Posted on 02/02/2003 8:53:00 AM PST by Deadeye Division
Governor outlines need during visit to Queen City
By Spencer Hunt and Debra Jasper
Enquirer Columbus Bureau
Gov. Bob Taft came to Cincinnati on Wednesday to sell his plan to raise $3.1 billion in new taxes and save more than $1 billion by taking away medical care from the poor, elderly and disabled.
"We've put a plan on the table. I'm out front. I'm catching the flak. It's my plan," he said. Then he added, "It will be a tough sell."
The governor dismissed lawmakers who argue that he hasn't yet cut enough from the next $49.2 billion state budget, which contains a 10 percent increase in spending over the current two-year spending plan.
Taft challenged the legislature to find ways to cut more programs without taking away medical coverage from poor children or cutting spending on elementary schools, high schools or universities. Without his tax increases, he said, the state would have an education crisis and children would be eliminated from the Medicaid rolls.
"I'm trying to balance giving people the services they have to have with what they are willing to pay for," the governor said. "We're about to find out what they are willing to pay for."
Taft plans to travel throughout Ohio this week, making his sales pitch on television, radio stations and to newspapers. He hopes his statewide campaign will convince lawmakers and Ohioans that he has trimmed all the fat from the state budget and that the largest tax increase in state history is necessary.
Taft says the General Assembly must raise taxes on cigarettes by 45 cents per pack and double the taxes on alcohol to fill a $720 million deficit in the current budget by June 30. Then he wants lawmakers to tax new cars, spa services, dry cleaning and a variety of other services to plug a $4 billion deficit in the next two-year budget.
"The first task is to make sure they understand why we have the depth of the problem," Taft said. "We've got to take action here if we don't want to create chaos in public services in Ohio."
Despite his dire warnings, fellow Republicans - who control the General Assembly and must vote on his spending plan - aren't convinced Taft has made enough cuts to justify so many new taxes.
"What I would like to do is look at every department, turn over every stone, before we resort to widespread tax increases," said Rep. Tom Raga, R-Mason. "Today I'm not inclined to vote for tax increases."
Other Republicans suggest the governor could cut $300 million from the Department of Education bureaucracy without hurting schools. And they say he could also cut up to $1.7 billion in Medicaid - $600 million more than Taft is proposing - and make deeper cuts in other areas.
Taft responded that it would a "major mistake" to reduce the money going to the Department of Education because it would hurt school curricula and proficiency test designs.
He also criticized the demand for further Medicaid cuts, saying that would require the state to stop paying for prescription drugs for the elderly, poor and disabled. "Pharmaceuticals are optional services, but is the state going to eliminate them? I don't think so."
The governor said he doesn't see how lawmakers can make more cuts without also hurting basic health and safety, such as shutting down mental hospitals or closing prisons and putting criminals back on the streets.
"Our mental hospitals are full. If we close those, I'm not sure where those people would go," Taft said.
He said people don't realize just how many services the state pays for until they stop. "They don't care about prisons unless we do an early release and someone commits a crime in their community," he said.
Taft also repeated his opposition to a plan to put slot machines at horse racetracks, a move proponents say would bring in up to $500 million a year to the state budget. Taft said the plan would meet so much opposition it would probably have to go to the ballot in November.
That means the expansion wouldn't take place in time for new taxes on gambling to help the state out of its current crisis. "It could be well into 2005 before we collect anything," Taft said.
The governor said he still opposes gambling because it is "socially irresponsible" and an unreliable source of money.
While the governor said he is committed to his plan to raise taxes and cut Medicaid, he said is looking forward to hearing alternatives from the General Assembly.
"The only good thing about this crisis," Taft said, "Is that it forces you to examine everything you're doing."
E-mail djasper@enquirer.com and shunt@enquirer.com
Once again, here we have this jerk looking down upon anyone who doesn't live as he thinks they should. And this fool will turn down a solid source of revenue from gambling in part because it's "unreliable"?! I think that Michigan, West Virgina and Kentucky are finding that they can indeed rely on people from Ohio to cross the state line in droves to spend money in their casinos, knowing that Bob Taxt would rather tax every activity under the sun than cut into their gambling revenue.
I hope he continues to get a cold reception from the people he pretends to serve.
Gov. Bob Taft's proposal to increase taxes on cigarettes and alcohol ran into stiff resistance in the Ohio House yesterday, but majority Republican leaders put it on the fast track for passage next week.
While the governor's emissaries lobbied lawmakers to support Taft's $720 million plan to fix the current state budget, some House Republicans plotted alternatives to avoid the tax increases.
Meanwhile, minority Democrats flatly refused to support any tax increases.
House Speaker Larry Householder said most of his 59-member caucus agrees with Taft's plan. "We'll get a majority of what the governor wants and get it over to the Senate.''
However, resistance to the proposed cigarette- and alcohol-tax increases is expected in the Republican-dominated Senate. Taft wants the short-term budget remedy enacted by Feb. 20 so Ohio merchants can begin collecting the new taxes on March 1.
The legislature then will turn its attention to the governor's $49.2 billion two-year budget proposal for July 1 of this year through June 30 of 2005. That budget contains more than $3 billion in tax increases, including a broad expansion of the 5 percent state sales tax.
