Tax rise still an option

The state is struggling to rebound from the recession, the governor said.
By DAVID SKOLNICK
VINDICATOR POLITICS WRITER
GIRARD -- Gov. Bob Taft said a long-term plan is needed to stop the state's continuous budget shortfalls and he is not dismissing a tax increase as an option.
"At this point, it's too early to rule in or rule out budget cuts or tax increases," Taft said Tuesday during a tour of Altronic Inc., a Girard business. "We want to avoid an across-the-board tax increase, but we'll have to look at some revenue sources. There's no question about that."
Taft says he wants the state to use a large portion of its Budget Stabilization Fund, known as the rainy-day fund which has about $600 million available, to offset some of the state's projected shortfall, which ranges from $400 million to $800 million by June 30, 2003.
The state Legislature has long been resistant to deplete the rainy-day fund and to increase taxes.
Taft, who has been critical in the past of the Legislature's willingness to work with him on long-term budgetary concerns, said he will meet with the body to come up with solutions for the next fiscal year.
"We need a comprehensive economic strategy and that's what we're developing for Ohio," he said.
Budget crunch: Taft plans to make an announcement later this week disclosing "how big the problem is" and next week, he will discuss his plans to balance the budget.
"We are in a very severe budget crunch," he said. "We're coming through this recession unfortunately still slowly. Our unemployment rose last month. Our income tax revenues are down. Our business profit tax revenues are down. A lot of that is the fallout from last year."
But Taft sees some light at the end of the tunnel.
"It's beginning to pick up now, but it's very slow," he said. "We're still seeing the aftershocks from the downturn that started last year and was aggravated by the events of Sept. 11. As we emerge from the recession, we believe we'll have the capacity to make a sustained commitment."
Third Frontier: Part of that sustained commitment is Taft's Third Frontier Project to spend $1.6 billion over 10 years on a program to promote and develop high-technology businesses in the state.
The plan seeks funding over the next decade with $500 million in the two-year capital budgets to pay for research centers, another $500 million for research and development from the state's Biomedical Research Fund, and $100 million in bonds issued by the state backed by liquor profits to finance high-growth industries. The remaining $500 million would require a statewide bond issue, proposed for next year, to recruit researchers and financial projects.
Taft toured Altronic to promote his plan Tuesday. Altronic produces ignition systems for spark-ignited natural gas engine instruments, controls for heavy duty rotating equipment and control panels used in the oil and gas industry.
"It's a long-term project to transform our economy," Taft said of the Third Frontier Project. "It will provide a solid foundation for Ohio's economy in the 21st Century."
skolnick@vindy.com