Tuesday, January 14, 2003

Budget crisis darkens tone of Taft's inauguration

Expect deep cuts, higher tuition and more taxes, governor warns

By Spencer Hunt and Debra Jasper
Enquirer Columbus Bureau

COLUMBUS - An impending state budget crisis that Gov. Bob Taft called the worst since World War II will likely mean more taxes, tuition increases at universities and funding cuts for nursing homes over the next two years.

That's the message Mr. Taft sent between the lines of an inaugural address Monday that also praised Ohioans' pioneering spirit and tried to sprinkle some sugar on the state's sour economy.

[photo] Gov. Bob Taft takes the oath of office as his wife Hope looks on.
(Michael E. Keating photos)
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Speaking to a crowd of officeholders and supporters gathered at the opulent Ohio Theatre downtown, the governor said that state budget reserves will soon be gone, the national economy has failed to recover and state tax revenues have yet to rebound.

Calling the situation a crisis, Mr. Taft said, "Let us find opportunity in this season of sacrifice."

The governor's speech was a far cry from his 1999 inaugural, when he entered office amid a booming economy and a state budget so flush that politicians doled out tax refunds.

This time around, while the festivities still included upbeat Ohio State band music, two-time Grammy award-winning singer Sylvia McNair and a party atmosphere, it was a much more low-key affair.

Mr. Taft was stubbornly optimistic about Ohio's future but repeatedly noted that the year ahead of him would be tough. At times, the governor's inaugural speech sounded more like a trial run for his Jan. 22 State of the State address.

He touched on several controversial issues, including the state's need to change its tax code.

Transcript of Gov. Taft's Inaugural Address

Mr. Taft is expected to ask lawmakers to approve new tax increases to balance the current budget, now in its final six months, and to consider another tax increase proposal for the two-year budget that begins July 1.

Legislative leaders appear prepared to accommodate the governor, but crucial budget talks could bog down under the pressure of conservative lawmakers opposed to raising any type of taxes at all.

Another big problem could be bitter in-fighting over which programs to cut. Leaders of universities and colleges, prisons, and mental health and mental retardation systems all argue that they can't afford to lose more money.

Officials say everything is on the table. "We'll have to look at the entire proposal," said House Speaker Larry Householder, R-Glenford. "It's too early to tell what's needed."

Education could take hit

One early victim of the budget deficit, which could reach as high as $4 billion, could be governor's 2002 campaign pledge to spend more on higher education.

In his speech, Mr. Taft appeared to back away from that promise, at least for now, saying, "Our financial condition makes it hard to provide significantly more resources to our colleges and universities in the short run."

[photo] Secretary of State J. Kenneth Blackwell speaks after his swearing-in.
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He promised to set up a panel of academic and business leaders to study ways to improve Ohio's higher education system. The governor later explained the commission would analyze whether some university programs are redundant and schools could share more programs.

Some Democrats, however, dismissed the committee as window dressing. House Minority Leader Chris Redfern, D-Catawba Island, said the committee is a delay tactic that takes the focus off the Republicans' lack of support for higher education.

"You don't need a commission to convince working families that we need to make colleges more affordable in this state," Mr. Redfern said.

Mr. Taft said he hopes to work on the problem by providing a small funding increase for universities in the next two-year budget and by limiting tuition increases each college and university can approve.

Roderick Chu, chancellor of the Ohio Board of Regents, said the state can't insist that schools create a world-class educational system while giving them only small increases and limiting their ability to raise money elsewhere.

He added that tuition will increase again this year and said the only question is by how much. "Hopefully, they won't be as dramatic as they were," Mr. Chu said. "Hopefully, we won't see the kind of (funding) cuts the state has forced on higher education in the past."

Ohio colleges and universities lost more than $240 million in proposed spending increases over the past two years to budget cuts and to primary and secondary schools. That prompted double-digit increases in tuitions.

Senate President Doug White, R-Manchester, said it is too early to say whether legislators will go along with the governor's campaign promise to spend more on higher education. Mr. White said his goal is to be fair to higher education, but he declined to say if fair meant the schools should get more money.

A lot, he said, "depends on how much we bite the bullet now."

Nursing homes vulnerable

In other budget matters, Mr. Taft vowed to expand a program that helps senior citizens live in their own homes, a position that could mean funding cuts for Ohio's 1,000 nursing homes.

"Most dependent seniors and those in need want the choice to live in their own homes or with their own families, rather than in an institution," Mr. Taft said. "As a society we must rethink how we care for those in need."

The governor has twice tried to reduce annual rate increases to Ohio's nursing homes. Lawmakers preserved those increases over the governor's objections, even though statistics show fewer seniors stay in nursing homes.

Peter Van Runkle, leader of the nursing home lobby, the Ohio Health Care Association, said nursing homes are struggling.

"We can't afford any cuts," he said.

The governor also said the state must address the skyrocketing costs of Medicaid, the health care program for the poor and disabled. "In the short-term, we'll have to take tough measures on this," Mr. Taft said, adding that he doesn't rule out cuts or changing who is eligible for the health care program.

The governor also warned lawmakers that he would push hard for his Third Frontier Project, a plan to spend $1.6 billion over the next decade to fund high-tech research and lure more scholars and high-tech companies to Ohio.

"My friends, the Third Frontier Project is not a luxury," Mr. Taft said. "It's an investment we must make. And let there be no doubt, it is one I will fight to protect."

The governor's commitment to the Third Frontier at least gives a ray of hope to those who seek more funding for higher education.

Former Senate President Stanley Aronoff, a Cincinnati native, said if voters approve a bond issue next November to pay for the plan, it could bring hundreds of millions of dollars to the University of Cincinnati and to other big Ohio schools.

"It (the investment) would be huge," Mr. Aronoff said, while he stood in the back of an hourlong receiving line, waiting to shake hands with the governor.

"The three-C's, Cincinnati, Columbus and Cleveland, would probably get most of the money out of the Third Frontier," he said. "That's one way to build up higher ed."

Fighting over higher education, nursing homes, budget cuts and the state's long-term economic future makes this political term a rocky one for Mr. Taft. He acknowledged that the state faces "immense challenges" but said he is up for leading the state through its troubles.

"Clearly a daunting set of tasks lies ahead of us, yet I know that we will prevail," Mr. Taft said. "For we are a pioneering, innovative, aspiring and creative people, able to turn any adversity into opportunity."

E-mail djasper@enquirer.com and shunt@enquirer.com

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