By Spencer Hunt
Enquirer Columbus Bureau

COLUMBUS - Secretary of State Ken Blackwell's push for an early repeal of the state's one-cent sales tax increase would put Ohio's budget hundreds of millions of dollars in the red, according to state officials and a coalition of social service groups.

In separate reports released Tuesday, Gov. Bob Taft's budget office estimated the repeal would cost $798 million, while a study from the Cleveland-based Federation for Community Planning showed an $814 million budget hole.

The federation's study said the repeal would force devastating funding cuts to schools, universities, prisons, state mental health and retardation programs, and local police and fire departments.

"That's where the money is," said John Corlett, the group's policy director. "Gutting the budget is not a practical way of running the state's business."

Both studies are the opening shots of what is likely to be a yearlong battle over taxes in the legislature.

While Blackwell didn't dispute either estimate, he argued that lawmakers could easily save most of the money a repeal would cost by clamping down on health care costs and wasted tax dollars.

"I can tell you right now that people outside of Columbus, they want to rein in spending," said Blackwell, who underwrote a petition drive that got 157,000 signatures to put the repeal issue before lawmakers. "They want tax reform."

At the center of the tussle is a temporary, penny-on-the-dollar sales tax increase that lawmakers and Gov. Bob Taft passed in May to balance the budget. The extra penny raised the state's sales tax rate from 5 percent to 6 percent. (Many counties charge an additional percentage point for local expenses.) Set to expire on June 30, 2005, the increase is expected to bring in $1.3 billion a year.

Social service groups urged lawmakers to pass the tax increase during the budget debate to help fend off cuts to Medicaid and other programs meant to help Ohio's poor, disabled and elderly citizens.

Medicaid is the state's fastest-rising cost. Spending has increased 34 percent to $8.9 billion in five years. It accounts for more than a third of the state's budget, compared to just 16 percent in 1995.

That increase is driven by rising numbers of people who qualified for Medicaid, exploding prescription drug prices and care for the elderly. Ohio's nursing home costs increased 31 percent in five years to $2.2 billion, making it the state's biggest single health-care cost.

Blackwell says lawmakers should have made the tough choice to scale back Medicaid spending instead of raising taxes. He singled out nursing homes as one of the first places to cut, saying the state routinely pays millions of dollars each year for beds that go empty.

But Corlett and other groups said Blackwell can't convince lawmakers to cut Medicaid. They point out that Taft has twice tried and failed to convince lawmakers to cut nursing home funding.

"Previous legislatures have shown no willingness to tackle that," Corlett said.

Other Medicaid cuts won't save the state any money, he said, because the state would have to seek federal approval and that could take months.

"You might be able to make some small cuts there, but we don't see it as a place where you can save a lot of money," Corlett said.

In fact, the federation's study assumes Medicaid won't be cut at all if lawmakers approve the repeal.

Gayle Channing Tenenbaum, lobbyist for the Public Children Services Association of Ohio, which represents county child welfare agencies, said Ohioans must realize that supporting the repeal means supporting funding cuts for their children and elderly relatives.

"We're not crying wolf here," she said. "This is very very serious in respect to the quality of people's lives across the board."

Blackwell, a Republican candidate for governor in 2006, said lawmakers have plenty of time to make cuts that could be spread out over an entire fiscal year or more.

"We could save well over $1.3 billion or $1.4 billion," Blackwell said.

If Blackwell's repeal petitions are certified, lawmakers would have four months to pass a law repealing the sales tax increase. If they ignore the repeal, Blackwell has vowed to lead another petition drive to put the issue before voters this November.

There is some doubt that lawmakers will see Blackwell's petition at all. Challenges to the signatures have been filed in about 26 Ohio counties.

Blackwell said it doesn't matter if lawmakers formally get the petition or not.

"They can do any sort of backdoor maneuvers they can think of," Blackwell said. "They can't dodge this issue. It's not going away."

E-mail shunt@enquirer.com