County's state legislators report from front lines of budget battle

As state and local agencies and organizations hold on to their belts while the Ohio General Assembly goes into another week of negotiations over the state's two-year budget, this area's legislators this week discussed the governor's proposal to help fill a budget gap by allowing slot machines, as well as various calls for a temporary tax increase.

Legally, a budget was due to the governor on July 1, so the Statehouse passed its first interim budget in 18 years, which runs through Tuesday and sets funding levels for a number of agencies at 30 percent less than they received last year. The House has also introduced another seven-day interim budget if an agreement can't be reached.

The stalemate at the Statehouse is due in part to a rift between Democratic Gov. Ted Strickland and Senate President Bill Harris, R-Ashland, over the placement of electronic slot machines at Ohio's seven horseracing tracks. Strickland wants the measure to be passed legislatively, while Harris wants Strickland to issue an executive order. Strickland has estimated the state would raise $933 million over two years if thousands of slot machines were placed at Ohio's seven racetracks.

Late Wednesday morning, the Columbus Dispatch reported that Senate Republicans had set hearings for today on Strickland's slot-machine plan.

If approved, the slot machines would help to fill a $3.2 billion state budget shortfall. Strickland has said that if Senate Republicans reject the slot-machine proposal, it's up to them to propose something to make up the $933 million. Strickland has also proposed substantial budget cutbacks to state agencies and programs, including heavy cuts to libraries, early childhood development, health-care for elderly in their homes, food banks, mental-health programs and more.

As a number of newspaper editorial boards as well as a variety of advocates across the state have called for a temporary tax increase to solve the budget woes while protecting services for the needy and elderly, Strickland, Harris and House Speaker Armond Budish, D-Beachwood, have refused to consider the option. The tax increase option was used to solve previous budget crunches in 1971, 1982, 1991 and 2003 under both Republican and Democratic leadership.

Locally, state Sen. Jimmy Stewart, R-Albany, said his position on the slot-machine issue is that if Strickland wants to do it, he can do it the same way he did Keno expansion in the state.

"I haven't heard any convincing argument to say why he couldn't do it [that same way]," Stewart said. "I'm just very hesitant to basically overturn what the voters did in the 2006 election."

In recent years, voters have rejected expanded gambling in the state four times. It should be noted that reasons for opposing these measures ranged from moral and social objections to disliking legislation that would favor a specific company putting forth the proposition.

Stewart said that he thinks a couple things are being missed in the slots debate. "They claim that it's going to generate $933 million, and a lot of that is one-time [money] because of the licensing fees," Stewart said. "And the other side of this is that it's going to make hundreds of millions of dollars for the racing industry, which has also, by the way, suddenly become a huge donor to the Ohio Democratic Party in recent months."

This could not be independently verified, as Ohio Election Commission filings for the quarter do not come out until later this month.

"Let's just call a spade a spade here," Stewart said. "In my opinion, the real reason behind this is that the handful of racetracks are going to make hundreds of millions of dollars on this, if this goes through, whether it's by a vote of the Legislature, a vote of the people, or the hand of the governor. When the information becomes public, I guess we'll see and people can decide for themselves whether that has a hand to play in all of this or not."

With regard to various calls for a temporary tax increase, Stewart said he sees the option as off the table considering Strickland, Budish and Harris's opposition.

"It doesn't seem at all likely," Stewart said, "when the leadership of the House, the Senate and the governor have all said from the get-go that it's not going to happen."

Asked how he feels about a tax increase personally, Stewart said he tends to think there are trade-offs either way. There is some truth to Strickland's argument that a tax increase during a tough economy may prolong the downturn, according to the senator. "At the same time, I understand what's also at stake here, particularly for some of the poorer areas here in Ohio that depend on these dollars."

When asked about political hesitation to raise taxes in an environment where anyone who supports a tax increase can expect to be attacked for it, Stewart said that every candidate who has run against him has tried to use the penny sales tax increase from 2003 against him. "Obviously, it gets used against you, whether you're a Democrat or a Republican," Stewart said. "Sometimes it works and sometimes it doesn't."

State Rep. Debbie Phillips, D-Athens, said that Strickland has worked hard to put forth a balanced-budget proposal and that while the slot machine proposal was a difficult decision, the alternative is worse.

"Whether it be closing parks, or closing prisons, or further cuts to services people depend on, I really don't see an alternative," Phillips said.

"The economic crisis is really forcing Ohio to tighten its belt and make some very difficult choices."

Phillips said that the budget impasse that the Statehouse is currently facing is unfortunate.

"The House and the governor put forth a framework for a balanced budget, which the Senate has rejected," Phillips said. "And they have failed to offer any alternative proposal to balance the budget."

As the process continues, Phillips said that she feels that given that the House and Strickland offered a balanced-budget framework, with very difficult choices in it, the Senate Republicans are obliged to offer an alternative if they reject what's on the table.

Phillips said that the distinction Harris has drawn with regard to whether the slot-machine proposal needs legislative passage or can be issued by executive order of the governor, contradicts his vote in favor of similar legislation two years ago.

"He seemed to think two years ago that this required legislative authorization, and he did support it," Phillips said. "If something has changed, and it's not something that he can support at this time, then I would like to see them come back with some proposal of how we move forward."

As far as the framework itself, Phillips said she had been working with House leadership to reduce some of the impact on critical areas.

"I've been particularly concerned about the libraries, about early childhood, about the food banks," Phillips said. "There are just several areas where I want us to find alternatives." She said that with most of the budget negotiations, she believes strong progress has been made in addressing concerns. "The process has been derailed over a fairly minor distinction," she said.

Seven of the 53 Democratic members of the Ohio House have called for a temporary tax increase instead of draconian budget cuts. With regard to this option, Phillips supported Strickland's position that a tax increase may hurt the state in its efforts to recover economically.

"In these very difficult times, many of us have a concern that any kind of tax increase could deepen or extend the recession," Phillips said. "It is a very difficult process that we are engaged in right now. We are working to protect those essential safety-net services and invest in the things that are going to help the economy improve "“ working for job creation, strengthening our education system. I think there are some significant policy improvements in this budget. But I am hesitant, and I understand the governor's hesitance, in doing anything that could slow down our recovery."

With regard to political considerations over a tax increase, Phillips said that with such a difficult economy, there could be political repercussions either way.

"I think that people are frustrated," Phillips said. "I don't think it's a clean-cut analysis in terms of what the political gamesmanship going on is with the Senate leadership that is making a hair-splitting distinction between two different forms of expanded gambling at racetracks, and failing to offer any alternative."

In signing the interim budget, Strickland said he expects members of the legislature to join him "in working around the clock and, if needed, through the weekend, to get this budget done."