By Rep. Steve Driehaus
Sometimes it takes a crisis to expose our shortcomings and prod us toward change. That was certainly my hope as we entered deliberations on Ohio's biennial budget. The governor had proposed a reasonable spending package and a controversial restructuring of the tax code. Instead, the legislature is considering a budget that actually spends more than the governor's initial proposal and fails to address the structural flaws in the code.
In tight times, we must reduce spending in government. To spend in excess of the governor's proposal is simply irresponsible. But as the legislature looked to cut, the majority lacked the political resolve to demand efficiency and expose waste. As long as we fail to address wasteful spending, then dollars for education, libraries, Head Start, Passport, and critical health services will be on the chopping block.
In the meantime, misspending by state agencies and private contractors, as reported by the Enquirer, exceed $346.5 million. This is the tip of the iceberg, because few programs are actually audited. As the state continues to binge on unbid private contracts, which have grown by 300 percent in the last decade, accountability is paramount. But when a Democratic amendment requiring performance audits, measuring what we actually receive for our tax dollars, was offered on the floor, the Republican majority soundly defeated it.
I offered an amendment that would require the state to measure the effectiveness of our 140 tax breaks. These "loopholes" accounted for $9.5 billion in 2003 alone. The measure requires sunset provisions for tax breaks and forces the legislature to evaluate their effectiveness prior to considering their reauthorization. Despite support from both the conservative Buckeye Institute and the left-leaning Federation for Community Planning as a sound measure that sheds light on Ohio's tax policy, the Republican majority opted for business as usual.
So who pays? Once again the burden falls on the little guy. While Republicans focus attention on the issues of abortion, guns, and gay rights, they have picked the pockets of every middle-income family and small business in the state.
The linchpin of the biennial budget package is a 1-cent "temporary" sales tax increase intended to close a portion of Ohio's anticipated $4 billion budget deficit. This follows closely on the heels of a 6 cent-per-gallon increase in the gas tax and a 31-cent-per-pack increase in the cigarette tax, along with increases in nearly every license fee the average citizen has to pay.
In the meantime, 46 percent of the corporations in Ohio paid only the $50 minimum in corporate franchise tax, another 35 percent paid $2,000 or less. The lion's share of the franchise tax falls upon those small businesses unable to take advantage of tax maneuvers to avoid such costs. As corporations avoid paying the franchise tax, the income tax, which we all pay, has grown from 17.3 percent of the general revenue fund in 1973 to 47.2 percent last year.
Local governments and schools are also hurt. Provisions slipped into the Senate version of the budget significantly change the taxes paid on business machinery and equipment. The Education Tax Policy Institute estimates this tax break will cost school districts $462 million and local governments $343 million. While you will probably hear the boys in Columbus brag about investment in education and saving local government funds, you won't hear them mention this little favor to big business.
The budget gave us a chance to change the way we govern in Ohio. Unfortunately, in Columbus, it's business as usual.
Rep. Steve Driehaus of Cincinnati is a member of the Ohio House, representing the 31st House District.
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