COLUMBUS - Those paid to crunch numbers for taxpayers yesterday urged Ohio not to lose sight of a massive crisis looming ahead as it searches for a quick fix to the state's immediate $851 million budget hole.
Representatives of the Ohio Society of Certified Public Accountants conceded that increased revenue will likely be part of the long-term answer. But the organization urged the state to look first to so-called "sin" taxes on cigarettes and alcohol if it goes that route.
"Every month that goes by that they delay acting on that next budget reduces the options they have available to solve that gap," said J. Matthew Yuskewich, chairman of the society's executive board. "If they wait as long for the next biennium as they have for this issue, the only solution available to them is going to be a tax increase, and it's going to be a big tax increase."
The advice came as the Senate Finance Committee prepares for a possible vote this week on Gov. Ted Strickland's proposal to delay for two years the final 4.2 percent installment of a total 21 percent cut in the personal income tax set in motion in 2005.
The move would raise an estimated $844 million over two years that would nearly fill the hole in Ohio's K-12 education budget. The hole was created by an Ohio Supreme Court ruling that has at least delayed the state's plan to install and tax slot machines at racetracks.
The society recently placed possible options before Mr. Strickland to help deal with an estimated future budget hole as stretch as wide as $8 billion when federal stimulus dollars dry up. It suggests the state to consider consolidation of the operations of state and local governments as well as school districts.It suggested greater reliance on direct user fees for government services and a rethinking of whether government employee pensions are too generous.
"The governor appreciated the opportunity to hear their thoughts," Strickland spokesman Amanda Wurst said. "The CPA's recommendations wouldn't address the immediate $851 million problem in the education budget, but he did ask them to further develop their recommendations. The governor is always interested in ways to make government more effective and cost-efficient."
The Senate committee has scrambled to come up with alternatives to the tax rollback. They've talked about diverting $200 million in one-time licensing fees from casinos just approved by voters from regional job training programs to education.
They've also discussed asking voters to raise the tax rate on those casinos and cutting state worker pay again.
The society does not oppose the income-tax rollback, but Mr. Yuskewich said individuals and small businesses will notice next spring when they're told they'll get smaller refunds or owe more than expected. "I think they're going to see it as a tax increase personally …,'' he said. "If their income is what they thought it was going to be, if their expenses are what they thought they were going to be, [and] the only difference is the tax, I don't know how else you could frame it.''
Contact Jim Provance at:
jprovance@theblade.com
or 614-221-0496.
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