Legislature fixes budget shortfall with tax freeze
Monday, Dec. 21, 2009
Governor Ted Strickland and lawmakers were able to find a compromise solution to close the $851 million budget deficit, and on Thursday approved HB 318 (Sykes), Tax Freeze.
HB 318 delays the final 4.2 percent reduction in personal income taxes approved in HB 66 in 2005, and makes other adjustments to close the state's projected budget deficit. The League of Women Voters has been urging such a resolution to the budget dilemma since May.
A provision that was included in the House version of HB 318 to reduce the salaries of lawmakers by 5 percent was removed in the Senate version of the bill, but is included in separate bills before the Ohio House and Senate, SB 209 (Schaffer) and HB 210 (Morgan).
Once HB 318 is signed into law, the Ohio Department of Taxation can begin distribution of tax booklets, charts, and forms with the tax law changes. Governor Strickland is expected to sign the bill into law early this week.
The Senate Finance and Financial Institutions Committee, chaired by Senator John Carey, approved several amendments to HB 318, and reported out the bill favorably on Thursday.
The bill was then immediately sent to the Ohio Senate, which had delayed its session in order to take action on HB 318. Senators approved HB 318 by a 17 to 15 vote. All Democrats and five Republicans, including Senators Harris, Niehaus, Carey, Goodman, and Wagoner, voted for the bill.
The House, which also had delayed its session to consider HB 318, then concurred with the Senate's version by a vote of 54 to 42. All Democrats and two Republicans, Representatives Dolan and McGregor, voted for the bill.
In addition to postponement of the income tax reduction, the final bill includes the following amendments:
- Construction Reform Demonstration Projects: The Chancellor of the Board of Regents will establish criteria to determine three capital projects at University System of Ohio institutions to utilize alternative construction management methods, to serve as a demonstration of construction reform.
- All-Day Kindergarten: Permits districts to request and receive a waiver regarding All-Day Kindergarten from the Superintendent of Public Instruction until 2012, if the local board of education approves a resolution with a justification for a delay. (According to a survey by the Ohio Department of Education, 150 out of 607 school districts indicated that they would request a waiver to delay implementing all-day kindergarten.)
- Funds for Non-public, Chartered Schools: Allows funds from lapsed line items in the state budget to be transferred to two line items, Auxiliary Services and Non-Public Administrative Costs, to support non-public chartered schools. The transfers to non-public schools cannot total more than the amounts lapsed in the GRF line items of the Ohio Department of Education's budget.
- Mental Health Services: Corrects an error in HB 1, and directs $14.7 million in mental health funds to the correct fund for community mental health services.
- The Ohio State Employment Relations Board: Corrects an error in HB 1 and provides $2 million to SERB to support the merger of the Ohio State Employment Relations Board (SERB) and the Personnel Board of Review (PBR) backroom offices.
Although HB 318 closes the current budget deficit, a future state budget deficit of $6-$8 billion was the focus of lawmakers as they debated HB 318 on the Senate and House floors. The following are some excerpts from the debate regarding HB 318 on the floor of the Senate:
- Senator Carey in support of the bill: "This has been a very difficult bill to work through. I respect the differences that people have. We all have very passionate views. The reason that there are 132 legislators and the governor is that we are here to represent our constituents, and that causes a wide range of debate, and that has been the case with this bill."
- Senator Gillmor opposing the bill: "Look at all the information we have about the looming deficit. Look at Auditor Mary Taylor's announcement that when the one-time stimulus money goes away, we will have an effective shortfall of $8 billion dollars."
- Senator Strahorn in support of the bill: "We as leaders in the state have been confronted with the tough task of staying the course for the benefit of Ohio's future in the face of difficult choices. Continuing to improve Ohio's education system is an enormous part of that future."
- Senator Seitz opposing the bill: "This bill not only does not relieve our reliance on one-time money, it extends our reliance on one-time money, because it's only a two-year deferral and delay of receipt of your the income tax cut."
- Senator Wagoner in support of the bill: "In order for this place to work, for this state to work, we have to stand for something. We have to solve problems. We need to put the interests of the state first. Every once and awhile we need to put our political interests on the back burner."
The above summary was taken from today's edition of League education specialist Joan Platz's weekly Education Update.