Thursday, February 13, 2003

House defies Taft on budget

Plan doesn't cut or tax enough to close deficit

By Spencer Hunt
Enquirer Columbus Bureau

COLUMBUS - House lawmakers looking to balance Ohio's ailing budget Wednesday passed a $566 million plan that Gov. Bob Taft blasted as irresponsible and incomplete.

Gov. Taft
The bill, which passed 68-31, falls short of erasing either of two differing estimates of the state's current budget dilemma. The governor's office is predicting a $720 million shortfall by June 30, while legislative analysts estimate a smaller budget hole of $651 million.

House lawmakers defied the governor's call to double alcohol taxes and to increase the cigarette tax by 45 cents per pack to raise another $159 million. Their bill also bars Taft from making good on a threat to cut state school funds if legislators didn't increase state "sin taxes."

Minutes after the vote, Taft said House lawmakers ducked their responsibility to balance the budget now.

"There are only two ways to balance a budget: cut spending or raise revenue," Taft said in a statement. "While I too would like to avoid making these difficult choices, responsibility requires us to take the necessary action to balance our budget soon."

House Speaker Larry Householder, R-Glenford, defended the plan, saying it will keep state spending in the black through April 15.

Highlights of a bill providing $566 million to close a state budget deficit that was approved 68-31 in the House on Wednesday:
• Eliminates Gov. Bob Taft's proposed increases in cigarette and alcohol taxes that would have raised $159 million.
• Restores $30 million in cuts proposed by Taft to state funding for local governments.
• Prohibits cutting per-pupil spending, parity aid and other basic aid for primary and secondary education. Taft has threatened cuts.
• Creates a "State Facilities Closure Commission" and establishes procedures for closing a prison, youth detention center or mental hospital. Would require Taft to follow its recommendations.
• Prevents Taft from cutting state basic aid to schools.
• Raises $288 million by speeding up the collection of the state sales tax from monthly to weekly.
• Taps $121 million in surplus funds.
• Puts into the state general fund at least $35 million from the administrative fund for the food stamp program. The House said the money was not needed to run the program.
• Toughens the eligibility requirement for a state child care program to slow the program's growth.
Source: Substitute House Bill 20
"If we've still got a deficit, we'll deal with it at that time," he said. A two-month-long, 1-cent increase in the state sales tax is one option he has said his members might consider to eliminate an April deficit.

Higher taxes aside, the bill does everything else Taft wanted to balance the budget.

It accelerates sales tax collections to provide a one-time boost of $288 million and it would allow state agencies to spend up to $156 million in untapped reserve funds. The governor has already ordered another $122 million in state agency spending cuts.

The current budget crisis is only the latest in a series. Dwindling tax revenues spurred by the national recession have already forced lawmakers to deal with $1.5 billion and $1.9 billion deficits over the past 18 months.

Another $4 billion deficit looms in the coming two-year budget lawmakers must approve by June 30.

Senate Republicans looking at the short-term problem will now take up the House bill. They were almost as critical of it as the governor was.

Like Taft, Sen. Bill Harris, R-Ashland and chairman of the Senate Finance Committee, called the House plan incomplete.

Although his own legislative analysts say the budget is $651 million out of balance, Harris said it's more prudent to devise a plan that would fill a $720 million budget hole.

"Better to think about the worst-case scenario," he said.

One option senators are discussing would have them impose a temporary 1-cent sales tax increase now instead of waiting until April. Taft said he'd support a general sales tax increase instead of higher sin taxes if lawmakers passed it now.

Harris also acknowledged that some senators have discussed a 19-cent increase in the cigarette tax. That increase would equal a 50-cent tax hike senators voted for last year before they settled with House lawmakers on a lower, 31-cent increase that took effect in July.

A third faction reportedly supports passing the House plan as-is. That would force the governor to make spending cuts that won't affect classrooms.

House conservatives echoed that sentiment Wednesday.

"We need to protect our classrooms and look to the heart of the bureaucracy," said Rep. Timothy Grendell, R-Chesterland. "I suggest, let's start (cutting) here in Columbus."

The bill was supported by all 62 House Republicans and six Democrats.


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