Ohio: Anatomy Of A Budget Crunch

The slowing U.S. economy is shrinking the budgets of at least 40 states, and about two dozen of them have frozen spending or cut program to plug the gaps, according to the National Conference of State Legislatures and data compiled by Stateline.org.

Ohio is a good example of the problem, the possible solutions, and the political fears that prompt state legislators to rule out certain fixes.

With sales tax revenues trickling in much more slowly than expected, Ohio faces a projected deficit of $1.5 billion during the current two-year budget period that ends June 30th of 2003.

Gov. Bob Taft, a Republican, is proposing what he calls a “responsible” solution. It’s a combination of spending cuts, closing tax “loopholes,” borrowing, and raiding a special “rainy day fund.”

Taft has ordered most state departments to cut spending by six percent. That’s supposed to raise about $600 million, the bulk of what’s needed to eliminate the budget shortfall. But it could have the most dramatic fall-out.

Ohio Corrections Director Reggie Wilkinson proposes to close one to three prisons, along with sections of eight others. He also says 300-800 corrections employees will be laid off, at least two-thirds of them prison guards.

Security at the prisons won’t be compromised, Wilkinson says. He says the fact that the prison population has fallen recently from about 49,000 to less than 45,000 means that the new prisoner-to-guard ratio won’t be too high.

The union that represents prison workers disagrees. The Ohio Civil Service Employees Association warns that the guard layoffs will bring the state’s inmate-to-guard ratio back to where it was a decade ago, just before Ohio’s maximum-security prison in Lucasville suffered through an 11-day inmate revolt that left one guard and 9 prisoners dead in 1993.

It was the longest prisoner siege, with deaths, in U.S. history.

Ohio college students and their parents are also expected to be hit by the spending cuts. Tuition bills at state-supported universities already rose seven to nine percent earlier this year due to spending cutbacks, and this latest round, the largest, will push tuition still higher.

Some social welfare programs are also expected to suffer due to the budget cutbacks. One state mental hospital is scheduled to close its doors.

Besides ordering spending cuts, Gov. Taft is asking legislators to raise about $465 million by ending several business tax exemptions.

For example, he wants companies to start paying sales tax on toll-free telephone lines and on transaction between companies that are related to each other.

Taft wants to find another $300 million by dipping into Ohio’s “rainy day fund,” which currently has more than $800 million in it. And to get another $100 million, he proposes that legislators borrow money from the national tobacco settlement and pay it back in several years.

Minority Democrats in the legislature say the spending cutbacks Taft has ordered are too drastic. They want to raid the rainy day fund for more money than the governor proposes.

Leaders of the Republican majority are also skeptical about the governor’s plan for different reasons. They don’t like wiping out business tax exemptions, and they’d like to pressure Taft to come up with new money in a way he opposes — allowing each of Ohio’s 7 major racetracks to install 1,500 video slot machines.

Lobbyists for the tracks and the companies that manufacture the machines estimate their proposal could bring in a bonanza for the state treasury of $400 million a year.

Ohio’s budget mess promises to have Democrats and Republicans fighting with each other as legislative elections loom next year, but it also promises to have majority Republicans fighting among themselves.

There is one thing that virtually all Ohio lawmakers agree on, though major statewide taxes should not be raised. Legislators from both parties believe that anyone who proposes a tax increase will commit political suicide.

They’re guided by history. They remember that in 1998, when Ohio voters were asked to raise the five percent state sales tax by one perecent so schools could get an extra $500 million and property taxes could be lowered by $500 million, voters said no by a whopping four-to-one margin.

Bill Cohen covers the Ohio Legislature for Ohio Public Radio.