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Prevent spending disaster

May 13, 2012
Tribune Chronicle | TribToday.com

It's the perfect recipe for a spending debacle. Ohio's $8 billion worth of austerity measures over the last nine months has contributed to a $350 million budget surplus. That is expected to grow to about $500 million by June 30, the end of the fiscal year.

June 30 is 129 days before the November General Election. That's just enough time for legislators in hotly contested races to purchase $500 million worth of votes.

And thus, the Republican-controlled state government is prepared to repeat the mistake that former Gov. Ted Strickland and his fellow Democrats made that required $8 billion worth of austerity measures in the first place.

While local legislators Capri Cafaro, Tom Letson, Sean O'Brien, Ron Gerberry and Bob Hagan are anxious to spend, spend, spend, one saving grace for the Mahoning Valley is that a lot of the spending could occur here. That's because Letson's race against Republican challenger Randy Law could go down to the wire.

Last year, Ohio passed a budget that projected a $152.7 million year-end balance. As of the end of March, collections were $265.4 million ahead of projections. Personal income taxes, robust sales taxes (especially automobile sales) and cigarette tax collections are the main reasons. Also, spending is below expectations.

Ohio Democrats proposed a $500 million spending spree to restore cuts to local governments and schools. Local representatives Letson, O'Brien, Gerberry and Hagan are behind the ''Kids and communities First Fund,'' that includes spending money from an oil and natural gas industry tax that isn't even on the books. Republicans rejected the spending proposal.

Instead of spending it, the legislature could send about $45 to every man, woman and child in Ohio. That's about $180 for a family of four. Couple that with an income tax cut that matches increased revenue for an oil and natural gas industry tax proposed by Gov. Kasich and Ohio families can suddenly receive a nice piece of change.

However, Republican legislators don't want to hear it. They balked at the tax on the oil and natural gas industry; they approved a $30 million spending package in the House for the Ohio nursing home industry; and also in the House they approved changing an Ohio law that requires the budget surplus to go into a rainy day fund. Under the House proposal, the governor would need legislative approval to bank the surplus in a rainy day fund.

Even State Rep. Ron Amstutz, R-Wooster, chairman of the House Finance and Appropriations Committee, said lawmakers should take a more balanced approach that could include helping struggling schools, cities and other local governments.

But here's a key question: If the legislature restores local government and school funding because of the budget surplus, will communities repeal taxes that were increased because of the local funding and school budget cuts? If not, taxpayers will be paying the additional local taxes while the state funding it replaced gets restored leaving townships, municipalities, counties and school districts with more to spend.

Legislators should heed the warning from Ohio Budget Director Tom Keen, who pointed out that payroll taxes are still weak. ''If there is more money at the end of the year, it would be one-time money,'' Keen said. ''There's no guarantee these resources will recur. If we begin to spend one-time money, we'll be in the same situation we faced in 2011 when we used significant one-time money for ongoing programs ... ''

Kasich should not hesitate to veto any spending increases, even those approved by his own party, and the governor should continue to push for tax relief.

editorial@tribtoday.com

 
 

 

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