Thursday, September 05, 2002

Hagan's a candidate with a plan


Tax changes, video slots in budget repair

By Spencer Hunt, shunt@enquirer.com
and Debra Jasper, djasper@enquirer.com
Enquirer Columbus Bureau

        COLUMBUS — Gubernatorial candidate Tim Hagan said Wednesday that he would ask voters to raise taxes if lawmakers don't pass a budget plan that cuts corporate tax loopholes and puts video slot machines at racetracks.

[photo] Tim Hagan held a press conference in Columbus last week to introduce his Internet campaign site.
(Associated Press photo)
| ZOOM |
        “If you adopt this plan in its entirety, we won't have to discuss a tax increase,” Mr. Hagan said, as he unveiled a six-month agenda to balance the state budget and better fund public schools. His “Plan for Ohio” also lays out initiatives to decrease property taxes, cut prescription drug costs, reduce college tuition and lure more jobs to Ohio.

        The 22-page policy statement marks the first time Mr. Hagan, a Cleveland Democrat, has spelled out why voters should pick him over Gov. Bob Taft, a Cincinnati Republican seeking a second term.

        The Hagan plan sparked a sharply worded attack from the governor, who was on the second day of a campaign bus tour of Ohio.

        “We say it's more like a ploy than a plan.” Mr. Taft said. “It's kind of like a Hollywood movie, it's over budget, very expensive and unreal.”

        Mr. Taft declined to offer his own plan. He said “it would be premature and unwise” to do so without knowing what state finances will look like 10 months from now.

Tim Hagan
Tim Hagan
        The state government faces a $2 billion deficit next year created by a national recession and spiraling Medicaid costs. An expected Ohio Supreme Court decision on the state's school funding lawsuit could require another $700 million to $1.2 billion.

        Mr. Hagan said he would save $1.5 billion a year by restructuring the Ohio Medicaid program and by cutting most state agencies' spending by 15 percent. Installing up to 10,000 slot machines at racetracks would raise up to $500 million a year, he estimated. Another $500 million would come from eliminating tax breaks Ohio gives businesses.

        When pressed for details, Mr. Hagan refused to say what tax breaks he'd target, what state programs he'd cut or how exactly he would restructure Medicaid. But if lawmakers don't support these changes, Mr. Hagan said he would call for an August 2003 special election asking voters to pick between two different tax increases.

        That strategy is similar to a Michigan ballot initiative that reduced property taxes and raised more money for schools. Michigan voters were asked to either increase the state income tax or the sales tax. Though they could have defeated both ballot questions, voters passed the sales tax increase.

        Mr. Hagan called the Michigan plan “courageous” and said Mr. Taft lacked the leadership skills to come up with an equally bold plan.

        Mr. Taft said he and fellow Republican lawmakers already have made several tough decisions to balance the current budget. Although he has not offered a specific budget plan, he has ordered more spending cuts and said lawmakers should consider eliminating more corporate tax breaks. He also supports limiting Medicaid funding increases at nursing homes.

        Like Mr. Hagan, the governor has not ruled out asking voters to support a broad tax increase. Mr. Taft called the idea “a last resort.”

TAX, BUDGET SHUFFLES
   Under the plan, Mr. Hagan would:
   Propose lowering Ohio's property taxes and shifting more of the burden for school funding to the state. For example, homeowners would receive a personal income tax credit whenever their property tax exceeds a certain percentage of their income.
   Propose abolishing the ability of local governments such as cities and counties to offer tax abatements to companies and give that authority to the state alone.
   Propose saving $450 million by reducing Medicaid prescription drug costs and reducing long-term care costs by emphasizing prevention and primary care services.
   Propose raising $500 million by placing electronic slot machines on Ohio's seven race tracks.
   Propose raising $500 million by closing loopholes in Ohio's business tax structure.
   Conduct an extensive review of the Department of Development to make sure it is addressing high-tech issues.
   Create an Education Cabinet to create ways of improving state higher education funding and to ensure college is accessible to as many Ohioans as possible.
        Where video slot machines are concerned, Mr. Taft said he won't support them without a vote of the people. He predicted church groups would ask voters to defeat any state law that puts video slot machines at racetracks.

        Mr. Hagan said Ohioans already spend millions in riverboat and racetrack casinos in neighboring states. He said it only makes sense to try to keep the money from leaving this state.

        “I've bet on a few horses. I've played slots, too, alongside my mother,” he said. “I don't think I'm morally weakened by that.”

        The governor ridiculed Mr. Hagan's other initiatives, one of which would reduce property taxes through a state income tax credit. He said that proposal along with others to reduce college tuition and prescription drug costs would require millions the state doesn't have.

        “He's talking about one of the largest spending increases in Ohio's history,” he said. “It's really a wish list of everything that might be nice to do in Ohio. But it's not a plan.”

        Mr. Hagan said his plan would only work if lawmakers first fix the budget. “If you don't deal with the deficit, none of what I proposed can happen,” he said.

        Another portion of Mr. Hagan's plan, which would bar local governments from giving businesses property tax abatements, is likely to incur the wrath of business interests and many local government officials. Mr. Hagan said a state ban on such incentives would eliminate instances in which Ohio businesses can lower their taxes simply by moving their operations to new in-state locations.

        Hamilton County Commissioner Tom Neyer Jr., a Republican and chairman of a local commercial development company, said the idea would hurt economic development and his business. “I'm not sure if I'm more offended as a developer or a commissioner,” he said. “

       



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