Some conservative House Republicans oppose the increases.
"You're asking us to raise taxes now and you're asking us to raise taxes again,'' Rep. Jean Schmidt, R-Loveland, told Budget Director Thomas W. Johnson. "Quite frankly, my constituents would run me out of town.''
A half-dozen conservatives held a news conference to contend that higher taxes are unnecessary to balance the budget by June 30, and they dispatched a truth squad to follow Taft as he travels the state to promote his tax-and-cut package.
"We believe Ohioans need to have all the facts and not half the facts,'' said Rep. Timothy J. Grendell.
The Chesterland Republican said the Taft administration has enlarged the projected hole in the budget so they can push for increased taxes to help fund the next two-year budget, which is $5 billion larger than the existing outlay of $44.2 billion.
But Assistant Budget Director Tim Keen said the independent Legislative Service Commission's estimate of a $678 million deficit proves that the administration is not exaggerating.
Grendell said that by accelerating sales-tax payments for businesses, using rainy-day money and borrowing from other funds, the administration could raise $409.4 million by June 30, "more than enough to provide for a contingency in case of a shortage of funds.''
Taft has cut spending by $121 million and proposed the fund transfers and accelerated sales-tax payments. He also wants a 45-cent increase in the current 55-cent tax on a pack of cigarettes and a doubling of the taxes on beer, wine and liquor to raise $160 million toward the budget-balancing this fiscal year, which will end June 30.
Ohioans are currently taxed about 10 cents for a six-pack of beer, about 5.4 cents for a 750 ml bottle of wine and about 17 cents for a 750 ml bottle of liquor, according to the Legislative Service Commission.
The governor is speaking on radio talk shows and with editorial boards and community leaders, warning that failure to pass his tax package quickly will result in sharp cuts to schools, colleges and the PASSPORT program enabling senior citizens to remain in their own homes.
Grendell said the $720 million figure does not recognize that the administration is spending less than its original estimates. He said the administration is using scare tactics to force the higher taxes.
"They claim crisis, say there's a shortfall and threaten to cut into essential services,'' he said. "Our decision (on balancing the budget) should be based on sound economic business policies, and not on emotions and threats.
"I've gotten hundreds of e-mails and faxes and I've yet to get one that says, 'Please join the governor in raising taxes.' ''
Grendell said conservatives will fan out across the state making their case against taxes. He said they want to duplicate Taft's appearances yesterday on a Columbus radio station and at editorial boards in Cincinnati and Toledo.
Joining Grendell were Republican Reps. Keith Faber of Celina, Diana Fessler of New Carlisle, Mike Gilb of Findlay, Bob Gibbs of Lakeville and Ron Young of Painesville. Seated in the audience were Reps. John Hagan of Alliance and Steve Reinhard of Bucyrus. Gilb said two other representatives supporting the no-tax solution could not be present.
House Bill 40, the governor's budget-balancing bill, was introduced yesterday and is scheduled for a vote Tuesday in the House Finance Committee.
Business, labor leaders grudgingly accept taxes
Taft visits Dayton as first part of plan to generate
support for budget proposals
Thursday, February 6, 2003
James Hannah
Associated Press
DAYTON -- Gov. Bob Taft received a cool but resigned response yesterday from business and labor leaders concerned about his proposals to increase taxes.
This was Taft's first trip out of Columbus to talk with Ohioans about the plan since proposing the budget.
"People are not going to like the plan because of taxes,'' said Charles Morton, secretary of the Dayton Building & Construction Trades Council, which represents carpenters, plumbers and other skilled-trades workers.
"But he's got to do what he's got to do. I think he's trying to get a solution. I think it's something we're going to have to support,'' Morton said.
Taft met privately at the Dayton Convention Center with 23 business, labor, government and education officials to explain his plan to help fill a $720 million budget deficit by increasing taxes on cigarettes and alcohol.
The governor also wants to expand the state sales tax to cover services such as cable television and real estate to bring in more money for the two-year budget that will begin July 1. His total tax plan for the next budget would raise $2.3 billion.
"We don't see how we can preserve essential services and dollars that go to schools and colleges and create jobs without additional revenues of a substantial nature,'' Taft said after the 45-minute meeting.
He said he urged the officials to support his budget proposal by contacting legislators.
"We want a partnership with them to work through this challenge that we have,'' he said.
Bryan Bucklew, vice president of economic development and public policy for the Dayton Area Chamber of Commerce, predicted that the higher taxes would have a huge impact on businesses.
"We need to evaluate it and get some feedback,'' he said. "And we need to do it in the next 15 days. So we're under a tight time crunch.''
Taft has said he wants the legislature to agree to his tax hikes by the end of February.
Dennis Weinert, president of Ohio Teamsters Joint Council 41, said Taft's proposal will be a hard sell.
"But it's a real thing, and it's got to be done,'' Weinert said. "I think he's going in the right direction.
"Anytime you ask for tax increases, you're going to have a lot of negativism. But there are a lot of services that have got to be protected.''
Montgomery County Commissioner Charles Curran said he is worried that if the state doesn't generate more income, funding for schools and social-service programs will be cut.
