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Saturday, September 20, 2003

Forcing budget restraint


Sales tax: Repeal effort

This week, Ohio Secretary of State Ken Blackwell's bid to repeal the recently imposed "temporary" one-cent sales tax increase was called, among other things, "reckless and irresponsible," "anti-Ohio" and a "ridiculous media stunt." And that's just comments from his fellow Republicans.

But for Blackwell, who says the Ohio GOP has "lost its moral authority on tax and spending issues," it's like why the farmer whacks the mule - or in Ohio's case, the elephant - over the head: First you've got to get its attention.

He certainly has that now.

The political furor over his campaign to get 96,870 voter signatures - an "initiated statute" process to confront the General Assembly with the repeal - could start a genuine, fundamental debate on how Ohio handles the business of government. If it does, more power to him.

Blackwell thinks the repeal would impose fiscal discipline, and could spur radical changes in the tax system, force state agencies to start measuring their performance, and make the state evaluate what it does well - and what it shouldn't try to do.

Otherwise, he warns, Ohio could be "lost in an economic death spiral," with those who can afford it "voting with their feet" and moving elsewhere, shrinking the state's tax base. He recites a familiar litany:

• Ohio has increased state spending by 70 percent over the past 10 years, by conservative estimates - more than any other state.

• It lost 118,000 manufacturing jobs lost between March 2002 and March 2003.

• It ranks 47th in business-friendliness, according to a recent Tax Foundation report, while neighboring Indiana is 11th.

• The average Ohio family of four with two wage earners has a total tax burden of 45 percent.

• And yet, faced with a multibillion-dollar deficit, the legislature increased spending by 11 percent for the current two-year budget period - and raised sales taxes 20 percent.

We've been pointing out Ohio's budget excesses for years, and we never believed the one-cent hike would be "temporary." In fact, some lawmakers already have talked about extending it or making it permanent. So we think the public deserves a chance to consider a repeal - especially since it didn't get a voice when the "temporary" increase was slipped into the omnibus budget bill, instead of being put to voters.

As Blackwell notes, state tax revenues aren't declining. They are up 5 percent in the last two years, enough to accommodate a modest budget increase. "It's a spending problem, not a revenue problem."

Many lawmakers reply that they have little control over the bulk of the state budget - namely, education and Medicaid. Well, they should try to exert control - and demand accountability.

At the same time, the onus is on Blackwell to provide more specifics about how to cut spending and balance the budget.

The subtext is that Blackwell figures to be one of the main contenders for the GOP gubernatorial nomination next year, along with Attorney General Jim Petro and Auditor Betty Montgomery. Being a tax-fighting hero might help his chances.

But his tax-reform, budget-restraint message resonates in an economically stagnant Ohio whose policies hamper growth and innovation. Bring on the debate.




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