Tuesday, February 10, 2004

The story of your 8.5 cents, and how they're all after it


Inside Ohio's Capital

Click here to e-mail Debra
 
Click here to e-mail Spencer
Ohio lawmakers were not alone last year when they decided to raise the sales tax to balance the state's budget.

Government officials in states, cities and counties across the country raised 412 different sales tax rates last year. They also created 206 new sales taxes.

The statistics, compiled by Pennsylvania-based Vertex Inc., show sales taxes at an all-time high nationally. Government took an average 8.5 cents on the dollar for most U.S. purchases in 2003 compared to an average 6.5 cents in 1981.

Lawmakers and Gov. Bob Taft temporarily raised the state's sales tax rate by a penny, from 5 cents to 6 cents, in May to help erase a $4 billion hole in Ohio's $49 billion, two-year budget. (Many counties charge an extra half-cent or penny.) The state increase is set to expire on June 30, 2005.

Only three other state governments, Idaho, New York and Vermont, raised their sales tax rates. Most of the other increases were passed at city and county levels as local government officials tried to balance their budgets.

Ohio stands out nationally on the sales tax issue because of Secretary of State Ken Blackwell's effort to repeal the increase early. Blackwell, a former Cincinnati mayor, has argued that lawmakers could well make the temporary tax increase permanent to balance the next state budget.

Vertex's report adds some weight to that argument. Of the 945 changes made to sales taxes nationally, only 66 were reductions. The only decrease in the nation's average sales tax came in 1999, when the rate fell from 8.25 cents to 8.23 cents on the dollar.

MANY GOOD RETURNS: Ohio doesn't exactly have a reputation as a great investor.

The State Teachers Retirement System made headlines for losing 21 percent of its assets, about $12.3 billion, over the last three years while awarding $14 million in bonuses to its employees.

Recent financial reports show a 2.3 percent gain on investments over the past 12 months. While that's an improvement, teachers may want their retirement board to hire away the Bureau of Workers' Compensation's investment strategists.

Last week, the bureau reported a 15.7 percent return on investments for 2003 and a 4.8 percent average return over the last five years. Investors may remember several of the past five years as being particularly brutal.

The agency also claims its investment strategy has outperformed 86 percent of public funds over the past eight years.

What does the bureau do with its wealth? Gives it back. The Bureau of Workers' Compensation has given back more then $10 billion since 1995 and cut rates 34 percent.

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Email djasper@enquirer.com and shunt@enquirer.com




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