"What we tried to do was basically be open-minded, to take a look at the total package,'' Curran said.
"I think all of us realize the state's in very dire circumstances and that things will have to be addressed that normally wouldn't have to be addressed.''
Taft said he thinks business officials appreciate the importance of maintaining spending for schools and economic development.
"I think they understand our problem,'' Taft said. "As people understand the consequences of not acting, I think there will be more support.
"We're not trying to harm businesses. All we want to do is ask them to pay their fair share.''
Have we all emailed our reps AND the Speaker yet? Looks like he's ready to rubber-stamp this piece of crap!
COLUMBUS | House Republicans are prepared next week to approve much of Gov. Bob Taft’s plan to fix the budget for the current year, except for Taft’s proposals to raise taxes on cigarettes and alcoholic beverages and reduce state payments to local governments, House Speaker Larry Householder, R-Glenford, said Thursday.
The budget situation could be reviewed again April 15, said Householder. If projections show that additional revenue is needed to keep the budget balanced until the end of the fiscal year on June 30, the state sales tax could be raised by 1 percent temporarily until June 30, he said.
The sales tax is 5 percent statewide, but different from county to county. The rate in Montgomery County is 6.5 percent.
Householder estimated that the temporary sales tax increase would raise about $144 million. Taft said his plan to raise cigarette and alcoholic beverage taxes would raise $160 million.
Householder said the House plan "would be the most responsible thing for us to do at this point." The plan will go to the Senate after the House votes on it.
The changes the House appears ready to approve would come up with $409 million to close a projected budget hole estimated by Taft at $720 million. Taft has already issued an executive order cutting spending by $121 million.
The $409 million in the House plan includes speeding up sales tax collection, $288 million; draining "rainy day" funds, $65 million; using unclaimed funds, $35 million; and transferring money from rotary funds, $21 million. Rotary funds include fees and fines collected by state agencies for their own use.
"I think this would be the package that probably would be passed," said Householder.
The House plan also would include language prohibiting Taft from making cuts in the basic aid the state provides to primary and secondary education, said Householder, who was interviewed after a caucus of Republican House members. If Taft wants to cut aid to education, "the department of education" would be the place to start, said Householder.
Republicans control the House 62-37.
Taft has threatened to cut aid to primary and secondary schools, higher education, the Passport program that helps seniors live at home and economic development if the legislature doesn’t approve a plan by Feb. 20. The governor's budget office projects the budget hole at $720 million, while the Legislative Service Commission, which advises the legislature, has projected a $651 million deficit.
Coupled with the $121 million in cuts Taft already has made through an executive order, the changes in the plan that the House expects to vote on next week would account for $530 million.
Taft has asked lawmakers to raise $160 million by increasing the cigarette tax by 45 cents to $1 a pack and doubling taxes on beer, wine and liquor. In addition, he has asked them to trim payments to local governments by $30 million.
Orest Holubec, Taft’s spokesman, said Taft would need to see specifics of the bill before commenting fully but that the governor believes that he would have to make cuts to education if "we don’t have new revenue by March."
"If they (the House) can’t pass the ‘sin taxes’ (on cigarettes and alcoholic beverages) now, there’s no guarantee they’ll be able to find additional revenue in a month," said Holubec.
Senate President Doug White, R-Manchester, said Thursday he has asked his budget aides to come up with information on a temporary sales tax increase. White said that a temporary sales tax increase would be the least objectionable tax increase.
Householder said House members have been struggling "with a lack of good information" from the Taft administration. Members have been skeptical about the projected size of the budget hole. Also, Householder said they hadn’t been able to get information they wanted about how much money might be available altogether in the rotary funds.
Householder said that by April 15 — the date at which the budget for this year would be reviewed — the state would be able to make a more accurate projection as to the size of any projected deficit.
"We should have every bit of information we need to make a decision," he said.
The budget wrangling won't be over, however. About that same time, the House will be voting on the next two-year budget.
In the budget for the next two years, Taft has called for $3 billion in tax increases, including expanding the sales tax base to include a wide array of services and other items that now are exempt.
Contact William Hershey at 614-224-1608 or whershey@coxohio.com
[From the Dayton Daily News: 02.07.2003]
COLUMBUS, Ohio - Alcohol and cigarette tax increases are out as a solution to Ohio's budget shortfall.
Gov. Bob Taft's proposal to raise the so-called sin taxes will not pass the GOP-controlled House, Republican Speaker Larry Householder said Thursday.
But Republican lawmakers would consider a temporary, two-month sales tax increase of 1 percent if the state still has a budget deficit in April once tax returns are in, Householder said. The budget must be balanced by June 30.
The House will strip Taft's plan to double alcohol taxes and raise cigarette taxes by 45 cents a pack from a bill balancing a $720 million budget deficit, Householder said.
House Republicans will also remove a proposal to cut $30 million in state money to local governments.
Instead, the House will pass a bill without the taxes but with a series of budget cuts and accounting procedures that Taft proposed totaling about $530 million, Householder said.
"We're trying to predict over four months out what something's going to be," Householder, a Glenford Republican, said after a closed-door meeting of House Republicans debating the budget bill.
