OHIO Budget will be tough, Taft says

The governor has asked his tax commissioner to look at options to increase revenues.
By JEFF ORTEGA
VINDICATOR CORRESPONDENT
BEXLEY, Ohio -- Gov. Bob Taft will look to new revenue and possible spending cuts to deal with a prospective two-year state budget he said has the potential to be "one of the most difficult budgets in Ohio's history."
"We're going to have a substantial budget gap that we need to fill," Taft said of the two-year state spending plan he will present to the Legislature early next year. The budget must be in place by July 1.
"We're going to need additional revenues to close that gap," the Republican Taft said from the governor's residence in this Columbus suburb.
Taft's comments came in a year-end interview in which he reflected on a number of issues including the Ohio Supreme Court's recent decision in the school-funding lawsuit and the need for more investment in high-tech research in Ohio.
But it was clear that the state's potential fiscal woes were high up on the governor's agenda.
Taft has said he doesn't favor increases in the major taxes without a vote of the people, but he said that he's asked state Tax Commissioner Tom Zaino to look at options to raise revenues.
"We're looking at how can we raise additional revenues, but also to make our tax system more fair, more simple and more supportive of our economic goals," Taft said.
Possibilities
Among the options Taft said the state could look at were possibly broadening the sales tax to include toll-free numbers purchased by businesses, among other things.
Taft said the two-year budget he proposes to state lawmakers in February will add more state aid to fund public schools and higher education, but that other state departments were likely looking at flat funding.
The state will also have to address soaring costs for Medicaid, the federal and state insurance program for the poor and those who are disabled, Taft said.
"That's a budgetary pressure," the governor said.
The state will also have to replace $500 million in one-time money that was used to balance the current two-year, $44 billion state budget.
That includes money from the now-drained Budget Stabilization Fund -- the so-called "rainy-day fund" -- as well as some of the state's share of the national tobacco settlement.
"We are facing one of the most difficult budgets in Ohio's history," Taft said.
Other concerns
Not only is Taft worried about the next budget, he's also worried about the state's current budget that ends in June.
State officials are concerned that revenue collections were down about $80 million in November and the fact that economists were pushing back projections for a recovery from the economic recession to the middle of next year rather than the first of the year, Taft said.
"We're watching our revenue collections very closely," Taft said. He didn't rule out any more budget cuts for the remainder of the fiscal year.
Taft said the state should continue to try and improve the state's funding of public schools in the wake of the most recent state Supreme Court ruling on the issue.
In a 4-3 decision this month, the high court again ruled the funding system unconstitutional and ordered a "systematic overhaul" of the system that splits funding for schools between state money and local property taxes.
The high court also ended its jurisdiction in the case, meaning that any further action may have to stem from a new lawsuit.
It was at least the third time in 11 years that the high court had ruled the system unconstitutional.
Next year, the governor plans to propose a $500 million bond issue to fund a portion of his Third Frontier project aimed at developing high technology employment in the state.
Taft said the timing of a public vote was still being planned.
Interest groups will undoubtedly be carefully watching the budget process.
"No. 1, let's be sure before we even start talking about taxes in any kind of serious way that we find out what programs of government need to be cut back, reformed or even eliminated and how [much] money that saves us," said Dan Navin, the director of legislative affairs for the Ohio Chamber of Commerce.