Hagan Says Slots, Ending Tax Loopholes Will Help Close Deficit

By JOHN McCARTHY, Associated Press Writer

COLUMBUS, Ohio (AP) - Democrat Tim Hagan (pictured, right) said Wednesday that if elected governor he would propose putting video gambling in racetracks and ending some tax breaks for businesses to raise $1 billion to help balance the next state budget.

Hagan, at a news conference at Ohio Democratic Party headquarters, also said most state agencies would face 15 percent cuts from the current fiscal year, with exceptions for Medicaid payments, primary-secondary education, debt service and local property tax relief.

Those cuts also have been suggested by the budget office of Republican Gov. Bob Taft, who is running against Hagan in the Nov. 5 election.

"I regret, candidly, that we have to offer this plan. But we will have to clean up the mess that Taft left," Hagan said, flanked by running mate Charleta Tavares and his brother, state Sen. Robert Hagan, a Youngstown Democrat.

Taft, who opposes video slots at racetracks, said his campaign was still studying Hagan's plan. However, Taft added that the state cannot count on an expansion of gambling being upheld by the voters.

"I'm very concerned about it in terms of the social costs versus the potential economic benefits. It's also a very risky way to try to balance your budget because there will be a referendum on that issue and twice Ohio voters have defeated casino gambling," Taft said in suburban Cleveland.

Hagan said allowing video gambling at Ohio's seven racetracks would give the state revenue that now is going to surrounding states and Canada. He said he's not opposed to gambling.

"We have bingo. We have the lottery. We have racetracks. And for those who bet on Enron and Tyco, we have Wall Street," Hagan said.

Hagan said his budget plan would raise $500 million annually from the slot machines and another $500 million over two years by closing loopholes in Ohio's tax laws. He didn't rule out a broad-based tax increase but said he would take that to voters first, possibly in a special election in August.

Hagan said his estimates show he would inherit a state budget at least $2.68 billion in the red. A Hagan administration would spend its first 180 days finding ways to eliminate that, he said.

"First of all, we're going to have to ask for sacrifices -- across-the-board sacrifices -- for the first six months of my administration," Hagan said.

Taft said it's too early to predict whether revenues will catch up with spending in the next two-year budget.

"We are not even close to the point where you can responsibly predict state revenues. Just as one example, the difference between a strong economy and a weak economy is half a billion dollars in Ohio," Taft said.

Hagan said that after budget concerns are met, he would tackle problems including how to expand prescription drug coverage and responding to the school-funding case before the Ohio Supreme Court.

Hagan said he would propose the state follow the Supreme Court's most recent school-funding decision.

Last September, the court declared the funding system constitutional if lawmakers spent more money on schools.

After estimates of that additional spending hit $1.2 billion annually, Taft asked the court to reconsider its decision. The court has not yet ruled.

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