"Let's narrow that window down so we can have a better idea," he said. "It's a practical approach to try to solve this problem."
A Taft spokesman said the governor was still looking at the plan but said Taft would have to proceed with cuts to education without his entire proposal being adopted.
Taft has said he will cut 2.5 percent from school and university budgets this year if legislators don't approve the proposed sin tax increases to help fill the $720 million deficit.
"If they can't pass the sin tax now, there's no guarantee they'll pass the sales tax in a month," said spokesman Orest Holubec. "And that will make the cuts even deeper."
Householder's plan is supported by conservative House Republicans who have refused to approve new taxes.
"It's consistent with what we've been saying," Rep. Timothy Grendell, a Chesterland Republican and House Finance Committee member, said Thursday night. "We do not want to go off raising a tax when it might not be necessary because we're still dealing with projected numbers."
The finance committee plans to approve the bill Tuesday, with full House approval expected Wednesday.
With the sin taxes removed, the bill would still cut agency budgets by $121.6 million. It would require early collection of the next sales tax payments from retailers, providing $288 million, and transfer $121.4 million from various surplus funds.
House Democrats, who have criticized Taft's budget projections, have said they would not vote for new taxes.
The combination of cigarette and alcohol taxes would raise about $159 million through June 30.
Rep. Ed Jerse of Euclid, the top-ranking Democrat on the finance committee, said Democrats support eliminating the sin taxes and local government cuts. He said it was too early to say whether Democrats would vote for the bill.
"I think there would be a big problem on our side with a temporary sales tax," Jerse said. "I see that as regressive, and we're not persuaded yet of the need."
Also Thursday, the state reluctantly defended its decision to lower the income requirement for state child care aid as lawmakers tried to fix a $720 million budget hole.
The child care program can't keep up with its current rate of growth without changing the rules, said China Widener, assistant director in the Department of Job and Family Services.
Widener said the changes wouldn't be necessary in a perfect world but were needed to keep the program under control.
Controlling costs "are necessary to protect the most vulnerable participants of our system," Widener told the House Finance Committee.
The state's child care subsidy program has grown by 20 percent yearly for the last four years as more parents moved off welfare and into jobs.
The state will spend about $600 million this year on its child care program, but only budgeted for $520 million. In the budget that started in July 1998 and ended in June 1999, the state spent $282 million.
Currently, parents at 185 percent of the poverty level may receive subsidies. Gov. Bob Taft proposes scaling that back to 150 percent of the poverty level.
That means only 85,000 of the 100,000 parents now receiving child care subsidies would be eligible.
The restrictions would be put in place for the budget year beginning July 1, but the human services department said it needs to begin implementing the changes in April.
Some lawmakers questioned why the department was selecting the child care program for change.
"If you're going to have a government program, this works," said Rep. Jim Trakas, an Independence Republican. Changing the eligibility "kicks people in the teeth who finally climbed out of dependency. This just throws more shackles on them."
ON THE NET
Department of Job and Family Services:
http://www.state.oh.us/odjfs/
And low and behold there it is! I know exactly where they could cut 9.3 billion dollars from the budget, resulting in a 5.3 billion surplus, which would then mean they'd surely have to cut taxes again across the board. Any of them have the balls?
Refusing to believe Gov. Bob Taft's forecast on the state's financial shortfall, House Republicans have come up with a budget fix that would discard the GOP governor's proposal to boost taxes on alcohol and cigarettes.
House Republican leaders and GOP members of the House Finance Committee tentatively agreed late yesterday on a $531 million budget-balancing package, House Speaker Larry Householder said. It's based on more-optimistic income estimates than Taft's, which project a $720 million gap this year.
The Republicans plan to pass their bill Wednesday, Householder said last night. It includes spending cuts, borrowing and various savings, as well as accelerated sales-tax payments by many businesses.
If Republicans decide in the spring that Taft's gloomier projection was right, they'll consider raising the state sales tax by a penny on the dollar for two months.
Yesterday's development sets up a possible confrontation. Taft has said that if lawmakers don't enact his plan by Feb. 20, he will chop funding by 2.5 percent for schools, higher education and the popular PASSPORT program, which enables hundreds of Ohioans to receive care at home instead of in a nursing home.
But Householder, of Perry County, said the House plans to insert language into its bill that would forbid Taft from cutting any money for basic or parity aid provided to school districts.
Majority Republican senators have been working toward a solution of their own. But Householder spoke with Senate President Doug White of Manchester yesterday and said he received positive feedback about the House plan.
"I feel pretty confident,'' Householder said. "We're doing what we think is best.'' GOP senators are scheduled to caucus Tuesday.
Democrats in both chambers have announced their opposition to any tax increases.
Without approval of the cigarette and alcohol taxes, Taft has said he will have to cut $136 million for schools -- affecting every district in the state -- and $39 million for colleges and universities during the last four months of the budget year, which ends June 30.
Householder said that House Republicans believe Taft can cut other funds from the Ohio Department of Education without disturbing school aid.
"While we have not heard from anybody about a specific plan, from what we have heard about (the House) proposal, Gov. Taft thinks it sounds incomplete,'' said Taft spokesman Orest Holubec.
