2009 Ohio Piglet Book
With a projected shortfall of $7.3 billion for Fiscal Year (FY) 2010,
the budget forecast for Ohio is bleak. This shortfall comes after a
tough budget period in FY 2009, in which Governor Ted Strickland
ordered most state agencies to cut 4.75 percent from their budget in
order to help make up a $540 million deficit. As legislators consider
the governor's budget recommendation, the main topic of discussion
will certainly be how to make revenues meet expenditures. It is
possible that there will be new rounds of spending cuts, new taxes, or
both.
For example, there is a proposal in the state legislature to increase the cigarette excise tax by 40 percent from $1.25 to $1.75 per pack. While such "sin" taxes have proven politically popular across the country, time and again history has shown that raising excise taxes does not usually produce the projected revenue. Of the 57 excise tax increases that states implemented between 2003 and 2007, only 16 met or exceeded revenue targets. When New Jersey increased its cigarette tax in 2006, instead of gaining a projected $30 million in revenue, the state lost more than $22 million.
The proposed increase would make Ohio's excise tax rate higher than four out of five bordering states, encouraging consumers to purchase their products in these lower-tax states or through untaxed venues such as the Internet or Native American properties. When the expected tax revenue fails to materialize, politicians in Columbus will end up increasing other taxes to make up for the shortfall. They should be cutting wasteful and unnecessary spending first before enacting any new taxes.
Furthermore, excise taxes are regressive, disproportionately impacting the poor and those living on fixed incomes. With Ohioans struggling to make ends meet, no taxpayer - particularly not those most disadvantaged - should be forced to hand over more of his or her hard-earned money to the government.
Ohio's elected officials should always spend tax dollars effectively and efficiently. In times of budget deficits, it is especially important that legislators and the governor make every effort to ensure that money is spent only on those government programs which are truly needed. They have yet to make this effort in Ohio.
For instance, the Ohio Department of Development's (ODOD) budget for fiscal year 2009 allocates $1.15 billion to hand out loans and cash to Ohio businesses. In a time of reduced tax revenue coming into the state, the governor and General Assembly should eliminate this department. While some "entrepreneurs" use nearly $500,000 in taxpayer funds to build a Chuck E. Cheese, it is highly unlikely that the average Ohioan would be upset if this type of expenditure disappeared. Also, if the state stopped funding the Cultural Facilities Commission and the Ohio Arts Council, there would be more than $50 million in savings.
In
his 2009 State of the State Address, Governor Strickland asked Ohioans
"to accept the sacrifices that these times demand." But none of the
wasteful spending programs in this report were eliminated in the
governor's budget requests for fiscal year 2010. Some had their funding
reduced, but all will be around in the coming fiscal year to waste
taxpayer money if Governor Strickland has his way.
Read the full 2009 Ohio Piglet Book here.
Additional resources:
