State budget

Hearings start Monday on postponing tax cut, reducing lawmakers' pay

Budget plan includes 5 percent pay cut for Ohio lawmakers

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By William Hershey, Staff Writer Updated 11:55 PM Friday, October 16, 2009

COLUMBUS — Hearings are expected to start Monday, Oct. 19, on a plan to balance the state budget by postponing for two years a final 4.2 percent cut in a five-year plan to reduce state income taxes.

The plan, unveiled by House Speaker Armond Budish on Friday couples the delay, first proposed by Gov. Ted Strickland on Sept. 30, with a 5 percent pay cut for legislators.

The pay cut wouldn’t take effect until 2011 because the Ohio Constitution prohibits pay adjustments during legislators’ current terms. Savings in the House would amount to about $379,000 a year. Figures for the Senate weren’t immediately available.

One big question is expected to come up at hearings: Is postponing the income tax cut a tax hike? Democrats say “no” but House Republicans already are saying “yes.”

Democrats control the House 53-46 and Budish said the Democratic caucus concluded, as Strickland had earlier, that postponing the final year of the income tax cuts was the best way to fill an $850 million hole in the budget.

The Ohio Supreme Court last month blew that hole in the budget by ruling that a plan to put video slot machines at Ohio racetracks was subject to a vote of the people 2010, delaying efforts to collect revenue from the slots.

“It is not a tax increase,” Budish said of the plan. “No Ohioan will pay more in income taxes this year than they paid last year.”

Budish said the plan is the best way to avoid drastic cuts in state support for K-12 education.

Because most of the five-year, 21 percent tax cut already is in place, a family of four earning $60,000 annually now pays about $357 less in state income taxes than it paid in 2004. The additional 4.2 percent would have reduced it further.

State Rep. Seth Morgan, R-Huber Heights, proposed the 5 percent legislative pay cut in June but Democrats have called no hearings on the plan.

Minority Whip John Adams, R-Sidney, third-ranking House Republican, said rescinding a tax cut, particularly retroactively more than nine months into the year in which it takes effect, is a tax hike. Adams called the plan “too little, too late.”

Budish said the change must be made before the end of the year.

“That’s not even the outside date because the “tax department will need time to change its software and change its forms, so it’s my understanding that we have to move very quickly here,” he said.

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