Thursday, January 29, 2004

Gov. Taft stresses jobs, tax overhaul

By Debra Jasper
and Spencer Hunt
Enquirer Columbus Bureau

[IMAGE] Ohio Gov. Bob Taft said in his State of the State address Wednesday that Ohio must rebuild its economy, create jobs and be friendlier to business.
(Michael E. Keating photo)
COLUMBUS - Ohio must create more jobs, overhaul its tax system and make it tougher for people to sue businesses, Ohio Gov. Bob Taft said Wednesday in his State of the State address.

Taft, a Cincinnati Republican in his final term, outlined his plan to create jobs by spending more on training, expanding tax credits for businesses and using money from a state tobacco settlement for high-tech employment.

"We must face the facts. Even as the nation's economy has started to rebound, Ohio employment has not," Taft said to an Ohio House chamber packed with state representatives and senators.

The governor promised to appoint a new Jobs Cabinet to make sure Ohio offers a friendlier climate to business. The cabinet will be headed by Bruce Johnson, who runs the state's development department, another agency focused on making sure Ohio is a business-friendly state.

"Our challenge is clear. Turn job losses into job gains. Sell our state as never before," the Republican governor said.

Taft sold lawmakers last year on his $1.6 billion Third Frontier program to create more high-tech jobs. But voters in November rejected a key piece of it when they voted down Issue 1 to borrow $500 million.

Democrats criticized the governor after his speech, saying he and GOP lawmakers who control the Legislature plan to help big businesses at the expense of Ohio families.

Businesses liked tone, but wonder how it can be done
Taft's topics
Senate Minority Leader Greg DiDonato, D-New Philadelphia, held up a series of newspaper stories that showed his district lost 1,000 private and public sector jobs in just the last seven days. About 800 of those jobs were worker layoffs at a local steel plant.

"What the governor just proposed doesn't do anything to help these situations," DiDonato said.

Other Democrats cited Bureau of Labor Statistics showing Ohio has lost 264,700 jobs since Taft took office in January 1999. The state's unemployment rate in December was 6 percent. They said Taft's initiatives were too vague to create a meaningful turnaround in the economy.

Republican House Speaker Larry Householder said Taft's proposals are "tweaking" the way lawmakers are already doing business. He said the speech was "energizing," but said lawmakers have already done 75 percent of the public policy work that Taft suggested to create new jobs.

"He's just advocating that we finish up the other 25 percent," he said.

Part of that unfinished business includes overhauling Ohio's tax code. Last year, Taft's response to a $4 billion, two-year budget deficit included a $2.3 billion proposal that would have raised taxes on companies and expanded the sales tax to include more services, such as manicures, spa treatments and dry cleaning.

Lawmakers instead persuaded Taft to support a temporary 1-cent increase on the sales tax, taking it from 5 cents to 6 cents. But that tax is set to expire in June 2005, and Taft warned Wednesday that the long-term problem hasn't been fixed.

Householder said Ohio's tax code hasn't had a major overhaul since 1932 and agreed it desperately needs updating. Still, he said it won't be easy. "I think we can get it done in an election year, but it's going to take courage."

Democrats also liked the idea of reforming the tax code, but House Minority Leader Chris Redfern, D-Port Clinton, called Taft's ideas "bumper sticker" solutions. He said Taft could lower Ohioans' tax burden by eliminating legal loopholes businesses use to lower their annual tax bills, not by expanding taxes across-the-board.

"We can certainly balance the budget and reform our tax code, but not on the backs of our working families," Redfern said.

Taft pushed lawmakers on Wednesday to pass a new law making it more difficult for people to sue companies for punitive damages, saying, "Frivolous lawsuits are driving up the cost of doing business in Ohio."

Taft also renewed his opposition to any new health insurance mandates this year. Several Republican lawmakers back a bill that would require companies to cover mental illnesses in the same way they cover physical illnesses.

But the governor said the state can't afford to require insurance companies to step up coverage because rates would go up. "New mandates, however well-intentioned, could push more small companies to reduce or eliminate benefits," he said.

Business leaders praised Taft for his stance on limiting insurance mandates and jury awards. Andrew Doehrel, president and CEO of the Ohio Chamber of Commerce, said the governor's focus on these issues is coming just in time.

"This state has been so preoccupied with the budget problems, education funding and things such as conceal and carry weapons, that quite frankly, employers have felt that business climate issues haven't gotten on the front burner," Doehrel said.

The No. 2 Republican in the House, Rep. Gary Cates of West Chester, agreed that job creation is the key issue this year. "Most people I'm hearing from are concerned that we're having an economic recovery but we're not creating jobs," Cates said.

Secretary of State Ken Blackwell, who has won considerable attention in recent months for his effort to repeal the one-penny sales tax, said Taft failed to recognize that the state shouldn't enact tax reform without spending reform.

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