"The governor believes the budget gap is $720 million, and he still believes we need substantial, ongoing revenue so we can avoid cuts in education. The governor's plan remains the only responsible plan on the table.''
Taft's threatened cuts were the centerpiece of private meetings he held earlier in the day with about two dozen education and business leaders from Ohio's eight largest cities.
"The governor has tried his best to avoid any major reductions in education funding, and now feels -- and he certainly convinced the people in the room -- that without raising revenues, cuts can't be avoided,'' said Jim Betts of the Alliance for Adequate School Funding, a coalition of about 60 of the state's wealthier school districts, including Upper Arlington and Worthington.
Taft urged the group to contact legislators, write to newspapers and help coordinate local events as he travels the state to make his pitch directly to residents.
Rep. Mike Gilb, R-Findlay, said conservatives are trying to combat Taft's promotion of his tax package by having legislators rebut the governor in news releases to local media and letters to the editor.
He said areas of responsibility have been assigned according to where the governor appears on radio or visits with newspaper editorial boards or community leaders.
Regardless of whose financial forecast is right, John Brandt, executive director of the Ohio School Boards Association, said his priority is to maintain basic funding levels and parity aid for poorer districts.
"The governor says the deficit is $720 million,'' Brandt said. "Our message to legislators is: Whatever the deficit is, they need to take immediate action to eliminate it.''
In the House, Taft's proposed 45-cent increase in the cigarette tax -- raising it to $1 a pack -- and doubling of taxes on beer, wine and liquor were dropped to satisfy a contentious cadre of conservative Republicans. They refused to vote for any taxes until more is cut from the budget. The House also wants to cancel the governor's plan to reduce payments to local governments by $30 million.
Besides using money from the alcohol and cigarette tax increases to help fix this year's budget deficit, Taft also needs their estimated revenue of more than $700 million to balance his $49.2 billion budget for the two years starting July 1.
On April 15, when income-tax collections become more apparent, the legislature will take another look at the deficit projection. If it turns out Taft is right, lawmakers will consider a temporary 1-cent sales tax increase that would raise $140 million in May and June.
Conservatives, though, have made no commitment to supporting such a tax.
Dispatch Senior Editor Joe Hallett contributed to this story.
02/07/03
Sandy Theis and Julie Carr Smyth
Plain Dealer Bureau
Columbus - Smokers and drinkers relax. Shoppers beware.
Gov. Bob Taft's plan to raise taxes on alcohol and cigarettes will not pass the Ohio House, Speaker Larry Householder said yesterday.
But if Ohio's budget remains in the red by mid-April, House members will give what he called "a serious look" at a temporary, 1-cent increase in the state sales tax.
Despite the lack of support in the House, Taft defended his plan.
"The governor's plan is the only responsible plan on the table," Taft spokesman Orest Holubec said after learning of Householder's comments. "There's no guarantee they will pass a temporary sales tax if they can't pass the sin taxes."
Taft has been promoting increases in so-called "sin taxes" as a way to help erase a projected gap in the budget for this fiscal year, which ends June 30.
Although many lawmakers have criticized the proposed increases, Householder is the first top-ranking leader to pronounce them dead and outline an alternative for balancing the state's books. The speaker made his comments after consulting members of his Republican caucus, which has 62 of the 99 House seats.
"There just isn't the support" for the tax increases, Householder explained. Complicating the debate has been "a concern about a lack of information," he said.
Householder was referring to the Taft administration's need to revise its budget forecast three times in 14 months.
"If we wait until April 15, we'll have a much better sense of whether we still have a hole, and what that hole will be," he said.
The House is expected to adopt much of Taft's budget-balancing plan - mainly budget cuts and accounting changes. It is expected to reject the tax increases and a $30 million cut to the Local Government Fund, an account that supports counties, towns, villages and libraries, Householder said.
The changes would trim $531 million from the deficit, which the Taft administration estimates to be $720 million.
Only if a deficit remains in mid-April will the temporary sales tax hike be considered, Householder said.
A 1-cent increase would bring in about $144 million in May and June, he said.
Taft, meanwhile, continues to lobby for his proposals.
Earlier yesterday, he pitched his plan - and a companion tax-reform plan that would generate an additional $2.3 billion in the next budget - during private meetings with education leaders and big-city chambers of commerce, including the Greater Cleveland Growth Association.
"The response was generally positive, but like all these meetings, it's a hard message the governor is delivering," Holubec said.
Taft asked business leaders to support some or all of the tax reforms and repeated earlier warnings that schools could face a new round of cuts if his budget-balancing proposal is not adopted, Holubec said.
Yet opposition continued yesterday during testimony before the House Finance Committee, as tax opponents and members of the alcohol and tobacco lobby argued against the proposed increases.
Legislative estimates put the current budget lag at $651 million, or almost $70 million less than the administration's Office of Budget and Management. A group of House conservatives is pushing a theory that no deficit exists at all.
Retail merchants and other business leaders have attempted to gauge legislative support for a temporary sales tax, said House Minority Leader Chris Redfern, a Catawba Island Democrat.
