Friday, September 28, 2001

Ohio counts new ways to raise money


Legal services, park visits, used car deals may be taxed

By Spencer Hunt
Enquirer Columbus Bureau

        COLUMBUS — Visitors to Ohio's 73 state parks could, for the first time, pay fees just to get through the gates.

        Ohioans buying new cars may soon pay a tax on their trade-ins.

        And lawyers and accountants could start charging their customers an extra 5 percent.

        These are just some of the ways the state's new fiscal crisis could work its way into taxpayers' wallets in the coming months.

SALES TAX EXEMPTIONS
    Ohio taxes most sales, but many professional, personal, and entertainment services are exempt. Here is a list showing many of those services and how much the state could collect each year if it taxed them:
   Medical professionals $734.3 million
   Legal services $311.5 million
   Architecture and surveying $131.0 million
   Accounting and bookkeeping $90.6 million
   Cable television $63.5 million
   Beauty salons and barbers $28.6 million
   Advertising $15.2 million
   Auto parking $14.5 million
   Public golf courses $13.7 million
   Theater tickets $12.9 million
   Laundry and drycleaning $12.4 million
   Funeral services $12.1 million
   Movie tickets $10.8 million
   Amusement park tickets $9.8 million
   Pro sporting events $7.0 million
   Coin operated amusments $7.0 million
   Credit reporting $5.3 million
   Bowling and billiards $4.8 million
   Interior design $4.6 million
   Pet boarding and grooming $4.4 million
   Septic tank cleaning $2.8 million
   Museums, galleries, gardens $1.3 million
   Source: Tax expenditure report, Executive Budget for Fiscal Years 1998 and 1999
        New estimates show a faltering national economy is going to leave the state's $44.9 billion, two-year budget about $1 billion short.

        On top of that, lawmakers face an Ohio Supreme Court decision that requires up to $2.4 billion more for schools.

        While Gov. Bob Taft promises budget cuts are on the way, some tax increases might be in the pipeline.

        Some basic state services Ohioans take for granted may also be at risk.

        Ohio is one of only eight states that does not charge gate fees to its parks. That could change, said Sam Speck, director of the Department of Natural Resources.

        Other cost-cutting options in the department's $85 million annual general revenue budget include closing some little-used parks or sections of parks during winter months and cutting back on maintenance.

Mental aid services
        The budget axe may also fall at agencies that offer care and assistance to the mentally ill and the mentally retarded.

        The Ohio Department of Mental Health was already dealing with a $20 million deficit for running its five hospitals, including Cincinnati's Summit Behavioral Healthcare Center (formerly the Pauline Warfield Lewis Center).

        With additional cuts needed, agency director Michael Hogan said the state must consider shutting down a facility.

        Mr. Hogan said a decision won't be made until after an extensive study and decision from the governor.

        The Ohio Department of Mental Retardation and Developmental Disabilities got a $16 million budget increase to offer services to 1,000 mentally retarded Ohioans on waiting lists. Spokesman Jeff Davis said that money may not be at risk if the agency is allowed to make its own cuts.

        “We just don't know anything right now,” Mr. Davis said.

Trade-in tax?
        Also unknown is whether lawmakers will embrace a push from Mr. Taft's office to expand the state's sales tax.

        One option would put a tax on the value of cars Ohioans trade in when they buy new vehicles.

        Early estimates show the state could collect about $290 million in two fiscal years.

        Even more controversial are proposals to tax legal and accounting services.

        The most recent estimates, from 1999, show the state would collect over $500 million in two years from a tax on lawyers' fees.

        Another $160 million could come from a tax on accountants, bookkeepers and tax preparers.

        Though the proposals were floated as trial balloons, they have already ignited opposition from special interest groups representing Ohio's legal and financial sectors.

        Mary Jane Trapp, president of the Ohio State Bar Association, said Ohioans should realize any new tax on legal services is coming out of their pockets.

        “I think it's easy for people to say, well, lawyers make a lot of money,” Ms. Trapp said. “The lawyers won't pay that tax. It's the consumer that will.”

        Legislative leaders, House Speaker Larry Householder, R-Glenford, and Senate President Richard Finan, R-Evendale, both oppose any new taxes.

        Mr. Householder, however, was not sure a tax on trade-ins could be considered new, since the state already taxes new-car purchases.

        How deep to cut and how much to tax are decisions that simply haven't been made.

        Mr. Taft, for example, says a budget-cutting plan won't come until mid-October at the earliest.

   



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