Friday, April 06, 2001

Taft: No easy fix for budget woes

By Howard Wilkinson
The Cincinnati Enquirer

        Ohio Gov. Bob Taft is looking at deferring some tax credits for businesses and at unspecified revenue enhancers to make a school funding plan and state budget work.

        But there is no guarantee that whatever the governor comes up with will pass muster with either his fellow Republicans in the Ohio General Assembly, or the Ohio Supreme Court, which will ultimately decide the constitutionality of a new school funding plan.

        State officials are under an Ohio Supreme Court order to come up with a new school funding plan by June 15. The legislature has until July 1 to pass a new two-year budget. Mr. Taft has proposed spending $44.8 billion.

        Thursday, in a meeting with the Enquirer's editorial board, the governor said his biggest problem in coming up with a new budget, including school funding, are lower tax revenues because of the downturn in Ohio's economy.

Gov. Bob Taft
        The state says this year's budget, which ends June 30, will be $288 million lower in revenues, leading to a second round of cuts in six months. The state estimates revenues for the next two years will be $562 million less than projected.

        How to plug those fiscal holes is the crux of the debate.

        “There's still some distance between us and the legislature,” Mr. Taft said.

        One example of the gap between the governor and the legislature is Mr. Taft's support for spending a small portion of the state's $1 billion “rainy day fund” and a separate Medicaid rainy day fund to make up part of the budget shortfalls.

        “I think it's raining,” Mr. Taft said. “I believe there is a manufacturing recession in Ohio.”

        But Ohio Senate President Richard Finan, R-Evendale, opposes tapping into the rainy day fund.

        Mr. Taft said he is considering the possibility of deferring some recently enacted tax credits for businesses in order to pump up state revenues. He also is examining closing some loopholes in state law. He did not offer any specifics.

        Also under consideration, Mr. Taft said, “are revenue enhancements, outside of across-the-board increases.”

        The governor offered no specifics on what kind of “revenue enhancements” he might propose.

        “I don't want people to worked up unnecessarily,” Mr. Taft said.

        Whatever plan he does come up with, Mr. Taft said, would include budget-tightening in most state departments.

        “We could consider responsible cuts in the basic operating budget,” Mr. Taft said. “But there are things we can't accept. We can't accept a situation where there would be overcrowding in prisons.”

        The working version of Mr. Taft's school funding plan would include $808 million in new spending. That is far less than the $1.4 billion proposed by the legislative leadership.

        Mr. Taft, Mr. Finan and Ohio House Speaker Larry Householder agreed to have their staffs meet to work on a funding plan, but that group has already disbanded because it wasn't making any progress.

        The governor said he will continue to work directly with legislative leaders to come up with an agreement.

        “I'm confident we can work something out,” Mr. Taft said.

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