Ohio levies a 5 percent statewide sales tax, although counties can add a surcharge of up to 2 percent. A 1-cent - or 20 percent increase - would generate an estimated $1.1 billion annually.
Redfern described his caucus as "reluctant about a tax of any kind, permanent or otherwise."
Politicians fearful of the tax-hike label have used temporary taxes to plug past budget holes. And many of those temporary taxes have become permanent.
The sales tax, for example, made its debut as a "temporary tax" in 1935. It has been on the books ever since.
Taft already has ordered $121 million in cuts from the current budget.
He had hoped to plug the remainder of the deficit by tapping other state accounts, implementing some accounting changes, and by doubling alcohol taxes and raising cigarette taxes to $1 per pack - a 45-cent-per-pack increase.
The cigarette taxes would bring in $140.3 million by June 30; the alcohol taxes would bring in $18.7 million.
Portions of the Taft plan that Householder said the House is expected to adopt include accelerating sales tax collections ($288 million); and raiding the following state accounts: reserve Medicaid fund ($40 million), unclaimed funds ($35 million), rainy-day fund ($25 million), other state funds ($21.4 million).
Once lawmakers complete work on this year's budget, they must take up Taft's two-year spending plan for the next budget. It assumes the sin-tax hikes will pass and generate $742 million over two years - an assumption that now appears to be false.
To reach this Plain Dealer reporter:
stheis@plaind.com, 1-800-228-8272
02/07/03
T.C. Brown and Stephen Ohlemacher
Plain Dealer Bureau
Columbus - If you don't like Gov. Bob Taft's package of tax increases, don't expect to hear a lot of different ideas from the three announced candidates to succeed him in 2007.
Taft isn't getting much support from the General Assembly for his plan to increase taxes by about $3 billion in the upcoming two-year budget.
But at least two would-be governors, Attorney General Jim Petro and state Auditor Betty Montgomery, offered qualified support.
"Governor Taft is using a lot of political capital to do what is right for the state's future," Montgomery said. "The way he has done it is absolutely right."
Petro was more reserved.
"I don't necessarily agree with each and every element of it," Petro said.
But, he added: "It's not my role as the governor's lawyer to basically, in a public forum, say I wouldn't do this, this and this," Petro said. "I'll only express my admiration for the leadership he is showing on the issue."
Montgomery, Petro and Secretary of State Ken Blackwell, all Republicans, have made no secret of their desire to reside in the Governor's Mansion. And whatever Taft and the legislature do to fix the state's budget problems will have a profound effect on the next governor.
But the usually talkative Blackwell was uncharacteristically silent on one of the most important policy proposals of the Taft administration.
"Right after the election, I had a conversation with the governor, and I made a promise to him," Blackwell said. "He would hear my opinions, thoughts and theories directly, before he read them in the paper or heard them on the radio. I have not talked to him about his budget, specifically."
Blackwell has long been a supporter of a single income tax rate, which is not part of Taft's plan.
Is Blackwell simply choosing to say no evil? Surely praising the tax package wouldn't offend his friend, the governor.
No, Blackwell said, don't read anything into his silence.
Taft is pitching his plan as "tax reform," and notes that it would lower corporate and individual tax rates while broadening the base. The reforms are contained in Taft's proposal for the two-year budget that begins July 1. He also is trying to plug a projected $720 million deficit in the current budget, but lawmakers appear poised to reject the beer-, wine- and cigarette-tax hikes that Taft says are needed to close the gap.
Montgomery's glowing review of Taft's tax-reform plan will no doubt provoke head-scratching among Democrats. Montgomery recently circulated a fund-raising letter warning potential supporters that Ohio Democrats "and their liberal tax-and-spend allies will be out for blood in 2004."
The rhetoric was directed at unnamed Democrats who would vote to impose taxes across the board without first looking at cuts, Montgomery said. The letter went out before Taft unveiled his plan.
Montgomery left out the fact that no Democratic lawmaker has voted to increase taxes in the past two years, while Republicans increased cigarette taxes, imposed the income tax on trusts and closed several business tax loopholes.
That fact was not lost on Ohio Democratic Party Chairman Dennis White, who weighed in because there are no announced Democratic candidates for governor.
"He's either dumb or numb," White said of the governor. "Taxing your way out of this problem is not going to work."
White said Taft should cut state spending, though he offered few examples of where to cut. "The alternatives are clean up the waste in government," White said.
White is trying to shake his party's reputation of voting for tax increases.
Petro said that won't be easy.
"They can come out and say the Republicans are tax-and-spend Republicans," Petro said. "But there is a rhyme to 'tax-and-spend Democrats.' It rolls off your tongue."
To reach this Plain Dealer reporter:
tcbrown@plaind.com, 1-800-228-8272
Undaunted by House Republicans' plans to ignore his call for higher taxes on cigarettes and alcohol, Gov. Bob Taft yesterday repeated his vow to cut education funding if those taxes don't go through.
Attempting to flex his political muscle, Taft sent news organizations in every county district-by-district assessments of how much would be cut on March 1 if House Speaker Larry Householder ignores the governor's tax package.
Taft's action came less than 24 hours after Householder floated a short-term budget-balancing plan that leaves out the tax increases.
