Thursday, May 16, 2002

Cigarette tax hike falters in Capitol

Ohio lawmakers regroup on budget

By Spencer Hunt,
and Leo Shane III
Enquirer Columbus Bureau

        COLUMBUS — A Senate Republican plan to balance the state's budget by increasing taxes on cigarettes and some businesses fell apart in the General Assembly on Wednesday.

        The Ohio Senate was expected to approve a 50-cent increase on a pack of cigarettes as part of a bill intended to fill an estimated $1.75 billion deficit. The scheduled vote was abruptly canceled after House Republicans refused to sign off on the measure.

   Lawmakers face a $750 million deficit by June 30, when by law the budget must be balanced. They are also trying to fill a $1 billion shortfall expected by June 30, 2003.
        “We want to have the House, the Senate and the governor all on the same page,” said Senate President Richard Finan, R-Evendale. “We expect to have a bill next week.”

        Mr. Finan says he has enough Republican votes to pass a bill in his chamber to hike cigarette taxes to 74 cents from 24 cents a pack. House Speaker Larry Householder, R-Glenford, said many House members are reluctant to vote for any tax increase until they first look for more cuts in Ohio's $44 billion budget.

        Mr. Householder later hinted a cigarette tax hike might be inevitable.

        “We would prefer not to do that. But if it's in the best interests of the state, our members are prepared to do what they were elected to do,” he said.

        The delay highlights continuing disagreements between moderate and conservative Republicans over the best way to cope with Ohio's growing budget difficulties.

        The bill Senate Republicans were prepared to advance would have raised $400 million through increased cigarette taxes, and completely drain the $600 million left in the state's rainy day fund.

        Another $500 million in budget cuts would have been left for Gov. Bob Taft to order among various state agencies. Mr. Finan said the remaining shortfall would have been filled by eliminating tax loopholes or increasing taxes on some businesses, such as financial trusts.

        That plan may change in the days ahead as lawmakers examine an ever-expanding list of options.

        Among the more surprising was a proposed doubling of the state's excise tax on beer and wine, which the governor supports. That “option” would have raised $47.6 million next fiscal year, said Mr. Taft's spokeswoman, Mary Anne Sharkey.

        Some lawmakers even examined selling Ohio college dormitories to private companies to raise as much as $750 million.

        While neither of these proposals have been linked to a bill, they underline the political lengths Republican lawmakers are willing to travel to find a budget solution.

        Mr. Householder downplayed another proposal that would put video slot machines at Ohio's racetracks. Supporters say slots could raise enough money to replace a cigarette tax.

        “I'd be surprised if anything dealing with (that) issue ends up in this plan,” Mr. Householder said.

        The governor, who opposes video slots without voter approval, said he was confident a cigarette tax increase would pass.

        “We believe that we need the cigarette tax, that there's no alternative good way of raising dollars of that magnitude,” Mr. Taft said. “We need to have substantial additional revenues to balance our budget if we're going to protect schools, if we're going to protect colleges.”

        Whatever the options, legislative leaders appear bent on passing a plan on or before May 24. Meeting that deadline would allow the state to collect as much as $31 million before the current fiscal year expires June 30.

        Said Mr. Finan: “We have to have the cigarette tax or the (budget) never balances.”


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