Thursday, February 20, 2003

Painful cuts now needed, Taft says

Senate refuses to increase taxes, passes budget $162 million short

By Spencer Hunt and Debra Jasper
Enquirer Columbus Bureau

COLUMBUS - After failing in his desperate attempt to convince lawmakers to raise taxes, Gov. Bob Taft said on Wednesday he must now slash state spending on schools, universities and the elderly.

"This is the last thing I want to do," Taft said. "The legislature has given me no other choice. Ohio will suffer as a result."

The governor tried hard to convince state senators to temporarily raise the sales tax by 1 cent on the dollar to help plug a $720 million budget deficit.

Instead, his fellow Republicans in the Senate on Wednesday passed a bill 18-15 that falls $162 million short of balancing the budget and ignores Taft's proposal to raise the sales tax or taxes on alcohol and cigarettes.

The shortfall, Taft warned, will force him to cut funding for colleges and primary and secondary schools by at least 2.5 percent this year. That means schools and universities in Greater Cincinnati alone could lose as much as $20.8 million by July.

Taft said he would also cut 2.5 percent - $1.8 million - from Passport, a home care program for the elderly.

As bad as things are now, Taft warned, they look even bleaker in the next budget, which is expected to be $4 billion in the hole.

"If we don't get new revenue, then you are talking about extremely deep and devastating cuts, far more than 2.5 percent," he said, moments after the Senate passed the bill. "I'm disappointed the legislature put me in a position where I have to make cuts to important programs."

Senate President Doug White, R-Manchester, said lawmakers came close to voting for a sales tax increase but in the end decided their constituents would rather see them cut spending, even to schools.

"Right now the `no tax' voice is much louder," White said. He said he tried to persuade legislators to raise the sales tax but, "I just couldn't make it happen."

He said his members have to be convinced by voters who are angrier over budget cuts than they are over higher taxes.

"It depends on how high the heat turns up after these cuts," White said.

White said Republican leaders "passed what we could pass" and now it's up to the governor to decide how to balance the budget. "He's the executive," he said.

Taft's proposed $49.2 billion two-year budget plan relies on $3.1 billion in new taxes, $742 million of which would come from the cigarette and alcohol taxes.

Taft remained hopeful that legislators might change their minds and vote for tax increases for the next budget. But conservative senators who rebuffed the governor, such as Sen. Lynn Wachtmann, R-Napoleon, said they are committed to holding the line against any tax increases.

"Ohio is a high-tax state," Wachtmann said. "We've got to break the habit of increasing the taxes during an (economic) down time."

"This is a good day for taxpayers in this state," agreed Sen. Jim Jordan, R-Urbana. "The debate has been are we going to raise taxes or not? And today we're not."

Taft acknowledged he might have to seek out Democratic votes to get his next round of taxes - including new taxes on cars, spa visits and dry cleaning - through the legislature.

Some Democrats said they would look at raising taxes for big corporations that use loopholes to lower their tax bills. They noted that several of the biggest companies in Ohio paid just $50 each in taxes last year.

Most, however, lashed out at Republicans for leaving them out of the budget debate, accusing the GOP of "out of control" spending and balancing the budget on the backs of the mentally ill and low-income mothers and workers.

Democrats unsuccessfully pushed for seven different amendments to the bill. Among their proposals: Cut spending on expensive private consultants and decrease no-bid contracts.

"It is with increasing frustration to the point of anger to observe the spending patterns of this administration in the last year," said state Sen. Eric Fingerhut, D-Cleveland. "We ought to put the administration on notice, the party on no-bid contracts is over and it's time to come back down to earth."

The national recession has sent sales and income tax revenues spiraling downward in the last two years, forcing lawmakers to scramble to find ways to make ends meet. Their plan to fix the budget that ends June 30 would speed up sales tax collections to produce a one-time surge of $285 million. The bill also taps up to $156 million in unspent reserves and would cut $30 million that is supposed to go to local governments.

Taft has already approved $121 million in spending cuts at state agencies. He had hoped that lawmakers would raise cigarette taxes 45 cents per pack and double taxes on beer, wine and liquor to raise another $159 million.

The Senate vote on Wednesday followed in the footsteps of the House, which refused last week to raise those taxes.

Taft has threatened for weeks to cut money to schools and universities if lawmakers didn't find new money for the budget.

The House plan tried to forbid the governor from cutting a variety of education funds, but the Senate proposal tries to protect only direct state aid to schools.

Regardless, lawmakers can do little to stop the governor from making good on his threat. Taft can order cuts before he signs the bill forbidding them.

The bill now goes back to the House. If lawmakers in that chamber agree with the Senate, it will go to the governor. If not, leaders in both chambers will set up a panel to come up with a compromise plan.

White said he hopes they work out a deal quickly.

"We've gone a long way towards the House in accepting their plan, and we would hope they would come a long way towards meeting ours," he said. But, he added, "We've got 132 strongly opinionated persons with large egos."

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