By Debra Jasper
and Spencer Hunt
Enquirer Columbus Bureau
COLUMBUS - Gov. Bob Taft on Monday proposed a 10 percent increase in state spending that directs millions of dollars in new taxes and funds from budget cuts to schools, universities and Medicaid.
In the face of at least a $4 billion deficit, the governor's proposal freezes state workers' pay, calls for more layoffs and would shut several state offices and programs.
Despite these cost-cutting steps, Taft's budget would still increase state spending by $4.6 billionover the next two years, from $44.6 billion to $49.2 billion.
To come up with the money, Taft wants lawmakers to approve more than $3 billion in new taxes on cigarettes, alcohol, businesses, and on a long list of new services, including cable TV, real estate commissions, dry-cleaned shirts - even tattoos.
If lawmakers balk at enacting all those new taxes - and many already are critical of the plan - the governor on Monday repeated his threat to make deep cuts in spending on schools, higher education, state parks, local governments, prisons and the elderly.
The governor plans to try to sell Ohioans and lawmakers on the need for new taxes by traveling the state and appearing on television and radio talk shows.
He actually must pull off two sales jobs. First, he has to convince lawmakers and the public to support increasing cigarette taxes 45 cents per pack and doubling the taxes on alcohol. He says lawmakers must enact those taxes by the end of this month in order to balance the current budget by June 30.
Next, the governor must launch his toughest sales campaign. He has to persuade the legislature to increase taxes on things from car sales to spa treatments - and to cut spending on nursing homes, hospitals and health care programs for the poor, elderly and disabled.
Taft is already running into opposition.
State Rep. Patricia Clancy, R-Cincinnati, the No. 3 leader in the House, said she is being bombarded by complaints from voters upset about the proposed tax increases.
"When people hear the governor is proposing all these tax increases and still increasing the size of government, they aren't going to be too happy about it," Clancy said. "We have members chomping at the bit to look at every aspect of that state budget and whittle it down until we know there's no fat left."
State Rep. Timothy Grendell, R-Chesterland, said the proposed $4.6 billion increase in spending in the next budget cycle illustrates that the governor doesn't know how to truly cut back.
"He proved today that Ohio has a spending addiction," Grendell said. "I find it hard to believe there are enough people in the legislature to drink his form of political Kool-Aid. It would be suicide."
House Democratic Leader Chris Redfern, D-Catawba Island, sounded downright giddy about the prospect of using the governor's tax plan to oust Republicans from office.
"The governor just unveiled the largest tax increase in the state's history and I'm excited about the opportunities that lie ahead for us in the next election," Redfern said.
Senate President Doug White, R-Manchester, said legislators know they can't cut higher education or funding for elementary and high schools - all programs Ohioans said they wanted.
His message to the public: "Don't tell me you want something and then cut my head off when I deliver the message that it costs more money. You don't dance without paying the fiddler."
The governor has refused to say how large the deficit is, despite repeated questions. He said the upcoming two-year deficit is too complicated to calculate.
White isn't buying that excuse. He said he doesn't know why Taft won't release the figures.
Ohio's budget woes trace back to the economic boom of the 1990s, in which state government enjoyed big budget surpluses. So much extra revenue was coming in that the state increased spending at 2.5 times the rate of inflation and still gave hundreds of millions of dollars back to taxpayers.
Those budget surpluses turned into deficits under the national recession, requiring the governor and lawmakers to scramble to pass a 31-cent-per-pack tax increase on cigarettes and take other measures to plug a budget gap. Taft now wants legislators to double state alcohol taxes and pass a 45-cent tax increase on a pack of cigarettes to balance the books yet again before the budget ends June 30.
Those increased "sin taxes" would also provide $742 million to help fund the governor's proposed two-year budget. The revenues would pile on top of an estimated $2.3 billion in new taxes on businesses, products and services.
That money would go to fund spending increases for schools, higher education and other programs designed to lure more businesses and jobs to Ohio.
The money would also help pay for Medicaid, the government's health care program for 11.7 million poor, elderly and disabled Ohioans. Despite cutting programs to save $1.1 billion in state and federal funds over the next two years, Medicaid will still increase $1.3 billion. Overall state spending for Medicaid will rise from $8 billion this fiscal year to $9.3 billion in 2005.
Schools would get the second-largest funding increase, about $455 million over the next two years. The money would increase state aid programs to schools and also provide a $900,000 increase to Ohio Reads, Taft's $32.5 million program that relies on volunteers to improve students' reading skills.
Colleges and universities would see their funding increase $120 million over the next two years. Most of that money would replace funds that the governor and lawmakers cut to balance the current budget.
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