State Budget Math: Economic Downturns + Enormous Tax Cuts = Painful Spending Cuts


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Like many states, Ohio currently faces a serious budget deficit, one that has prompted the administration of Governor Ted Strickland to announce plans to cut agency budgets by more than $400 million for the FY08-09 biennium. The consequences of those cuts are already being felt around the state, but, as a recent column from Joe Hallett of the Columbus Dispatch implies, they shouldn't be entirely unexpected. The combination of recent income and property tax cuts and the only-partial replacement of Ohio's corporate income tax with a new commercial activities tax (CAT) will mean that the state will lose in excess of $10 billion in tax revenue between 2006 and 2010, making spending cuts all but inevitable.

As Hallett notes, "Tax cuts are easy to love. But the reality is that taxes pay for services citizens want and need." This latestreport from Policy Matters Ohio details the substantial revenue losses Ohio will experience as a result of reductions in personal income tax rates and explains how heavily those reductions are tilted in favor of the rich.

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