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Two House Republicans side with Dems to raise state income tax

By Dennis J. Willard
Beacon Journal staff writer

COLUMBUS: State representatives Ross McGregor and Matt Dolan were the odd men out.

The two Republicans broke party ranks Wednesday and joined Ohio House Democrats in raising the state income tax rate by 4.2 percent to fill a projected $850 million hole in the two-year state budget.

But at the same time they were upsetting their caucus leader — ''I like both those guys, but they're wrong on the issue,'' House Minority Leader Bill Batchelder of Medina said — Dolan and McGregor also were sounding a warning bell to Democrats.

Dolan told Democrats to stop arguing over whether the tax was an increase or a freeze, while advising Republicans to refrain from trying to use the vote as a means to win elections in 2010.

''Let's not turn this into a 'gotcha moment,' '' he said.

Instead, Dolan said, a vote to raise the revenue was needed to ensure that further cuts were not passed down to the county level, where local officials would be forced to return to taxpayers with levies for schools, mental health issues and other services.

''We have major structural problems we have to work on,'' said Dolan, of Novelty in Geauga County.

McGregor, from Springfield, also pointed out the obvious to the sometimes oblivious.

''We are doing nothing but buying time,'' McGregor said.

Ohio's budget is out of whack in the short term because Gov. Ted Strickland's plan to raise $844 million by placing slot machines at seven horse-racing tracks was derailed in the courts.

Rep. Vernon Sykes, D-Akron, the sponsor of Wednesday's bill, said that either school districts' funding would have been cut or about $850 million in other state spending would have been reduced to preserve education dollars. That's because revenue from slots were considered lottery profits earmarked for schools.

In the long term, the state is facing a ''structural deficit,'' or what Dolan called a ''tidal wave,'' of up to $4 billion a year beginning in 2011 because of the use of one-time, nonrecurring revenue, primarily federal stimulus dollars.

McGregor said streamlining state government is one approach, but he knows this is not as simple as his Republican colleagues in the House maintain.

House Republicans continue to push a plan to combine Ohio's 24 Cabinet departments and cut 11,000 jobs from the state payroll. This might sound good and even look better on paper, but their Republican brethren in the Ohio Senate would never go along with the idea.

Dolan said everything must be on the table for discussion when lawmakers return in 2011.

''There are no more sacred cows in state government. No more can we hide behind partisan walls so we are protected in future elections,'' Dolan said.

House Speaker Armond Budish, D-Beachwood, with an eye on trying to maintain his slim 53-46 majority next year, painstakingly reiterated the 4.2 percent income tax increase was a temporary freeze on a five-year, phased-in reduction.

He agreed that lawmakers need to address the structural deficit, but argues that House Democrats and Strickland have already reduced the number of state employees and spending.

Budish also said Republican House members are not providing specific information about the cuts in state employees, but the numbers would have to include prison guards, park rangers, mental-health counselors and youth-service employees.

''I was disappointed that the House Republicans offered no credible suggestions,'' Budish said.

House Democrats were not above posturing for political expediency Wednesday.

In an effort to share the sacrifice, they also reduced legislative salaries by 5 percent, but not immediately, because they are prohibited by the Ohio Constitution from adjusting their pay rates up or down midterm. The pay cut would occur in January 2011.

Democrats also wrote into law that anyone filing a tax return in April 2010 and 2011 would not face penalties or interest for paying less income taxes up front.

An Ohio Department of Taxation analyst, Fred Church, assured reporters after Strickland's announced plans to raise the income tax that penalties and interest would not apply to Ohioans who owed the state money each April because of the change in rates, but House Democrats put the amnesty idea in writing anyway.

This was a good move for taxpayers.

Strickland announced his plans to delay the reduction in September — nine months after employers began deducting less in income taxes from employee paychecks.

Most taxpayers (about 75 percent) receive a refund check from the state each April, but that percentage will drop beginning next year, and more people will owe the state money.

The bill now moves to the Ohio Senate for hearings and considerable debate.

