 percent to 6 percent would bring in an estimated $1.295 billion over the next fiscal year.
Such a surcharge would have to be truly temporary, with an expiration date, since temporary taxes can quickly become permanent. That’s what happened in the budget crisis of 1982-83, when a 50 percent temporary surcharge on the state income tax enacted under Gov. James A. Rhodes morphed into a 90 percent permanent addition under his successor, Richard F. Celeste.
That, of course, brings to mind the legendary partnership of Governor Rhodes and House Speaker Vern Riffe. Though of opposite parties, they knew how to cut a deal for the good of the state.
Governor Taft, however, lacks the political skills and the personality to cultivate such relationships with legislative leaders, even when they are his fellow Republicans. There is no excuse for that.
Consequently, the legislature - controlled by his own party - won’t be rolling over for his plan. Already, many GOP members are expressing disappointment with the governor. A hard-core cadre of ultra-conservative lawmakers abhors any tax increase, even though the alternative is a severe cut in funding for public schools and higher education.
Some parts of the Taft plan, like the proposal to extend the state income tax to those who live in another state but work in Ohio, should be summarily scrapped. The notion would harm the economies of border cities such as Toledo and the governor’s own hometown of Cincinnati, and certainly would invite retaliation by our neighboring states.
Other parts of his plan, such as boosts in the so-called "sin taxes," are worth a look. Taxes on cigarettes and alcoholic beverages are, for most people, easy to avoid.
Whatever Mr. Taft finally does about taxes, he can’t lay claim to the "I didn’t know things were this bad" excuse adopted by Ed Rendell when he became governor of Pennsylvania this year or Bill Clinton when he moved into the White House in 1993.
He has been governor of this state for more than four years now and knew that the economy was weakening long before the second half of 2002, when, he claims, finances suddenly fell apart.
The current situation is not, as Mr. Taft seems to want Ohioans to believe, an inexorable natural phenomenon over which he had no control or warning. To ensure his re-election last year, he virtually ignored the gathering budget tempest.
That was short-sighted and hardly the mark of a strong chief executive. We’ll say it again: This is a bonehead tax plan.
This ain't the Bob Taft I used to know. (Oh, wait. That was this one's grandfather.)
America's Fifth Column ... watch Steve Emerson/PBS documentary JIHAD! In America
New Link: Download 8 Mb zip file here (60 minute video)
I believe you have to report out-of-state purchases on your income tax form and pay Ohio\county sales tax.
By Debra Jasper
Columbus Enquirer Bureau
02/03/03
COLUMBUS - Just three months ago, Gov. Bob Taft's campaign mailed a flier to senior citizens in Ohio blasting Tim Hagan for his plan to cut Medicaid and warning, "Seniors Can't Trust Tim Hagan to Protect Them."
Taft's spokesman at the time said that if Hagan won election, "Seniors should be scared."
Taft also trashed Hagan, his Democratic opponent in the governor's race, for raising taxes when he was a Cuyahoga County commissioner. Taft's campaign website portrayed Hagan as a cartoon character known as "Taxin' Tim," a guy who liked to raise taxes and gamble his money away at the racetrack.
What a difference three months makes.
Taft, a second-term governor who before the election wouldn't even utter the "tax" word, is now pushing for more than $3 billion in tax increases - by far the most in Ohio history.
He's calling for new taxes on everything from cigarettes, alcohol and tattoos to new cars, manicures and movie-going. He wants to slash Medicaid, the health care plan for the poor and elderly, by more than $1 billion. And he is threatening to cut funding for education if he doesn't get his way.
Taft's proposal is to be introduced today. It will need approval from the House and Senate to become law. The next two-year budget begins July 1 and ends June 30, 2005.
"He's taxing everything that moves," Hagan said last week. "He's finally admitting what he wouldn't admit during the campaign, that the state is in a serious financial crisis."
Hagan, along with political experts and others, says the governor's decision to downplay Ohio's fiscal crisis throughout last year's campaign season makes it tougher for him to sell his massive tax-hike plan now.
"He ran for office as a candidate who said we didn't have any problems, the budget's fine, thank you, and now we have this huge deficit," said Scott Pullins, chairman of the Ohio Taxpayer's Association. "I don't want to go as far as to say he was dishonest, but he certainly wasn't forthcoming."
