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Home > Blogs > Ohio politics > Archives > 2009 > September > 17
Thursday, September 17, 2009
1,097 state jobs gone
The ranks of state employees thinned by nearly 1,100 workers in the wake of budget cuts that began in the last two months, a new report shows.
The state of Ohio now employs 58,889 workers, down from 59,986 in mid-July. The Department of Rehabilitation and Corrections — the largest employer within state government with 15,461 workers — lost 138 people in the last two months.
House Finance Chairman Vernon Sykes, D-Akron, predicted in July that 2,000 to 3,000 state employees would lose their jobs due to state budget cuts.
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Grocers must pay commercial activity tax
The Ohio Supreme Court on Thursday, Sept. 17, ruled that it’s constitutional for the state to collect the commercial activity tax from grocers.
The ruling said that collecting the tax on the grocers’ gross receipts is not an unconstitutional “excise tax upon the sale or purchase of food.” Rather the tax is a tax on the privilege of doing business and the fact that this privilege is measured by gross receipts that include proceeds from the sale of food doesn’t affect its constitutionality, the decision said.
The 6-1 decision was a big win for Gov. Ted Strickland and the legislature. They need the money from the tax to keep the state budget balanced. A win for the grocers would have meant an annual loss of $188 million in taxes and could have led to $355 million in refunds.
In a prepared statement, Strickland praised the decision:
“I am thankful for the Supreme Court’s decision, which protects the integrity of Ohio’s reformed tax code and upholds the broad-based, low-rate structure that gives Ohio the lowest business taxes in the Midwest.”
Tom Jackson, president of the Ohio Grocers Association, which filed the lawsuit, had a different reaction.
“This is a sad day for consumers in the state of Ohio. Obviously the Supreme Court of Ohio did not recognize the constitutional argument that the grocers were making on behalf of Ohioans purchasing food for off premise consumption,” Jackson said in a prepared statement.
“We are extremely disappointed with the Court’s decision.
“In our opinion, the Ohio Constitution and the intention of the legislature were not upheld by this court today—it is very disappointing.
“Our goal was to make sure that any tax dollars would not affect the price of food. It is a sad to think that the consuming public will continue to be taxed one way or another on food for off premise consumption. Today, the Ohio consumer lost.”
Jackson said it appeared there would be no further appeal.
It is one of two cases the court heard oral arguments on this month that could affect the budget. In the second, LetOhioVote.org wants permission to hold a referendum in 2011 on the slots-at-the-tracks gambling plan. This could delay start of the slots program which is supposed to generate $933 million for the state over two years. The court hasn’t rule on that case.
The court’s majority opinion in the CAT case was authored by Justice Maureen O’Connor. Justice Paul Pfeifer dissented.
To read the opinion, click here.
“We’re very pleased,” said John Kohlstrand, spokesman for Tax Commissioner Richard Levin.
The legislature enacted the commercial activity tax in 2005 as part of the state’s tax overhaul. It is a tax on businesses’ gross receipts, levied for the privilege of doing business.
The tax doesn’t apply to businesses grossing less than $150,000 a year. Businesses grossing between $150,000 and $1 million must pay a flat tax of $150.
For businesses grossing more than $1 million, the tax is measured by .26 percent of their gross annual receipts.
The Ohio Grocers Association and others filed suit, claiming that levying the tax on grocers violated provisions in the Ohio Constitution that prohibit the state from levying or collecting any “excise tax upon the sale or purchase of food.”
A trial court ruled in favor of the state but a state appeals court reversed the ruling.
In her opinion, O’Connor wrote that the constitution “does not prohibit the state from using gross receipts to compute the amount of a privilege-of-doing-business tax, even if those gross receipts include proceeds from the sale of food.”
She also wrote that the CAT is a “permissible tax on the privilege of doing business, not a proscribed tax upon the sale or purchase of food.”
In his dissent, Pfeifer wrote:
“It is an incontrovertible fact that if a retailer has sales over $1 million and he sells an additional 40 gallons of milk at $2.50 per gallon, for a total of $100, a tax of 26 cents is levied upon him and the state collects 26 cents.
“Is this not a tax ‘levied or collected upon the sale or purchase of food?’”
Joining O’Connor in the majority were: Chief Justice Thomas J. Moyer and Justices Evelyn Lundberg Stratton, Terrence O’Donnell, Judith Ann Lanzinger and Robert R. Cupp.
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9th grade test questions are top secret, court says
Some students and teachers might love to get their hands on standardized test questions in advance but the Ohio Supreme Court ruled that such exams are trade secrets and not subject to disclosure under Ohio’s public records law.
The court said in a 5-2 ruling released Thursday, Sept. 17, that exam questions administered to all Cincinnati Public Schools ninth graders are to remain top secret.
In 2007, Cincinnati Hughes High School teacher Paul Perrea began asking the district for copies of the tests, saying he wanted to have them evaluated for fairness, accuracy and validity. Cincinnati Public Schools denied the requests, saying they were exempt under the trade secrets and copyright material. Perrea took the matter to court in April 2008.
Justice Judith Lanzinger, who wrote the majority opinion, said the material falls under the trade secret exemption because the district spent more than $750,000 developing semester exams for ninth-, tenth- and eleventh-graders, re-doing the ninth-grade questions would cost more than $270,000 and the district has gone to great lengths to keep the questions secret.
If the questions become public, the test would become less effective at measuring student progress and would have to be canceled, the school district argued. The court agreed.
