Thursday, June 19, 2003

Ohio budget: Rush to the finish

Fix the process

It's crunch time in Columbus, as state lawmakers try to reconcile House and Senate budget plans for 2004-05 that are more than a half-billion dollars apart. Add to that the news that low tax-receipt projections will put the state at least another $1.1 billion in the hole, and the conference committee faces a daunting task.

A frantic round of meetings and caucuses is aimed at ironing out the 415 differences between the two versions of the $49 billion-plus budget, with the gloomy new predictions forcing lawmakers to move back to the lower-spending House version. Progress was made Wednesday, with school funding still the major hang-up. But the new spending cuts could take away Democratic votes and jeopardize passage. It's a predicament.

The weak economy has been Culprit No. 1 behind Ohio's budget woes, but lawmakers also are in this fix because they failed to consider Gov. Bob Taft's plan to reform the tax system, broadening it into the new, service-oriented economy and actually lowering many rates. Instead, here's some of what we are getting:

• A proposed "temporary" two-year hike in the state sales tax from 5 cents on the dollar to 6 cents. If passed, Ohio will have a higher rate than any of its five neighboring states, because it lets local governments tack on as much as 3 percent to the tax. It is hard to see how that will help Ohio's economy recover.

• A fight over a plan to apply the sales tax to satellite TV services but not cable TV. Taft proposed both, but cable lobbyists convinced lawmakers their tax situation was different. Now the satellite folks threaten to sue.

• A collection of business property tax breaks that have schools and local governments up in arms because it could cost them a total of $805 million a year in revenue, according to the Education Tax Policy Institute.

Meanwhile, the lack of a comprehensive budget plan has ripple effects. The state's 250 library systems will receive no money from the state in July, because of one of three mid-course corrections the lawmakers were forced to make in the 2002-03 budget. Struggling schools may face further cuts if conferees are forced to make last-minute adjustments in the per-pupil funding formula.

Taft is still pushing a version of his tax reform, but it's too late to fix things now. Lawmakers are under pressure to finish this week. State tax officials say that if the budget is approved by Saturday, that would give them the 10 days they need to start collecting the extra sales tax on July 1. Otherwise, they'd have to wait until Aug. 1, and the state would lose more than $100 million in revenue.

The reasons for this fiasco are not all outside lawmakers' control. The budget process has become a frantic tail-chase of patches and improvisations. Ohio needs a comprehensive reform of the way it chooses its priorities and funds them.

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