Robert Adams, associate professor of political science at Wright State University, agrees.
"Taft set himself up politically and deserves some pain for what he did," Adams said. "He didn't campaign in a way that set the table for what he had to have known was coming."
Throughout the fall, Taft repeatedly emphasized that the state budget was balanced, which was technically correct, Adams said. "But we could all see the storm clouds gathering."
The governor last week defended his pre-election silence on Ohio's dire fiscal state. He pointed out that he did tell voters that "some narrow revenue enhancements" might be needed if the economy didn't improve.
"During the campaign I spoke about the fact we would have a very tight budget," Taft said.
Taft's spokesman, Orest Holubec, said the state budget was balanced through October and then tax receipts started to fall short. The governor, he said, "was working with the numbers he had at the time."
When asked if the governor believes $3 billion in increased taxes are "narrow revenue enhancements," Holubec replied, "The governor thinks this is a responsible package."
While the governor acknowledges the state is in crisis now, he spent much of this fall lashing out at Hagan for hammering repeatedly on the state's financial troubles.
"You're down on Ohio," the governor told Hagan during one October debate. "You're motto seems to be, `say something bad.' "
After that debate, Taft said, "I don't know what (Hagan) reads. I don't know where he gets a $4 billion deficit."
Taft now says the Ohio Legislature must go along with his tax proposals or the state will be $720 million in debt before the end of the year and face higher deficits in the next biennium budget. He won't reveal the size of those deficits until today - but some estimates show it could be as high as $4 billion.
Jerry Austin, who ran the Hagan campaign, said the most recent budget figures show what political insiders in Ohio already knew: Ohio is a financial mess.
"We weren't taken seriously but we were right," Austin said. "And now (Taft) is borrowing a lot of things right out of Hagan's playbook."
To be sure, many of Taft's ideas for balancing the budget were heard during the campaign - but not from the governor's camp.
In October, Hagan released a budget-balancing plan that called for: reforming Ohio's tax code to make sure all companies pay their fair share; broadening taxes on all corporations but lowering overall rates; and cracking down on companies who try to avoid paying taxes by putting their money in out-of-state accounts.
In the past two weeks, the governor said the state must: reform Ohio's tax code to make it more fair: broaden the corporate franchise tax but lower overall rates; and crack down on companies that try to avoid taxes by using out-of-state accounts.
During the campaign, Hagan promised to cut spending on Medicaid by $450 million. Page 14 of the Hagan plan said: "In the early 1990s, former Gov. George Voinovich referred to Medicaid as the `Pac Man of the Ohio Budget.' The days of Medicaid devouring the state budget have returned."
If the state doesn't rein in Medicaid spending, Hagan warned, it won't have the resources or flexibility to deal with any other part of the state budget.
Taft echoed those sentiments in his State of the State speech on Jan. 22.
"Gov. Voinovich once said Medicaid was the `Pac Man' of the state budget, devouring everything in sight," Taft said.
If the state doesn't rein in Medicaid spending, Taft warned, it won't have the resources or flexibility to deal with any other part of the state budget.
To fix the problem, Taft called for cutting Medicaid spending by $1.1 billion and also called for more tax hikes than Hagan had proposed.
"I'm not surprised," Hagan said. "He didn't tell the public how deep-seated the problems were, but we all knew it was bad."
There is one big move suggested by Hagan for balancing the budget that Taft has ignored. Hagan pushed to expand gambling in Ohio, saying allowing video lottery terminals at racetracks would raise $500 million a year for the ailing budget.
Taft slammed the plan before the election, and he still opposes it. But some Republicans side with Hagan on that issue and it is likely to be heavily debated as legislators decide whether to expand gambling to offset some of Taft's proposed tax hikes.
As the debate over how to balance the budget continues, Taft readily acknowledges these days that he finds himself in a bleak political situation.
During a recent news conference to announce his plan to cut medical benefits for 30,000 low-income parents and to cut dental, vision and other medical care to 800,000 Ohioans who are poor, disabled and elderly, Taft offered a half-hearted joke.
"The good news is I won the election," the governor said grimly. "The bad news is, I won the election."
