CRAIN'S CLEVELAND BUSINESS
February 2, 1998

School funding proposal to face Roundtable fight
By Tom Ford

The same group that helped scuttle riverboat gambling in Ohio will work to defeat a proposed sales tax increase designed to help overhaul the state’s system of funding schools.

David Zanotti, executive director of the Ohio Roundtable, a conservative think tank in Solon, said his group will oppose the General Assembly’ s school funding proposal being considered for the May 5 primary ballot. The group may seek allies in the effort, including those in the business community, Mr. Zanotti said.

“The only question is whether we will take a leadership role in opposing what is a bad solution for a bad court decision,” Mr. Zanotti said. “We feel that, as many people inside and outside government have said, no tax increases are needed.”

The group represents a potentially powerful hurdle for the school funding measure. In 1996, the Ohio Roundtable campaigned against a ballot measure that would have allowed riverboat gambling in the state. The measure, also opposed by Gov. Voinovich, lost by a 62% to 38% margin.

Lawmakers are expected to agree on the final language of legislation early this week that would seek voter approval to increase the state sales tax to 5.5% from 5% as the primary method of raise $550 million more for the state’s public schools. Legislative leaders have said the additional money is needed to comply with the Ohio Supreme Court ruling last March that found the state’s system of funding schools unconstitutional.

Late additions to the financing plan, eliminating the 10% rollback businesses enjoy on commercial and industrial property and eliminating the widely disliked 25% tax on unsold inventory, were also on the table for lawmakers to consider. Elimination of the rollback could cost businesses about $206 million per year, while the inventory tax would save businesses about $21 million per year, according to figures from the Ohio Manufacturers’ Association.

“Under the proposal, the sales tax revenues would go for construction and renovation of schools for the first few years, but then be switched to operations,” Mr. Zanotti said. “The education bureaucracy would be the main beneficiaries of the switch of funds to operations.”

Education leaders aren’t thrilled with the proposal either and could become unintentional allies with the Ohio Roundtable in an anti-tax campaign.

The Ohio School Boards Association “has no choice but to not support the proposal,” said OSBA president Ron Diver. “The needs for facilities, as well as operations, cannot be met by a one-half-cent sales tax increase.”

However, business advocacy groups - reliable allies for the Ohio Roundtable group in previous ballot campaigns - are not united in their views.

Joining the Ohio Roundtable in the anti-tax brigade is the 60,000-member National Federation of Independent Business - Ohio.

“Our most recent poll shows that 77% of our membership opposes increasing taxes for school funding,” said Roger Geiger, the group’s executive director. “A sales tax signals a shift of the tax burden from large businesses to small. An increase may mean little to a large manufacturer, for example, while it may mean the difference between selling and not selling a $1,000 TV for a small retailer.”

Others in the business community are less upset at the prospect of a sales tax hike.

“We are not jumping up and down (in support of the sales tax increase),” said Bill Burns, director of communications for the Ohio Manufacturers’ Association. “But we have said if taxes are raised, the extra money should equate to better student and school system performance.”