Taft proposes to double the taxes on beer, wine and liquor and add 45 cents to the existing 55-cent tax on a pack of cigarettes as part of a plan to plug a $720 million hole in the current state budget. Without the $160 million the taxes would raise, he said, cuts to vital programs will be necessary.
Householder's plan, based on a mistrust of Taft's deficit estimates, would provide $531 million. The speaker also has promised the bill would prohibit reductions in basic or parity aid to schools, an attempt to handcuff Taft.
The governor's cuts, which would take effect March 1, would whack $136 million from schools -- including nearly $5 million from Columbus Public Schools -- and $39 million from colleges and universities in the final four months of the budget year.
"We're to the point where further cuts will decide which children get a quality education and which don't,'' said Susan T. Zelman, state schools superintendent. "Preserving a strong education system is the way to turn an economy around.''
Even without the school funding cuts, Zelman said, districts will be affected by nearly $21 million in cuts the department must make from nonexempted programs this year.
Orest Holubec, the governor's spokesman, said all sectors of Ohio will be flooded next week with lists of Taft's proposed cuts to higher education. Details of reductions in drug-treatment programs and PASSPORT, the program that helps keep senior citizens in their own homes, will follow.
"It's the last thing the governor wants to do,'' Holubec said, but added that enacting the plan advanced by Householder would be irresponsible.
Holubec said the legislature's own fiscal research agency estimates $651 million will be needed to balance the budget, closer to Taft's estimate than Householder's.
Householder, a Perry County Republican, said his smaller package would serve until April 15, when personal income-tax returns would show whether more money is needed to balance the budget by June 30. If so, the speaker said, the legislature would consider a temporary 1-cent sales-tax increase for May and June to raise $140 million.
Holubec said nothing will be known by April 15 because it takes three weeks to process checks from the income tax. By then, he said, it would be too late to make up any shortage.
Senate Republicans, preparing to start hearings Tuesday on House Bill 40, the budget fix, said they would consider whatever the House sends them but made no promises.
Sen. Bill Harris, R-Ashland, chairman of the Finance Committee, said senators are concerned about Householder's proposal to solve only part of the problem.
"If you wait until April, can you get it (a tax increase) passed quickly enough to collect the money (by June 30)?'' he asked. "Before we say we can support that, we've got to have a lot more information. I just don't think you can guesstimate it.''
But Sen. Jim Jordan, a conservative Republican from Urbana, said he could go along with Householder's approach of waiting before taxing.
"The debate should be on whether we should raise taxes or not,'' said Jordan, a foe of taxes.
House Minority Leader Chris Redfern, D-Port Clinton, said Democrats want a line-by-line examination of the budget to look for more cuts, but he agrees with a month-by-month approach to see whether the projected shortage dwindles.
"I'm not convinced that a tax is needed,'' he said. "We have an obligation to streamline government before we even consider raising taxes. We're also wary of supporting tax increases when we don't trust the budget estimates.''
Redfern stopped short of saying Democrats will support House Bill 40.
Holubec said Taft probably would veto Householder's proposed prohibition against cuts in school aid.
Retorted Redfern: "I bet we'll override that in a second.''
Lawmakers from both parties have expressed concern that the Taft administration is proposing to balance the budget by stopping new enrollments of all but the poorest Ohioans in the state's day-care program.
Under Taft's plan, more than 15,000 children would be cut from the program, an administration spokeswoman told the House Finance Committee. The eligibility threshold for a family of three, for example, would drop from an annual income of about $28,000 to roughly $22,000.
But Rep. Thomas Patton, R-Strongsville, said that if working adults are forced back onto welfare because they can't get day care for their kids, it will cost the state $400 a month per family.
"You might save $1 at the front door and see $3 go out the back door,'' Patton said.
China Widener, assistant director of the Ohio Department of Job and Family Services, said the department cannot afford the $600-million-and-growing cost of subsidized child care for individuals and families coming off welfare.
She said enrollment has grown by 60 percent since 1999 and spending has increased by 113 percent.
Unless the door is closed to new enrollees, she said, the current budget will become further out of balance than the projected $720 million.
A burden to share
02/02/03
Give Gov. Bob Taft this: His $2.3 billion tax plan for the upcoming state budget isn't designed to protect his political supporters and contributors.
To the contrary, Taft's plan would hit his backers hard. Property taxes for businesses would rise considerably, as would other corporate taxes.
And the state sales tax would apply to dozens of transactions that currently are exempt. The long list of things that aren't now taxed - but would be - includes local telephone service, trade-ins for a new car or boat, cable and satellite television, taxi service, dry cleaning, packaging and packaging equipment, parking, movie and other entertainment tickets, interior decorating, public relations services, newspaper sales and fees paid to real estate agents and political lobbyists.
Among the small group of beneficiaries in the Taft plan would be the working poor, who traditionally vote Democrat. If the Republican governor's proposal is enacted, state income taxes would be eliminated for taxpayers who rank in the bottom third in income.
