Cable TV service could be taxed under Taft plan

By ANDREW WELSH-HUGGINS, AP Statehouse Correspondent

COLUMBUS, Ohio (AP) - People would begin paying state sale tax for cable TV service under a proposal Gov. Bob Taft was expected to announce Thursday.

The Ohio Cable Telecommunications Association expects its customers to be included in Taft's plan to generate more revenue to shore up the state budget that begins July 1, Edward Kozelek, the
association's executive vice president, said Tuesday.

The association opposes the move, arguing that cable TV already pays a tax in the form of a franchise fee to local governments, Kozelek said. He didn't know how much money taxing cable TV would raise for the state.

Taft's office would not comment.

On Thursday, Taft (pictured, above) will recommend an overhaul of the state's tax system at a news conference expected to last several hours.

Taft called for the tax reform plan in last week's State of the State speech. One of his proposals includes expanding the sales tax to professional services. He's expected to identify several services to be taxed Thursday.

Ohio real estate agents have previously said they're concerned they will be included on the list of services. Taft invited representatives of several industries, including cable TV and real estate, to attend a Wednesday briefing about the plan.

Estimates of the budget deficit facing Ohio next year have run as high as $4 billion. However, Taft has not said how big the gap will be.

Taft's proposal also includes lowering business taxes while eliminating some exemptions.

Taft first looked at taxing professional services such as accounting and legal services in the spring of 2001 when putting together the current two-year budget.

Potential revenue from the taxes was estimated in 1997 at $2.6 billion. The Ohio Department of Taxation left such estimates out of its most recent budget documents but estimated the taxes could
bring in hundreds of millions of dollars.

Lawmakers of both parties said Tuesday that Gov. Bob Taft's plan to cover a $720 million deficit for the budget that ends July 1 could be in for a rough ride if he doesn't consider more cuts before asking the Legislature to raise taxes.

Taft warned that the next round of cuts, should lawmakers balk at raising taxes, will hit higher education subsidies -- and for the first time -- per-pupil spending in primary and secondary schools.

"That is the severity and the reality of the budget situation," Taft said.

House Speaker Larry Householder and Senate President Doug White, both Republicans, said their majorities would consider tax increases only as a last resort.

"We owe it to the citizens of Ohio to first look at re-prioritizing the budget, making sure that the decisions that we made are in the best interests of the people of this state and try to move forward," Householder said.

Senate Minority Leader Greg DiDonato and his House counterpart, Chris Redfern, said Taft should prove that agency budgets cannot be cut any further.

"We need to have more details and information," DiDonato said. "Are we simply cutting programs on the user's end but still got the bureaucracy and large agencies?"

(Copyright 2003 by The Associated Press. All Rights Reserved.)