Sunday, May 26, 2002

House panel proposes budget fix

Vote expected Tuesday on compromise plan

By John McCarthy
The Associated Press

        COLUMBUS — Gov. Bob Taft's administration and House Speaker Larry Householder finally have come to an agreement on how to plug a $1.7 billion hole in the state budget.

        The solution came after a week of meetings at which Mr. Householder scratched for enough votes to get a package to the House floor. The House Finance Committee voted to recommend the bill for passage at about 5 a.m. Saturday.

        The full House will vote on the bill Tuesday.

        The committee vote ended a two-hour hearing whose debate was reflected in the straight party-line vote, with majority Republicans prevailing.

        The bill would raise Ohio's cigarette tax by 31 cents a pack, on top of the current 24 cents. The decrease from a 50-cent increase the Senate approved earlier in the week was intended to attract votes from antitax conservatives. Enough of them budged to give Mr. Householder 52 votes — two more than needed for passage, he said.

        Mr. Householder said conservatives and moderates in his caucus worked hard to reach a compromise.

        “Everyone was trying to come up with ideas to make this work,” he said.

        The bill also raids the state's rainy-day fund of its last $600 million, increases the tax on trusts — that provision ends in 2005 — and borrows another $165 million from tobacco settlement money set aside for school buildings, bringing the total borrowed to $345 million. It also authorizes Mr. Taft to make an additional $230 million in spending cuts, but bans any cuts in aid for local governments. The bill was needed to make up for a shortfall in the amount of state revenue anticipated when the $45 billion, two-year budget was put together last spring.

        Mr. Taft wanted Mr. Householder to move the bill through his chamber before the Memorial Day weekend ended. However, Mr. Taft understood that a few House members had commitments they could not break, so he agreed to the Tuesday vote, said Brian Hicks, his chief of staff.

        Mr. Householder allowed conservatives to put an amendment into the bill that means workers' cost-of-living pay increases won't automatically put them into a higher income tax bracket, beginning in 2005.

        That provision won over two of the more high-profile Republican holdouts, Reps. Tim Grendell of Chesterland and Mike Gilb of Findlay, both of whom had offered to resign their committee posts rather than vote for the Senate version. “In the long run, it will benefit Ohio taxpayers,” Mr. Grendell said. Mr. Householder said the income-tax provision would cost the state about $77 million the first year.

        The Senate plan was turned down by conservatives who are opposed to any increases in taxes and want to cut spending instead.

        They cite their opposition to the cigarette tax, to a plan to raise $119 million by taxing income in Ohio-based trusts and to a plan to delay a $175 million tax break for businesses created by President Bush's economic stimulus plan.

        The new plan also would end the increase in the trust tax in 2005.

        Left out of the budget negotiations were the House's 40 Democrats. Minority Leader Dean DePiero, a Parma Democrat, said Mr. Taft tried to obtain a few Democratic votes, but was unable to do so.

        Democrats on the committee said that Mr. Taft's senior budget staff, along with Mr. Hicks, had worked privately with Mr. Householder in an area next to the hearing room, but were nowhere to be found once the hearing started.


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