Shelly Davis contributed to this story. E-mail djasper@enquirer.com
BE HEARD
Gov. Taft
If you have a comment on Gov. Bob Taft's plan to raise taxes, you can reach him at:
Constituent phone line: 614-644-4357
By letter:
Gov. Bob Taft
77 South High St.
30th Floor
Riffe Center
Columbus, OH 43215
E-mail:
governor.taft@das.state.oh.us
Ohio's best-kept secret has been revealed, and it's a bigger surprise than the Buckeyes of 2002: You elected Timothy F. Hagan governor. Yep, "Taxin' Tim.''
Oh, I know you thought you elected Republican Bob Taft, but you got an impostor. With all the morphing and cloning that goes on today, anything can happen. And it did.
Somehow, that rough-cut Democrat raised in Youngstown wormed his way into the governor's office and is doing everything he said he would during the campaign.
We warned you. We told you time after time that Tim Hagan would say directly what was on his mind, even if it was political suicide. But you must have voted for him anyway, because you're getting his program.
Take taxes. Please.
The former Cuyahoga County commissioner said there might have to be additional taxes to fund schools and get Ohio off the ground and into 21st-century research and development to help business.
Sure enough, that's what the governor thinks. One Republican in the 1970s used to say Democrats want to "tax everything that walks, crawls or flies.'' A Democrat accused Gov. James A. Rhodes of trying to tax everything but flatulence. They're all pikers next to this governor.
He wants to tax everyone who goes to a rock concert, gets her nails done, trades in his car or talks on the telephone. Everyone who reads, parks, stores things or watches cable. Say one thing: It's fair. Everybody pays.
During the election campaign, Taft was asked repeatedly about his plan to fund the state for the next two years, and he stonewalled. It was too soon to be revealing budget figures, he said. Or his plan was developing. Or he needed flexibility. Yeah, that's it: flexibility.
Now we know why. He would have been accused of plagiarism. Hagan's plan is being carried out. Hagan vowed to stand up to the corporate community. In campaign conversations with reporters, he'd practice telling off those Fortune 500 bosses with the big cigars.
"We rank 36th out of 50 states in our corporate taxes, 20th if you include the local,'' he said. "You say (to the bosses): 'Look, we need to be competitive. You should be saying we're willing to pay our fair share instead of saying we want every tax break you can give us.' ''
And that's what's happening. The new budget, while lowering the top corporate-income tax rate, will have some tough stuff for business to swallow, in part because the administration believes they've been guilty of what one reporter last week indelicately called "tax evasion.''
Tax Commissioner Thomas M. Zaino said the top dogs have been creative enough to save millions of dollars through "tax planning'' and that, by golly, the administration is going to close those loopholes.
And lobbyists: Hagan said during the campaign he was going to stop those bad boys from dictating policy around Capitol Square. Well, don't you know, the governor has proposed extending the sales tax to lobbying services.
What about school funding? Hagan said the state ought to obey the Supreme Court and come up with a new school-funding formula. And he proposed a special task force comprising all interested parties to make recommendations.
Said Hagan: "What did (former Gov.) Jack Gilligan do? He got the chairman of Procter & Gamble. He got together a task force. Brought business, labor and education together to get a consensus. He said, 'I'm willing to take the political heat to get this done.' Put everybody at the table. I think it's absolutely essential to do this.''
Darned if the governor, in his State of the State address, didn't propose a new look at the formula by a blue-ribbon commission comprising all interested parties. He's so intent on it that he's junking the formula in his new budget until after the commission reports.
So you can't tell me that's Bob Taft peeking out the window of the governor's office on the 30th floor of the Riffe Center. That's the tough guy from Cleveland who wanted to tax everybody.
And you put him there, pal.
Quack, quack.
Lee Leonard covers the Statehouse for The Dispatch.
"...close those loopholes."
Riddle me this...what recent administration in Washington DC often used those terms? Here's a hint...it's the same administration that also used the words "additional revenue" in place of the more accurate term, "new taxes." The suckers in our state bought his story hook, line, and sinker while taking their kids to soccer practice.
Amen.
By Debra Jasper
and Spencer Hunt
Cincinnati Enquirer Columbus Bureau
04 February 2003
COLUMBUS - Gov. Bob Taft on Monday proposed a 10 percent increase in state spending that directs millions of dollars in new taxes and funds from budget cuts to schools, universities and Medicaid.
In the face of at least a $4 billion deficit, the governor's proposal freezes state workers' pay, calls for more layoffs and would shut several state offices and programs.
