State Officials: Ohio Budget Deficit Could Top $1.2 Billion

By ANDREW WELSH-HUGGINS, AP Statehouse Correspondent

COLUMBUS, Ohio (AP) - Ohio's new budget deficit could top $1.2 billion this year and next as state revenues continue to come up short, state officials said Thursday.

Ohio could face a $500 million deficit for the remainder of the current year and as much as $750 million next year, said state budget director Tom Johnson and Tom Zaino, commissioner of the Department of Taxation.

This year's shortfall is due primarily to lower-than-expected revenue from personal income and corporate franchise tax collections, Johnson said.

Less than four months ago, lawmakers labored to resolve the state's $1.5 billion deficit.

"It is now clear that Ohio's revenues continue to decline further due to the national economic recession's impact on employee wages, business profits and last year's dramatic decline in the stock market," he said in remarks prepared for a budget briefing on Thursday.

The projected deficit for the rest of this year was $100 million more than Taft had predicted. He said state revenues in March are still short. Final March figures won't be available until next week.

"It was indicated that March was not looking wonderful," Senate President Richard Finan, a Cincinnati Republican, said following a conference call with Taft, Johnson and Zaino.

"That means the first quarter is not good," Finan said. "We still have the second quarter, but the problem is we still have to balance by the end of the year."

Taft's top budget officials on Thursday outlined the extent of the state's problem. No solutions will be offered until Taft officials talk with legislators next week, said Taft spokesman Joe Andrews.

From mid-December, when Taft signed the bill closing a $1.5 billion deficit, through February, the state took in $233 million less in taxes than predicted.

Overall tax revenues for December were up by $13 million but fell $161 million below estimates in January and $85 million below estimates in February.

Taft has said he plans to tap more of the state's $1 billion rainy day fund but has ruled out a general tax increase.

On Monday, he said he hadn't ruled out small targeted tax cuts on businesses.

During last year's budget debates, the governor unsuccessfully proposed raising $165 million by taxing the undistributed income of Ohio-based trusts.

He also proposed raising $49 million by suspending the tax deduction that companies can take on net operating losses. He also wanted to raise $80 million by eliminating the exemption on sales and use taxes on toll-free numbers -- such as 1-800 or 1-888 numbers -- and bulk long-distance service.

Although the rainy day fund has more than $1 billion, only about $600 million of the fund is actually available because of earlier agreements to use portions of the fund.

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