Legislature should heed Taft's budget warnings
Republican Gov. Bob Taft is right when he says time is running out for the state to balance its current general fund budget which expires on June 30 and that the attitude of Republicans in the General Assembly isn't conducive to producing a realistic plan.
To make sure Ohio is not under the gun as the end of the fiscal year nears, the governor says he's willing to drop his demand for tax increases on cigarettes and alcohol to eliminate an anticipated $720 million shortfall and support a temporary 1 percent sales tax increase. But he think it's irresponsible to wait until April 15, as some Republican legislators are suggesting.
This week, Republicans in the House cobbled a plan they contend would close the $720 million hole in the budget by slashing administrative costs in the department of education, raising $288 million through speeding up collection of the state sales tax from monthly to weekly, tapping $121 million in surplus funds and toughening the eligibility requirements for a state-funded child care program to slow the program's growth.
No new revenue
But the most significant aspect of the plan is the absence of any revenue from new taxes. Taft has warned that without the additional revenue, he will have to cut funding for primary and secondary schools and higher education. But GOP legislators have taken steps to prevent the governor from reducing the $4,949 in basic aid the state guarantees each student by $124 and cutting "parity aid" -- extra money intended to help poor districts catch up with wealthier ones.
It's one thing for legislators to reject Taft's call for an increase in cigarette and alcohol taxes to generate $159 million, but it's quite another for them to turn their backs on any other option for increasing revenue.
The governor's willingness to give up on the so-called sin taxes if the General Assembly approves a 1 percent temporary sales tax increase is a major concession that deserves more than a cursory look. House Speaker Larry Householder, R-Glenford, was unnecessarily coy when he said that the governor's sales tax proposal came too late. Too late for what? The House's budget balancing plan must still go through the Senate and will undoubtedly end up in conference committee where differences will be worked out.
As Taft rightly put it, "To say that, 'We're not going to give you any new revenue, but we're going to prevent you from making cuts,' that's a prescription for an unbalanced budget."
While state lawmakers are understandably uneasy about raising taxes in the midst of a national economic crisis, they run the risk of putting Ohio on the financial ropes by not acting expeditiously when it comes to the sales tax increase. There is no basis for anyone to think that the state's economy will rebound by April. Things could get worse if there is a war with Iraq.
The governor's has made a major concession. The General Assembly should respond by enacting the 1 percent temporary sales tax as soon as possible.