House Democrats release supplemental budget: No sales tax proposal, plenty of cuts

House Democratic budget writers released a proposed supplemental budget Tuesday that aims to close the budget gap without a sales tax hike.

However, the proposal gives local city and county governments more authority to raise taxes, such as a sales tax, restaurant tax or utility tax. The proposal allows the state’s seven largest counties to impose a 0.1 percent sales tax without voter approval. Small counties could to raises taxes by 0.2 percent.

“It won’t damage the state over the long run, but it gets us through the worst economic downturn since World War II,” said lead budget writer Rep. Ross Hunter, D-Medina.

Hunter said the state can no longer afford to help out local governments with certain expenses, and the proposal calls for a reduction of $82 million in distributions to local city and county governments.

“Over time, local governments have punted their responsibilities up to the state,” he said. But the state needs to focus on funding basic education, healthcare and other state responsibilities, and “something has to give,” Hunter said.

The proposal includes about $65 million in cuts to higher education, mainly in a reductions to institutional funding and shrinking the State Need Grant program. It would also delay about $400 million in school payments, which means the money is counted in the next two-year budget cycle.

Hunter said the Supreme Court decision in January that ruled the state is not fulfilling its duty to fund basic K-12 education required a “big rework” of the budget, and the proposal aims to fund basic education, bridge federal health care reform and protect against expected volatility in the economy. “We want to be able to manage major changes,” in the economy, Hunter said.

The budget includes two new sources of revenue: $13 million from a proposal that would add certification and taxing requirements to roll-your-own, or RYO, cigarettes and the retailers that provide these machines. Another $18 million comes from the elimination of a tax break that out-of-state banks can claim on mortgages.

The budget includes $222 million in cuts to health care and human services by reducing certain programs like those for people with chemical dependencies, Hunter said.  It does not include early releases from prison, but there will be “supervision changes” in the corrections department.

The proposal does not make reductions to pension contributions, but it does cut more than 1,500 full-time state employees.

Showing a balance sheet, Hunter said that the budget “spends less than we take in revenue.” Hunter said there has not been a decision about whether or not to send voters a proposed sales tax increase in November.

Tags: Budget