Taft's $2.3 billion tax plan for the two-year budget that begins July 1 would be the largest tax increase in Ohio's 200-year history. And it is over and above a hefty increase in taxes on cigarettes and alcohol that Taft is advocating to help close a projected $720 million deficit in the budget that ends June 30. All of the taxes proposed by the governor are subject to approval by the General Assembly.
There is room for reasonable debate over the details of Taft's tax package. But there is no arguing its necessity. Taft's choice was either to preside over the dismantling of state government, or to seek a significant tax increase to offset a projected $3 billion to $4 billion shortfall during the upcoming budget cycle.
In choosing the latter, Taft has demonstrated welcome leadership. Ohio's sales tax was enacted 68 years ago. In all that time, it has seen no major revisions, only occasional tinkering. And though all of the governor's proposals for new application of the sales tax are worthy of careful study by the legislature, aligning the code with a 21st-century economy - which is to say an economy that is increasingly service-based - is entirely defensible.
Some critics immediately squawked that a better solution might be a temporary, 1-cent sales tax increase applied only to goods and services that are taxed now. Those critics are merely doing the bidding of special interests who want to keep themselves tax-exempt.
Such self-serving whining isn't worthy of the legislature's attention, but many believe the across-the-board sales tax hike is exactly where the legislature is headed. But consider this: The package Taft has proposed hits business and individuals equally. A general tax would shift the burden to the point where two-thirds of the increases are borne by individuals, meaning legislators would be punishing the constituents they claim to represent.
Other aspects of Taft's tax package are more complex. They involve lowering many corporate and individual tax rates while broadening the tax base. Some Republican legislators, including the ever-dwindling number of moderates, have suggested the non-sales tax elements of the tax package fall well short of the true tax reform the governor has promised.
If the legislature can craft its own package that is more equitable, without sacrificing the needed revenues, then such a plan would be worthy of serious consideration.
What Ohioans don't need from their legislature is more bellyaching and grandstanding by a far right that fails to grasp - or care about - the gravity of the state's fiscal condition.
Taft has created a reasonable framework for answering Ohio's revenue shortfall. A responsible legislature might tinker with it a bit, but it would be irresponsible and wrong for legislators to dismantle it.
Warren County to Ohio:
'We told you so'
Ohio is imploding. Will the last one out please turn off the lights? Gov. Bob Taft is on a spending binge and he's jacking up taxes higher than a tailgating Buckeye. The state is about 9 percent in the red with a $4 billion deficit - and he wants to spend 10 percent more.
Somewhere on a hilltop in Lebanon, leaders of the Warren County Republican Party are telling the rest of us: "We told you so.''
A year ago, when Taft spoke at the Warren County GOP's Lincoln Day Dinner, about a half-dozen local party leaders boycotted and 21 stood up and walked out when Taft took the microphone.
It was not his animatronicspeaking style. The protesters' gripe was displayed on yellow stickers: "Save the Elephants from the RINOs'' - meaning "Republican In Name Only.''
They were objecting to his choice of a pro-gay, pro-abortion running mate. They were trying to warn everyone in Ohio that Taft is a liberal in a conservative suit.
"What choice did we have?'' asks Lori Viars, a board member on the Warren County GOP, which she jokingly calls, "The Republican wing of the Republican Party.''
"Tim Hagan was too liberal. But we felt like Taft betrayed those who put him into office.''
Viars said she got in trouble with state party leaders for the walkout. But she's still speaking up.
"He's not a conservative. Didn't Taft say Hagan would raise taxes? Now the dust has hardly settled and he's raising taxes.''
She says, "That hurts our party in a lot of ways and just reinforces the stereotype that all politicians are dirty rotten scoundrels.''
She's right. Not all politicians are mendacious bait-and-switch artists. Just Ohio governors.
"There's a pattern in Ohio that every 10 years we raise taxes,'' said Sen. Jim Jordan, R-Urbana. "They say the sky is falling and we need more money. They say it's the end of education if we don't raise taxes. It's the same old pattern.''
To prove it, he did some research and found:
Gov. Richard Celeste increased spending 2.13 times the rate of inflation. Gov. George Voinovich increased spending 2.17 times the rate of inflation. Taft has increased spending 2.92 times the rate of inflation - and he's just warming up.
Celeste said, "Once our economy is well on the road to recovery we can and should debate the appropriate level of taxation'' - as he cleaned out taxpayers' wallets.
Voinovich said, "If we can't raise the dollars, it will be a real hit to secondary and primary education because there is not much left on the bones'' - as he dug through the cushions in our couches.
And Taft says, "We are cutting to the bone, tissue and nerves here. We believe we can't go any further with these cuts'' - as he shakes us by the heels to empty our pockets for more spending.
They talk about cutting spending to the bone, but they won't trim a budget hangnail. Instead, they hide behind "education'' the way a bank robber takes children hostage - hand over the money or the kids get it.
Since 1971, Ohio has climbed from 45th to ninth for state tax burdens, Jordan said. The spending curve looks like a ski jump going backward - and our state economy is heading for a nasty crash landing.
"It doesn't make me happy to say I was right,'' Viars said.
Warren County Republicans were just ahead of their time. They were the first to walk out on Taft - and the rest of Ohio is not far behind.
E-mail pbronson@enquirer.com or call 768-8301.
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