Wednesday, June 11, 2003

State may raise taxes even more

Lawmakers grappling with new $966M shortfall

By Jim Siegel
Gannett Columbus Bureau

COLUMBUS - Ohio lawmakers may not be done raising taxes.

Senate President Doug White, R-Manchester, said he is looking for a mixture of budget cuts, one-time federal money and more taxes to plug a new $966 million hole in the next two-year budget, which becomes effective July 1.

He would not commit to details, saying only that everything is on the table.

"We all agree there's a combination of those things that a solution is going to encompass," he said.

Sen. Bill Harris, R-Ashland, the Senate Finance Committee chairman and member of the joint House-Senate committee that will hash out a budget compromise, said Tuesday he would consider a cigarette tax increase as a way to raise additional money if needed.

He noted that the Senate in May 2002 passed a 50-cent per pack cigarette tax increase before the House reduced it to 31 cents. Harris sees 19 cents that may still have support in the Senate.

The budgets approved by the House and Senate already contain a 1-cent sales tax increase, expected to generate $2.5 billion over the biennium. While that would cover proposed spending, it would not cover the new shortfall.

Gov. Bob Taft's budget office will announce today that tax revenues are expected to be $966 million below original estimates over the next two years, forcing lawmakers to retool a budget that passed the Senate less than one week ago.

The House voted 95-2 Tuesday to reject the Senate's version of the budget and send it to a joint conference committee, which begins meeting today. A deal must be reached by June 30, or lawmakers will be forced to pass a temporary budget to keep government going.

"We're a long way from any type of agreement on anything," said Speaker Larry Householder, R-Glenford.

The House plan spent $48.6 billion, trimming funding for K-12 education and higher education, among other areas. The Senate's $49.3 billion budget put hundreds of millions back into education, child-care subsidies and other social services.

House Republicans have criticized the Senate for spending too much. Many GOP Senators don't think the House invested enough in education and social service programs.

White said it appears some of the Senate's spending increases will now be scaled back.

But if the budget is scaled back too far, White may lose needed Democrat votes in the Senate. If more taxes are added, Householder risks losing Republican votes from his caucus.

Lawmakers will have help, thanks to the recent federal tax-cut bill that provided Ohio with an additional $770 million. But there's some reluctance to rely too heavily on that money.

"We have to realize that's one-time dollars, too," said Rep. James Hoops, R-Napoleon, one of six members of the conference committee.

"We don't want to do things that put us in a jam in two years, or even in a jam in this next budget."

House Minority Leader Chris Redfern, D-Cawtaba Island, said his members approve of the Senate's spending, but they want large corporations and people making over $250,000 to pay more of the increased tax burden.

"I'm not sure there is much of an appetite for an increase in taxes on cigarettes," he said.

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