Wednesday, February 12, 2003

Taft weighs temporary sales-tax rise


Cigarettes, alcohol may be off the hook

By Andrew Welsh-Huggins
The Associated Press

COLUMBUS - Gov. Bob Taft said Tuesday he would consider a temporary sales tax increase this year to balance the budget instead of raising cigarette and alcohol taxes.

Taft has proposed increasing the taxes to raise $159 million to help fill a $720 million hole in the state budget.

But after a speech to new university trustees, he said he could accept a temporary sales tax increase as long as it provided enough money to balance the budget by June 30, the end of the state's fiscal year.

If lawmakers approve a temporary 1 percent increase in the sales tax by April 1, the state could raise $195 million by June 30, the end of the fiscal year, Tom Zaino, state tax commissioner, told the Senate Finance Committee on Tuesday.

Several lawmakers have discussed temporarily raising the 5 percent sales tax by 1 percent as an alternative to Taft's plan that includes increasing the number of businesses paying taxes.

Taft said he can't balance the budget by cutting state agency spending any further.

"We're doing everything we can to try to make it easier for the Legislature from the standpoint of reducing the amount of the additional revenue they need to raise," he said.

Taft has said he would be forced to cut basic aid to schools by 2.5 percent if lawmakers do not go along with his tax plan.

"Some legislators would apparently rather see schools and higher education take a hit than add 10 cents to the cost of a six pack of beer or 6 cents to the cost of a bottle of wine," Taft said in his speech. "They'd rather see higher education cuts than a higher tax on cigarettes."

House Republicans have opposed any tax increases, but Rep. Jon Peterson, of Delaware, said the Republicans could consider "a temporary sales tax that is time-specific."

The GOP-controlled House Finance Committee planned a vote Tuesday night on a budget bill without Taft's "sin taxes."

The committee was set to approve a measure prohibiting Taft from lowering the basic aid. Taft's plan would reduce the $4,949 in basic aid the state provides for each student by $124.

The House also would block any cuts to "parity aid," extra money intended to help poor districts catch up to wealthier ones.

"That's a non-plan," Taft said. "To say that, `We're not going to give you any new revenue, but we're going to prevent you from making cuts,' that's a prescription for an unbalanced budget."

A vote by the full House could come today. The Senate still must consider the legislation.

Taft had asked lawmakers to increase the tax on cigarettes from 55 cents a pack to $1 and to double the tax on alcohol.

He has said the bill including the tax increases must reach his desk by Feb. 20 to bring in $159 million over the four months remaining in the budget year.

Taft and lawmakers already have made cuts, raised taxes and spent one-time money, including the $1 billion rainy-day fund, to cover $3.4 billion in shortfalls over the last 19 months.




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