 


Dennis J. Willard can be reached at 614-224-1613 or dwillard@thebeaconjournal.com.

COLUMBUS: State representatives Ross McGregor and Matt Dolan were the odd men out.

The two Republicans broke party ranks Wednesday and joined Ohio House Democrats in raising the state income tax rate by 4.2 percent to fill a projected $850 million hole in the two-year state budget.

But at the same time they were upsetting their caucus leader — ''I like both those guys, but they're wrong on the issue,'' House Minority Leader Bill Batchelder of Medina said — Dolan and McGregor also were sounding a warning bell to Democrats.

Dolan told Democrats to stop arguing over whether the tax was an increase or a freeze, while advising Republicans to refrain from trying to use the vote as a means to win elections in 2010.

''Let's not turn this into a 'gotcha moment,' '' he said.

Instead, Dolan said, a vote to raise the revenue was needed to ensure that further cuts were not passed down to the county level, where local officials would be forced to return to taxpayers with levies for schools, mental health issues and other services.

''We have major structural problems we have to work on,'' said Dolan, of Novelty in Geauga County.

McGregor, from Springfield, also pointed out the obvious to the sometimes oblivious.

''We are doing nothing but buying time,'' McGregor said.

Ohio's budget is out of whack in the short term because Gov. Ted Strickland's plan to raise $844 million by placing slot machines at seven horse-racing tracks was derailed in the courts.

Rep. Vernon Sykes, D-Akron, the sponsor of Wednesday's bill, said that either school districts' funding would have been cut or about $850 million in other state spending would have been reduced to preserve education dollars. That's because revenue from slots were considered lottery profits earmarked for schools.

In the long term, the state is facing a ''structural deficit,'' or what Dolan called a ''tidal wave,'' of up to $4 billion a year beginning in 2011 because of the use of one-time, nonrecurring revenue, primarily federal stimulus dollars.

McGregor said streamlining state government is one approach, but he knows this is not as simple as his Republican colleagues in the House maintain.

House Republicans continue to push a plan to combine Ohio's 24 Cabinet departments and cut 11,000 jobs from the state payroll. This might sound good and even look better on paper, but their Republican brethren in the Ohio Senate would never go along with the idea.

Dolan said everything must be on the table for discussion when lawmakers return in 2011.

''There are no more sacred cows in state government. No more can we hide behind partisan walls so we are protected in future elections,'' Dolan said.

House Speaker Armond Budish, D-Beachwood, with an eye on trying to maintain his slim 53-46 majority next year, painstakingly reiterated the 4.2 percent income tax increase was a temporary freeze on a five-year, phased-in reduction.

He agreed that lawmakers need to address the structural deficit, but argues that House Democrats and Strickland have already reduced the number of state employees and spending.

Budish also said Republican House members are not providing specific information about the cuts in state employees, but the numbers would have to include prison guards, park rangers, mental-health counselors and youth-service employees.

''I was disappointed that the House Republicans offered no credible suggestions,'' Budish said.

House Democrats were not above posturing for political expediency Wednesday.

In an effort to share the sacrifice, they also reduced legislative salaries by 5 percent, but not immediately, because they are prohibited by the Ohio Constitution from adjusting their pay rates up or down midterm. The pay cut would occur in January 2011.

Democrats also wrote into law that anyone filing a tax return in April 2010 and 2011 would not face penalties or interest for paying less income taxes up front.

An Ohio Department of Taxation analyst, Fred Church, assured reporters after Strickland's announced plans to raise the income tax that penalties and interest would not apply to Ohioans who owed the state money each April because of the change in rates, but House Democrats put the amnesty idea in writing anyway.

This was a good move for taxpayers.

Strickland announced his plans to delay the reduction in September — nine months after employers began deducting less in income taxes from employee paychecks.

Most taxpayers (about 75 percent) receive a refund check from the state each April, but that percentage will drop beginning next year, and more people will owe the state money.

The bill now moves to the Ohio Senate for hearings and considerable debate.

 


Dennis J. Willard can be reached at 614-224-1613 or dwillard@thebeaconjournal.com.

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