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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2009 > September > 27 > Entry
Editorial: Strickland, Ohio are out of choices
Gov. Ted Strickland needs to give it up.
He can’t unilaterally bring video lottery terminals to Ohio. If he’s going to insist on trying to find a way around the Ohio Supreme Court’s 6-1 ruling this week preventing him from allowing slots at racetracks, he effectively is defying the state’s highest court.
That’s the wrong road to go down.
He must decide now how to respond to the coming $1 billion shortfall that is just the tip of Ohio’s financial problems.
Slots were supposed to bring in $851 million over the next two years. Given the court’s decision (and other pending challenges to expanding gambling), the chances of that money materializing are poorer than poor.
Meanwhile, the state has already cut $2.4 billion from the original two-year budget he proposed and there’s $6 billion in one-time money — mostly from the federal stimulus — being used to keep Ohio in the black.
Clearly, Ohio is either going to have to raise taxes or further reduce spending.
Keep in mind, too, that getting through this budget cycle will be simple compared to figuring out how, in the next budget, to make up for the feds’ money. That help represents more than 10 percent of this two-year spending plan.
The state’s financial mess is, of course, due in large part to the recession. But another reality is that Ohio has cut personal and business taxes, hoping those moves would attract jobs and, ultimately, bring in more tax revenue.
That hasn’t happened. That fact is not necessarily a fatal indictment. It takes time for tax policies to make a difference, to even be recognized.
That said, businesses don’t move to a state, or grow jobs where they are, solely because of tax policy. There are always more considerations. The thing to guard against is having a total tax burden that’s out of whack. In truth, that was the reputation Ohio had acquired.
A short four years ago, however, Ohio dramatically overhauled its tax code — establishing the broad, but small, Commercial Activities Tax. It also phased in cuts in individual tax rates by a dramatic 21 percent.
Now, here we are, reeling from the worst downturn since the Great Depression, and the state doesn’t have the money to adequately support its schools and colleges; keep up its infrastructure; protect its resources; and look after the most vulnerable.
The combination of cuts was too much — and that problem has been compounded by the economic crisis.
Slashing spending further is not the way out. The only places to cut that would result in significant savings are schools and colleges, Medicaid (though because of the federal match, cutting $10 only saves about $5), and prisons. Those are the big drivers.
Gov. Strickland has been adamantly opposed to raising taxes. That’s nice, but exactly what straw does he propose to spin into gold?
There are options:
— The last of five installments of the 21-percent tax cut for individuals started this year. If that 4.2 percent cut were rescinded, that would raise $900 million.
— The new CAT tax, a business tax on gross receipts, could be increased from 0.26 percent to 0.38 percent, to raise a similar amount.
— The cigarette tax could be increased. If it was hiked another $1.25 per pack, that could bring in $1.5 billion for the biennium (though that amount might be smaller if large numbers of people were enticed to quit). Other tobacco products also could be taxed.
Gov Strickland and lawmakers who’ve been around know that something has to be done. Choosing not to do the obvious will have powerfully negative and lasting effects on the state. The denial phase has to end.
Permalink | Comments (12) | Post your comment | Categories: Economy, Editorials, Education, Ellen Belcher, Ohio government, Ohio politics
Comments
By Mike
September 27, 2009 2:09 AM | Link to this
Raise taxes on an unsustainable commodity(cigarettes?) Yes maybe for a year you would see the additional revenues, but as more people give up smoking, the amount coming in would be reduced. Raising the tax on alcohol is a more sustaining measure.By Sam Hall
September 27, 2009 3:16 AM | Link to this
It baffles me as to why the state of Ohio continues to waste money on labor and gasoline and supplies and equipment to needlessly mow the highway medians. Other states let it to grow natural and it looks great. Why such control issues in Ohio? Why is Ohio such an enemy of nature? Seems like a real easy place to save some $.By Kurt
September 27, 2009 8:30 AM | Link to this
In my 35 years of reading the Dayton Daily Democrat, I have seen read, where they say, it is time for government to do with less, and let the taxpayers, who pay the freight, keep and spend their own money, as they see fit.By Kevin M.
September 27, 2009 9:05 AM | Link to this
Desperate for tax revenue because you’ve spent like Michael Jackson at the crazy store? No problem! Just tax businesses MORE! Impose a Commercial Activity Tax. After all,no one needs or works at businesses. And the best part is that BUSINESSES pay the tax, not actual PEOPLE! MAGIC!By Jim
September 27, 2009 10:54 AM | Link to this
The answer to every liberal’s problem, tax, tax, and tax some more. And surprise, the liberal DDN is backing that option once again. The VLT’s at the tracks will happen. Thankfully, the opinion of the “Dayton Daily Democrat” means absolutely nothing.By Big Ed
September 27, 2009 11:32 AM | Link to this
Let’s start by eliminating front license plates. Then we introduce the state workers to the new reality that they are overpaid and their benefits are too generous in comparison to the private sector. State and local governments have been spending our tax money like water for years and it’s got to stop.By Andre
September 27, 2009 12:19 PM | Link to this
It times too realize that the CAT taxes are not paid by business - they are paid based on the sales to the public. Which means, its paid by the people, only collected by the business owner, I agree with others, tax the tobacco, tax the alcohol and tax the gas. Most importantly, quit giving raises and crazy levels of benefits to the government workers! Time to compensate them like the rest of the people of this fine State. Finally, allow those who want to gamble, do so and pay those taxes to our state instead of Indiana, Michigan and PA!By Ice Bandit
September 27, 2009 1:53 PM | Link to this
The DDN has never seen a tax it didn’t like, even if it means promoting job-killing measures like the CAT tax. It never occurs to Marty nor Ellen perhaps the state should do what many of their readers are doing; that is less….By Lookingformoney?
September 27, 2009 3:16 PM | Link to this
One of the best places to obtain money for tax purposes is through the vending machines put out by Coke and Pepsi. These machines are placed in businesses and are NEVER TAXED! The business owner gets to rent the machine and buy pop from Pepsi and Coke, but never have to pay taxes on their sales! Why is it that everyone else has to pay taxes when they sell pop in vending machines? This has gone on for years and millions of taxes have been lost in the state of Ohio. Time to do something about it if we are looking for excess money.By Future
September 27, 2009 4:21 PM | Link to this
Ted was brought in on the “change” mantra just like Barry. Ted, just like Barry never really did anything in their life nor did either of them run a business, climb the corporate ladder or command a group of people or lead any organization of any size. Ohio and the United States are paying for their inexperience.By Calvin
September 28, 2009 9:59 AM | Link to this
I propose a tax on newspapers. That should fill the state deficit spending fetish. In fact, they don’t even pay sales tax on newspaper sales if I recall. What other purchase doesn’t get sales tax on it. But we have these out-of-state big money-making companies owning various newspapers around the country, like Cox of Atlanta, and they should pay their share to Ohio.By Calvin
September 28, 2009 10:00 AM | Link to this
I propose a tax on newspapers. That should fill the state deficit spending fetish. In fact, they don’t even pay sales tax on newspaper sales if I recall. What other purchase doesn’t get sales tax on it. But we have these out-of-state big money-making companies owning various newspapers around the country, like Cox of Atlanta, and they should pay their share to Ohio.