Senate Republicans Introduce Plan To Balance Budget

By ANDREW WELSH-HUGGINS, AP Statehouse Correspondent

COLUMBUS, Ohio (AP) - Ohio's cigarette tax would nearly triple, to 74 cents a pack, to help balance the state budget under a proposal introduced in the Senate on Thursday.

A majority of Senate Republicans reached a tentative agreement Wednesday. However, at least five Senate Republicans oppose the plan and say they won't vote for a 50-cent cigarette tax increase.

The GOP controls the Senate 21-12.

"The budget plan is to raise taxes as opposed to reducing the amount of growth of government," said Sen. Lynn Wachtmann, a Napoleon Republican. "I went through all my old campaign fliers -- I couldn't find anywhere I promised to raise taxes."

Gov. Bob Taft supports the plan, including the cigarette tax proposal, his spokesman Joe Andrews said Thursday.

"It's a good start," he said. "We'll have to see how it comes out of the House."

GOP senators Kevin Coughlin of Cuyahoga Falls, Jim Jordan of Urbana and Scott Nein of Middletown also oppose the plan. All support further reductions in state spending and all oppose raising taxes. Sen. Jeffry Armbruster of North Ridgeville said Thursday he couldn't support the plan.

Senate Finance Committee Chairman James Carnes, a St. Clairsville Republican, introduced the bill on Thursday. Senate President Richard Finan, a suburban Cincinnati Republican, said two weeks of hearings would begin next week. The bill must become law sometime before June 30, the end of the current fiscal year, to balance the budget, Finan said.

Asked if members of his Republican caucus were having second thoughts about supporting the plan, Finan said, "None of these situations are ever easy."

Minority Democrats are happy that Finan plans hearings but are withholding judgment until more details emerge, said Sen. Greg DiDonato of New Philadelphia, the Senate's top-ranking Democrat.

The plan would help patch the state's $1.2 billion budget deficit by raising $26 million from the cigarette tax this year and $373 million next year, said Sen. Jay Hottinger of Newark.

The Senate also is proposing using about $260 million of the state's rainy day fund this year and $170 million next year, he said.

The Senate also will propose changing the state's tax code to minimize the effect of President Bush's economic stimulus package on Ohio.

Without the changes to the tax code, Senate Republicans estimate the state will lose $150 million next year under the stimulus package. The Ohio Department of Taxation said the amount is closer to $175 million.

The plan would ask Taft to cut $57 million more from state spending next fiscal year, beginning July 1.

Hottinger said the cigarette tax increase was needed because there are no other options for covering the entire deficit. Just tapping the nearly $1 billion rainy day fund is not enough, he said.

"We think that is going to be sufficient to plug any holes," Hottinger said. "Whether or not this is the final stopgap measure, we don't know, but it's a fiscally sound plan that covers us for the immediate foreseeable future."

Ohio's current 24-cent cigarette tax is higher than Indiana (15.5 cents), Kentucky (3 cents) and West Virginia (17 cents) but lower than Michigan (75 cents) and Pennsylvania (31 cents).

Sen. Doug White of Manchester, the Senate's No. 2 Republican and a southern Ohio tobacco farmer, wants the plan to restore $32 million to Ohio tobacco farmers taken from the state's settlement with major tobacco companies.

If that money is restored, White said he would be neutral on the cigarette tax increase.

Taft was aware the plan would include more cuts, Andrews said.

"He's been talking to cabinet directors about how much more they can take," Andrews said.

Taft's budget deficit plan would eliminate about $500 million of the deficit this year by borrowing more of the state's rainy day fund and making adjustments to end-of-the-year spending and budget reserves.

That includes $350 million in rainy day funds this year and nothing next year.

Other details of the Senate Republican plan include taking about $25 million from the state's unclaimed funds account and recouping $5 million set aside as an emergency loan to LTV Steel.

(Copyright 2002 by The Associated Press. All Rights Reserved.)