Despite these cost-cutting steps, Taft's budget would still increase state spending by $4.6 billionover the next two years, from $44.6 billion to $49.2 billion.
To come up with the money, Taft wants lawmakers to approve more than $3 billion in new taxes on cigarettes, alcohol, businesses, and on a long list of new services, including cable TV, real estate commissions, dry-cleaned shirts - even tattoos.
If lawmakers balk at enacting all those new taxes - and many already are critical of the plan - the governor on Monday repeated his threat to make deep cuts in spending on schools, higher education, state parks, local governments, prisons and the elderly.
The governor plans to try to sell Ohioans and lawmakers on the need for new taxes by traveling the state and appearing on television and radio talk shows.
He actually must pull off two sales jobs. First, he has to convince lawmakers and the public to support increasing cigarette taxes 45 cents per pack and doubling the taxes on alcohol. He says lawmakers must enact those taxes by the end of this month in order to balance the current budget by June 30.
Next, the governor must launch his toughest sales campaign. He has to persuade the legislature to increase taxes on things from car sales to spa treatments - and to cut spending on nursing homes, hospitals and health care programs for the poor, elderly and disabled.
Taft is already running into opposition.
State Rep. Patricia Clancy, R-Cincinnati, the No. 3 leader in the House, said she is being bombarded by complaints from voters upset about the proposed tax increases.
"When people hear the governor is proposing all these tax increases and still increasing the size of government, they aren't going to be too happy about it," Clancy said. "We have members chomping at the bit to look at every aspect of that state budget and whittle it down until we know there's no fat left."
State Rep. Timothy Grendell, R-Chesterland, said the proposed $4.6 billion increase in spending in the next budget cycle illustrates that the governor doesn't know how to truly cut back.
"He proved today that Ohio has a spending addiction," Grendell said. "I find it hard to believe there are enough people in the legislature to drink his form of political Kool-Aid. It would be suicide."
House Democratic Leader Chris Redfern, D-Catawba Island, sounded downright giddy about the prospect of using the governor's tax plan to oust Republicans from office.
"The governor just unveiled the largest tax increase in the state's history and I'm excited about the opportunities that lie ahead for us in the next election," Redfern said.
Senate President Doug White, R-Manchester, said legislators know they can't cut higher education or funding for elementary and high schools - all programs Ohioans said they wanted.
His message to the public: "Don't tell me you want something and then cut my head off when I deliver the message that it costs more money. You don't dance without paying the fiddler."
The governor has refused to say how large the deficit is, despite repeated questions. He said the upcoming two-year deficit is too complicated to calculate.
White isn't buying that excuse. He said he doesn't know why Taft won't release the figures.
Ohio's budget woes trace back to the economic boom of the 1990s, in which state government enjoyed big budget surpluses. So much extra revenue was coming in that the state increased spending at 2.5 times the rate of inflation and still gave hundreds of millions of dollars back to taxpayers.
Those budget surpluses turned into deficits under the national recession, requiring the governor and lawmakers to scramble to pass a 31-cent-per-pack tax increase on cigarettes and take other measures to plug a budget gap. Taft now wants legislators to double state alcohol taxes and pass a 45-cent tax increase on a pack of cigarettes to balance the books yet again before the budget ends June 30.
Those increased "sin taxes" would also provide $742 million to help fund the governor's proposed two-year budget. The revenues would pile on top of an estimated $2.3 billion in new taxes on businesses, products and services.
That money would go to fund spending increases for schools, higher education and other programs designed to lure more businesses and jobs to Ohio.
The money would also help pay for Medicaid, the government's health care program for 11.7 million poor, elderly and disabled Ohioans. Despite cutting programs to save $1.1 billion in state and federal funds over the next two years, Medicaid will still increase $1.3 billion. Overall state spending for Medicaid will rise from $8 billion this fiscal year to $9.3 billion in 2005.
Schools would get the second-largest funding increase, about $455 million over the next two years. The money would increase state aid programs to schools and also provide a $900,000 increase to Ohio Reads, Taft's $32.5 million program that relies on volunteers to improve students' reading skills.
Colleges and universities would see their funding increase $120 million over the next two years. Most of that money would replace funds that the governor and lawmakers cut to balance the current budget.
E-mail djasper@enquirer.com and shunt@enquirer.com
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