Ohio House Speaker Pro Tempore Matt Szollosi urged Oregon Council last Monday to pressure the state Senate to support House Bill 318, which would delay state income tax cuts for two years to offset an $852 million funding gap in the state budget.
Gov. Ted Strickland had planned to use a portion of revenue from slot machines at race tracks for education, but the Ohio Supreme Court ruled that the measure cannot go before voters sooner than Nov., 2010.
The Senate has until the end of this month to pass Bill 318, which would postpone for two years the last of five previously scheduled reductions in state income taxes, the amount of which would cover the $852 million shortfall in revenue.
In addition, the state stands to lose more in federal stimulus funds if the bill isn’t passed.
“I’m trying to raise awareness about a situation we’re faced with in Columbus right now,” Szollosi said to council. “This one’s a whopper. It’s very, very important. And it deals with budget cuts that school districts across the state are facing, and time is of the essence to pass a cure. Obviously, the end of the year is rapidly approaching.”
Earlier in the fall, the supreme court blew an $852 million hole in the state operating budget that was passed in July, he explained. “That $852 million was appropriated specifically for primary and public education in the state of Ohio. With that $852 million removed, obviously we have a budget deficit. Everyone here knows that the state is required to pass and operate under a balanced budget. We do not have the authority that the federal government has to either print money or operate in a fiscally irresponsible manner with a budget deficit. The reason the $852 million is so meaningful is not because of the number in and of itself, but because the $852 million also leverages, or draws down, an additional $1.4 to $1.7 billion in federal stimulus money. So by doing nothing, by leaving the $852 million hole in the budget, school districts in this state will be hit with a $2.4 billion cut to their two year operating budgets starting Jan. 1, 2010.”
Following the Supreme Court ruling, the House froze the fifth and final year of House Bill 66, passed in 2005, which provided for income tax reductions.
“For each successive year - 2006, 2007, 2008, 2009 - taxpayers in Ohio had seen a progressive reduction each year of around 4.2 percent in their state income tax. Therefore, people in Oregon are paying 16 or 17 percent less income tax now than they were in 2005,” said Szollosi. “What the Ohio House passed on Oct. 21 was a freeze of those income tax rates and postponed the fifth and final phase of the tax reduction for a period of two years, and two years only. And that gets us $844 million of the $852 million we need to prevent the catastrophic cuts that school districts in Ohio would have to face if nothing occurs with respect to the budget deficit.”
The bill also included a five percent reduction in legislative salaries, he said.
The bill was then sent to the Senate on Oct. 21.
“And the Senate has proceeded to do absolutely nothing with respect to the budget deficit. So we’re not less than two weeks out from what’s really a crisis in the public school system in the state,” he said.
Szollosi, a Democrat, is blaming Republicans, the majority party in the Senate, with stalling the bill. The party has refused to come up with an alternative, he said.
Szollosi’s legislative district includes the school districts of Oregon City Schools, Washington Local, and Toledo Public Schools, which would lose more than $60 million combined in their operating budgets if the bill is not passed, he said.
“The impact on their budgets is hard to describe, hard to measure. I don’t know what the calculus is in terms of millage, but I do know that given the current economic situation, there’s no way the taxpayers in Oregon or Lucas County would support replacement of that type of revenue. So the result then is significant cuts. Obviously, the student-teacher ratios will shoot through the roof. In the case of Toledo Public Schools, they’re losing $53 million. They’re going to have to close schools, transportation will be significantly impacted or eliminated, extra-curriculars will be impacted or eliminated. This is a situation that, it’s not an overstatement to say, is a catastrophe. So I’m trying to increase awareness and hopefully try to build up some pressure on the majority caucus in the Senate to do what is right and to spare the public schools in our state the kind of cuts that we’re currently faced with,” he said.
One other point I want to make, I don’t want to turn it into a partisan issue. I’m trying very, very much not to. In fact, the Ohio Chamber of Commerce, the Manufacturers Association, the Ohio Business Roundtable, all have come forward and said, `Look, this is the best of a bad set of options.’ There are no good options here when you’re talking about the cuts we’re in the process of making. But to sacrifice the kind of money we’re able to draw down from the federal government by doing nothing is nonsensical. And I think the behavior right now in terms of political partisanship in Columbus is reprehensible. I don’t like being a part of that, but I will tell you I’m willing to swing for the fences on this issue,” he said.
“My request is to reach out to any or as many of the state senators you possibly can and let them know from an educational and economic standpoint, these kinds of cuts cannot occur,” he added.
“The schools really are in trouble,” said Council member Sandy Bihn. “They rely on real estate taxes instead of income taxes. We in the community has heavy industry, which gave us a very good school system at a very competitive tax rate. And that benefit has been yanked from us by the State of Ohio. It’s hit home here very hard. We need to rally around and do things in Columbus, because that’s where they took it away, and that’s where the solution lies.”