Thursday, April 29, 1999

Tax cut possible in Ohio after all

Schools wouldn't get entire surplus

Enquirer Columbus Bureau

        COLUMBUS — Ohioans may still get a tax cut next year, despite Gov. Bob Taft's attempt to spend the state's budget surplus on school construction and computers.

        While Mr. Taft's $39.9 billion budget sets aside the entire surplus for schools, a version of the two-year state budget introduced Wednesday by majority House Republicans would cap the amount at $416 million.

        If the surplus is larger than that, any money left over would be returned to taxpayers through lower state income tax rates. The state returned $700 million to taxpayers last year, which translated into a $126 break for a family of four earning $50,000.

        GOP lawmakers also added $80 million to basic state aid for public schools. And they killed Mr. Taft's proposed tax deduction for college tuition, opting instead to freeze tuition next year at two-year colleges and reduce it by 5 percent the following year.

        “We are fine-tuning what the governor wants to achieve,” said Rep. E.J. Thomas, R-Columbus, chairman of the House Finance Committee.

        Facing a court order to spend more money on public education, Mr. Taft said last week he is not ready to compromise on his proposal to spend the entire budget surplus on schools.

        He may not have a choice. Republican legislative leaders in the House and Senate have made it clear they want some money set aside for tax cuts, in part to head off conservatives pushing for a permanent reduction in state income tax rates.

        “We broke the news to him some time ago,” said Senate President Richard Finan, R-Evendale. “I think there would be an awful lot of support in my caucus for that concept.”

        Scott Milburn, Mr. Taft's spokesman, said the governor may be more amenable to changes made in his proposed budget for higher education.

        Republican lawmakers scrapped one of his campaign promises — a $2,500 state tax deduction for college tuition — and replaced it with additional state funds intended to hold down tuition at two-year colleges.

        “From what we've seen, these changes are in line with the governor's priorities to improve access to higher education,” Mr. Milburn said. “If they accomplish the same goal, we shouldn't have a problem.”

        The overall budget for elementary and secondary schools wouldn't change. But the House rewrite assumes there will be 6,000 fewer children attending public schools than previously anticipated.

        As a result, lawmakers bumped up increases in state aid intended to comply with an Ohio Supreme Court order that declared the state's school funding system inadequate and unconstitutional.

        The state will guarantee each school spends at least $4,276 per student during the year beginning July 1, 2000. Lawmakers also raised a cap on annual increases of state aid to 8 percent from 6 percent, a change intended to provide more money to rapidly growing school districts.

        It's unclear whether the changes will satisfy the justices reviewing a trial judge's decision that ordered lawmakers to start over in their attempt to overhaul the school funding system.

        “Sounds like more of the same to me,” said William Phillis, executive director of the Coalition for Equity and Adequacy of School Funding, a group of school districts that successfully sued the state.

        Finance committee members are scheduled to vote on the revamped budget proposal next week, though it may be amended several times along the way.

        Other changes made by the committee would:

        • Make more former welfare recipients eligible for subsidized day care. The House budget would provide the service for families earning up to 200 percent of the federal poverty level. That would be $33,400 for a family of four. Fees would be capped at 10 percent of a family's gross income.

        • Provide a $125 million increase to doctors and other providers of Medicaid services to the poor, elderly and disabled. Future rates would increase with inflation.

        • Allow the use of public funds to commission a portrait of each departing governor. Private funds have been used to pay for previous portraits.

        • Cover 100 percent of the tuition costs at Ohio colleges and universities for members of the Ohio National Guard. The state has covered 60 percent of the cost in previous years. Mr. Taft proposed raising the reimbursement to 70 percent.

        Whatever budget is approved by the House must next go to the Senate for consideration. Republicans also control the Senate. The two-year budget would go into effect July 1.


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