Round Two of this year’s state budget battle is under way at the Statehouse, with education and – of all things – video slot machines on lawmakers’ minds.
The GOP-led House examined Gov. Taft’s biennium budget proposal down to the last nickel – something taxpayers might want to hold on to if Ohio’s dire economic situation persists. The House passed a bill last week, trimming the governor’s proposed budget to $48.5 billion. The bill includes a temporary penny increase on the existing 5 percent sales tax that would begin July 1.
If the House’s 2,700-page plan is accepted in the Senate, voters would have the option to repeal the increased sales tax in favor of revenue from video slot machines at horse tracks. The tax would raise $1.3 billion if instituted while slot machines could gross $900 million.
Voters turned down slot machines as a revenue enhancer in 1990 and 1996 by roughly a 3-2 margin. Gov. Bob Taft also opposes the bill. He promised to veto any slot machine initiative.
Although Round Two is still in the planning stages, Round One was completed in early March when Gov. Taft signed a quick fix to the FY2003 budget, a controversial solution ultimately costing Ohio State nearly $7.7 million in instructional aid.
Despite the toll funding for higher education has taken in the last three years, the House balked at Taft’s proposed increase. The governor’s general allocation for FY2004 was trimmed by more than $1 billion – a move the governor contends is a mistake.
“We have always been concerned about how adequately higher education is funded,” said Taft spokesman Orest Holubec. “We had proposed annual increases of two percent and 2.8 percent in the two-year period.”
Members of the Ohio Board of Regents testified in the House last week on the damage another cut in higher education funding would do.
“Ohio’s population is undereducated; we have underinvested in higher education for so long as we lag the nation in so many respects,” said Regents Member Donna Alvarado. “I do not know how long campuses can continue to operate with these constraints and still maintain their quality … of their programs.”
According to the Buckeye Institute’s state financial analysis, Ohio’s local tax burden ranks No. 9 in the nation. Institute member Samuel Staley said a sales tax is not the best solution.
“This move could be economically disastrous,” Staley said. “Raising taxes in a stagnant economy will do little more than erode our state’s economic competitiveness.”
Colleges are not the only educational sources taking a hit with the House’s solution. Primary and secondary schools stand to lose $363 million in funding compared to the governor’s proposal. In addition, the bill allocates funds based on districts’ attendance records, something Sen. Mark Mallory is uneasy about.
“Tying funding to attendance is a misguided solution,” said the Republican from Cincinnati. “Ongoing expenses continue to pile up, despite a decrease in attendance.”
The attendance element of the proposal would most significantly impact inner city schools, which have problems with student absences.
Rep. Tim Grendell, R-Chesterland, is not appeased by that notion.
“It is utter nonsense for taxpayers to pay for empty seats,” Grendell said. “The attendance measure is a tremendous incentive for failing schools to get their act together.”
The Senate Finance Committee is listening to testimony regarding the House’s bill. The penny increase is likely to see more opposition when the Senate votes in the next two weeks.
