Sunday, June 8, 2003

Ohio may get budget shock of $1 billion more in deficit

New figures are expected to multiply fiscal problem

The Associated Press

COLUMBUS - Lawmakers will have to come up with another $1 billion to balance the proposed two-year state budget that begins July 1, a newspaper reported Saturday. That's on top of a $200 million deficit expected as the current budget ends this month.

State officials had expected a deficit, saying state income tax collections are likely to be lower than first projected for the next two years.

The Columbus Dispatch quoted an unidentified source who said, "Based on just-released deficit projections for 2003, the state faces a $1 billion deficit."

The projection represents 2 percent of the spending plan and almost equals the $1.2 billion a proposed temporary 1-cent increase to the state sales tax would raise in a year.

Gov. Bob Taft's office and budget officials have said they would not release the amount of the projected shortfall before Wednesday, when House and Senate lawmakers start working out differences between their two versions of the budget.

Taft spokesman Orest Holubec declined to comment Saturday on the figure quoted in the newspaper.

"We have a general idea, but that could change by Monday," he told the newspaper for a story published Saturday.

Taft met Saturday to discuss the problem with members of his staff and representatives of the budget office and the Ohio Department of Taxation, Holubec said.

Tom Johnson, director of the Office of Management and Budget, and assistant director Timothy Keen said they could not comment on the figure on Saturday.

Dwight Crum, spokesman for House Speaker Larry Householder, said he could not verify the figure, but that the speaker was "disappointed" at the size of the reported shortfall.

"We have worked to hold down spending," Crum said Saturday.

A message was left for Senate President Doug White.

Taft must sign the budget by June 30, and the state Constitution requires that it be balanced.

Because one-time money was used to balance the current budget, the governor and lawmakers proposed spending reductions and tax changes to make up about a $4 billion deficit, based on early revenue projections.

Taft proposed spending $49.1 billion. The House-passed budget was $48.7 billion. The Senate boosted that by $600 million, mostly for education.

Both House and Senate versions include raising the state sales tax to 6 cents from 5 cents for two years.

Taft's Office of Budget and Management said Tuesday it was projecting a $200 million deficit for the last month of the current fiscal year.

Tom Johnson, Taft's budget director, said the deficit likely would be resolved by cutting agency spending and delaying the payment of the state's bills, among other things.

As the Senate passed its budget version Thursday, lawmakers learned that Taft's staff was likely to report lower revenue estimates because of lower-than-expected income-tax collections and the continuing economic slump.

The revenue projections upon which each version of the budget was based were developed in January, said Tim Keen, assistant budget director.

Also on the table is Taft's original suggestion of additional taxes on tobacco and alcohol, which would raise an estimated $720 million. Neither version of the budget includes it.

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