Friday, May 07, 1999
House decides how to spend $40B
But permanent tax cut rejected
BY MICHAEL HAWTHORNE
Enquirer Columbus Bureau
COLUMBUS — Flush with tax collections from a robust economy, the House overwhelmingly approved an Ohio budget proposal Thursday that shares the wealth with schools, prisons and people moving off welfare.
Conservative Republicans argued there also is enough money to permanently reduce income tax rates. But a biparti san majority rejected their proposals in favor of a program that finances annual tax cuts only if there is a budget surplus.
House members sent the proposal to the Senate on a 92-6 vote. Combined with a separate education budget approved Wednesday, the measures would appropriate $40 billion during the two years beginning July 1.
“It's always easier when economic times are good to do a budget,” said House Speaker Jo Ann Davidson,
R-Reynoldsburg.
Some of the changes House members made to Gov. Bob Taft's spending blueprint are intended to ease the transition for people moving from welfare to work.
The proposal would allow an additional 27,000 children to participate in a free health care program and raise income limits for pregnant women to qualify for Medicaid.
Subsidized child care would be provided for families earning up to 200 percent of the federal poverty level ($33,400 for a family of four). And day care fees would be capped at 10 percent of a family's income.
However, the House rejected an amendment by Rep. Catherine Barrett, D-Cincinnati, that would have extended Medicaid coverage to working parents earning up to 150 percent of the poverty level.
Proponents said many people moving off the welfare rolls either aren't offered insurance by their employers or can't afford to pay medical deductibles and co-payments.
But Ms. Davidson said the amendment would have ended up encouraging employers to drop private insurance plans in favor of one financed by taxpayers.
Before quashing attempts to permanently reduce state income tax rates, House Republican leaders warned that lawmakers could be forced to spend more on public schools by the Ohio Supreme Court.
“We have a responsibility to fund the programs that help make people's lives better,” said Rep. E.J. Thomas, R-Columbus, chairman of the House Finance Committee.
“But we need to have flexibility so we can respond to needs yet unseen.”
The court is reviewing legislation intended to comply with a 1997 decision that declared the state's school-funding system inadequate and unconstitutional. In an attempt to bolster the state's appeal, Mr. Taft proposed spending the anticipated budget surplus on school construction and classroom computers.
The spending plan approved Thursday would cap the amount of the surplus going to schools at $416 million — the current estimate from state economists.
Any additional surplus would go into a fund that has returned $1.4 billion to taxpayers during the past three years through temporary reductions in state income tax rates. A family of four earning $50,000 a year received a break worth $126 on their 1998 returns.
All House members from Southwest Ohio voted for the budget.
Conservatives argued that lawmakers often brag about their attempts to help taxpayers, but fail to follow up on their promises.
“We should put our money where our mouths are,” said Rep. Jeff Jacobson, R-Brookville. “We can get to a point where government takes too much of our own money.”
On a 58-38 vote, lawmakers tabled an amendment from Mr. Jacobson that would have permanently reduced income tax rates by 5 percent. The House also rejected a proposal to hold most state agencies to inflationary budget increases and use the savings to finance additional tax cuts.
Another winner in the budget is the state's prison agency, the Department of Rehabilitation and Correction. Overall spending for prisons would jump to $3.1 billion during the next two years, with much of the spending increase earmarked for five new prisons.
Despite the addition of 2,892 beds, state prisons will remain crowded. Mandatory sentences have forced the prison budget to grow faster than any other department in recent years, a trend that troubles some legislators.
The House also financed Mr. Taft's proposed tax breaks for adoptions, medical care, long-term care and medical expenses. By raising the income limit to $23,000 from $20,800, an additional 41,000 elderly and disabled homeowners will qualify for a homestead exemption that lowers their property tax bills.
Businesses, meanwhile, will continue to enjoy a tax credit for buying new machinery and equipment.
“I wish we would have made tax cuts for individuals permanent,” said Rep. Gary Cates, R-West Chester. “But people will find a lot to like in this budget.”
HIGHLIGHTS
Some highlights of the $22 billion noneducation budget approved by the House:
HEALTH CARE
• Children's Health Insurance Program gets $6.8 million next year and $24 million the second year, to provide health care to uninsured children of low-income families.
• Medicaid eligibility for low-income pregnant women increases from 133 percent of the federal poverty level to 150 percent. Price tag: $460,000 next year and $2.5 million the year after.
• Increases by $34.6 million the first year and by $90.1 million the second year the Medicaid reimbursement to health care providers.
SENIOR CITIZENS
• Alzheimer Respite program gets $7.6 million over the two years to increase the number of eligible caregivers from 1,200 to 3,600.
• Senior community services, such as “Meals on Wheels” and transporta tion: $27.4 million for two years.
• Passport program for in-home care gets $56.4 million in the first year of the budget and $60.3 million the second year.
PRISONS
• Department of Rehabilitation and Correction budget totals $1.5 billion the first year and $1.6 billion the second.
• Includes $80 million to open new prisons in Grafton, Conneaut and Toledo, and new camps in Lima and Glouster.
TAXES
• Requires that all surplus funds above $415 million be used to reduce state income taxes. The remainder goes for school building and technology aid.
DEVELOPMENT
• Extends the Ohio Enterprise Zone program until 2004.
WELFARE
• Provides $3 million over the two years to buy food to be distributed by local food banks.
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