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Old 06-23-2003, 07:52 AM   #1 (permalink)
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Here come new taxes, not that they'll buy enough


Unless you are among the very wealthy, or very needy, Ohio's newly completed two-year budget offers you very little to like - but lots to scorn.

Despite Gov. Bob Taft's strong push for "tax reform," his term for having businesses pick up a fair share of the tax burden, his own party rejected most of the meaningful reforms he outlined.

Instead, lawmakers decided to pick up much of the new cash the budget will spend by temporarily raising the state sales tax to 6 cents on the dollar -a 20 percent increase. Cuyahoga County already tacks on two additional cents, meaning shoppers in the state's most populous county will pay 8 cents in taxes for every dollar they spend when the new budget year begins July 1.

Consumers not only will pay a higher rate, they also will pay sales taxes on a broader range of services: cable TV, storage, tanning and manicures and dry cleaning and laundry.use sales taxes fall disproportionately on individuals, the tax burden that you and I are about to bear will set a modern-day record.

Meanwhile, the budget offers a sales tax break to part-owners of corporate jets.

Major tax increases occur about every 10 years in Ohio, and most result in changes the voter can see.

Some changes have been quite remarkable, such as those brought about by the income tax. Instituted in the 1970s, the income tax led to substantial reforms in education, the environment and mental health, and helped Ohio shed its image as a low-service state.

The sales tax increase, however, won't result in much positive change and some economists have warned that it could undermine the auto indus try, the one segment of Ohio's economy that has been humming along nicely.

While personal income taxes and corporate taxes have slumped, zero-percent financing and other incentives helped to ignite an auto and truck sales boom. Fearful that the sales tax hike will prompt consumers to delay new-car pur chases until the higher tax rate sunsets, auto dealers already are pitching beat-the-sales-tax- hike savings. Expect a boomlet before July 1 and a slump after that.

So who gets the new money raised by the tax hike?

While most legislators tout public schools as their top priority, the final budget shaved $198 million off of the Senate-passed spending levels for primary and secondary schools. The schools still will get more (1.2 percent in the first year, 2.2 percent in the second), but lawmakers voted to shift resources to nonpublic schools.

The Cleveland voucher program will now ex tend into ninth and 10th grades. Lawmakers also voted to transfer a special stipend known as "parity aid" from public schools to charter schools.

Parity aid was among the legislators' re sponses to a string of Ohio Supreme Court rul ings that deemed the state's method of financing schools unconstitutional. This budget is the first since the court dismissed the case and the first to openly shift money from public to private schools.

Although the transfer undermines the court and the schools, it helps House Speaker Larry Householder's pal, Akron industrialist David Brennan, who owns the Hope Academies, which are Akron-based charter schools.

This budget signals that the public school lobby is wearing out its welcome at the State house, but Ohio's anti-poverty advocates con tinue to rack up successes - even with conserva tives, even when money is tight.

The final budget preserves child care for the working poor; increases state money for PASS PORT, a home-health-care program for the eld erly; creates a permanent funding plan for hous ing programs; earmarks money for food banks; and continues to extend Medicaid coverage for dental, vision and podiatry services.

The biggest losers in this budget are Ohio's public colleges and those who pay tuition to them. After strong support from the Senate, the colleges went back into the "loser" column when lawmakers trimmed back their allotment to plug a last-minute, $1.1 billion hole in the budget.

The colleges will get more next year than this year, but they'll still fall short of 2002 funding levels - a situation guaranteed to force tuition even higher. And the books are going up, too.

Theis is chief of The Plain Dealer's Columbus bu reau.

Contact Sandy Theis at:

stheis@plaind.com, 800-228-8272
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Old 07-10-2003, 10:09 AM   #2 (permalink)
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Thanks for the info John!
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