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$1.5 billion in state budget at risk in lawsuits

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By Laura A. Bischoff, Staff Writer Updated 3:19 PM Monday, August 31, 2009

COLUMBUS — Two key cases before the Ohio Supreme Court this week have the chance to blow a $1.5 billion hole in Gov. Ted Strickland’s tenuously balanced state budget.

On Tuesday, Sept. 1, the seven supreme court justices will hear arguments in a lawsuit filed by the Ohio Grocers Association that challenges the constitutionality of the state’s commercial activities tax, which is a tax on businesses’ gross receipts. If the grocers win, they’ll likely ask for $355 million in tax refunds dating back to 2005 when the CAT was introduced and be excused from paying $188 million a year in future commercial activities taxes.

Then, on Wednesday, justices will listen to arguments in the LetOhioVote.org versus Secretary of State Jennifer Brunner case. LetOhioVote wants permission to hold a referendum on the law change that would put 17,500 video lottery terminals at the state’s seven horse racetracks, which is expected to generate $933 million for the state over two years.

If LetOhioVote wins and there is a chance that voters could reject the VLT plan, track owners may be reluctant to cough up $455 million in licensing fees and start building slot parlors.

Strickland spokesman Keith Dailey said, “We think both cases will stand on their merits.”

It could be three to six months, though, before the supreme court announces its decisions in the cases.

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I just read a report by Policy Matters Ohio on this tax, entitled, "Not a fat CAT: Commercial Activity Tax adds to Ohio's budget problems." The report examines the CAT revenue and recommends that the General Assembly take action to bolster business taxes. A way to start is to reinstate a self-adjusting trigger – included in the original CAT but later eliminated – that would raise the CAT rate if it falls well below projections.

Kara
1:13 PM, 10/19/2009

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What there trying to do is put tax on food that you pay in the grocery store.

Travis Aker
2:26 PM, 9/1/2009

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"anything that adds money to the state coffers has a high chance of approval in the courts"???

I hope that is not how our Ohio Supreme Court makes their decisions....

The CAT tax is agregious mistake by the State. it is what moves business and jobs AWAY from the state!! But, I guess at this point nobody cares... the state has been driving away business since the eraly 70"s...

Small Business owner - Avon Lake Ohio

dazman
9:54 AM, 9/1/2009

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The suit is not to keep slots out of racetracks, but to let people vote on it. There are plenty of arguments for and against slots.

I would not count on the Supreme Court to help Strickland here. Last month, they shot down his attempt to raid the tobacco-free funds to balance the budget.

Edd
9:52 AM, 9/1/2009

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I think anything that adds money to the state coffers at this point in time has a high chance of approval by the courts. There is too much political muck-ruck going on for it not to go through.

William
9:34 AM, 9/1/2009

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