"Never once did they (House Republicans) actually cut spending or reduce the state budget. Even when they cut taxes in 2005, they increased spending. They never paid for their tax cuts."
Armond Budish on Wednesday, September 22nd, 2010 in a news conference
Ohio House Speaker Armond Budish raps Republicans for their big-spending ways
House Speaker Armond Budish kicked off what he called his "rhetoric reality tour" last month in Columbus hoping to fight back against House Republicans who have painted Democrats with the usual "tax and spend" brush.
At a news conference, Budish got uncharacteristically lathered up, saying that Democrats have "made the cuts that Republicans wouldn’t" in slicing almost $2 billion from the current $50.5 billion general revenue fund budget.
The mild-mannered Beachwood Democrat then attacked the House Republican record from 1994 to 2006 when the GOP controlled the 99-member lower chamber (as well as the governor’s office and the Ohio Senate).
"Never once did they actually cut spending or reduce the state budget. Even when they cut taxes in 2005, they increased spending," Budish said. "They never paid for their tax cuts."
Instead, they put off the bills until last year using budget gimmicks, he said.
Those are fairly inflammatory claims, and just the kind of thing that PolitiFact Ohio likes to check out, so we did some digging to see if Budish was right.
First, we pored over the state budget details dating back to 1994. We quickly saw that the first part of his statement is true, as long as Budish is talking about the entire budget and not individual programs that may have seen cuts at one time or another.
From 1994 to 2006, the seven state budgets approved while Republicans were in complete control increased spending an average of 9.39 percent from one budget to the next. The closest thing to a cut under Republican control was the 2005-06 budget, which went up only slightly, but included a 21 percent across-the-board income tax reduction spread over five years — which is the tax cut Budish is referring to in his comment.
So far, so good.
But to evaluate the second portion of Budish’s statement where he says Republicans "never paid for their tax cuts," you need a brief education in the numerous changes made to the state’s tax structure in 2005 by lawmakers. In a nutshell, a number of taxes of business and individual taxes were adjusted at the same time — some were increased by lawmakers in 2005 while others were cut or phased out entirely.
A pair of business taxes that were phased out slowly by the budget that was passed in 2005 were the tangible personal property tax and the corporation franchise tax. They were replaced by a new tax on businesses called the Commercial Activities Tax, or CAT, which was phased in as the duo was ramped down.
While those changes affected businesses, individual taxpayers were also affected by tax changes, including a sales tax hike and a 21 percent cut in the personal income tax rates for everyone in Ohio spread across five years.
That was the plan anyway. But last year Gov. Ted Strickland proposed, and lawmakers approved, pushing the fifth year of that tax cut back a year to fill a hole in the state budget.
But Budish isn’t totally correct when he says that the Republicans "never paid for" the tax cuts contained in the 2005 state budget. In fact, the 2007 state budget passed by a Republican-controlled legislature and signed by Strickland had about $1.8 billion less in revenue because of the tax cuts of 2005, according to a 2009 state budget document. That, by law, required adjustments to the budget in other places to keep the state budget balanced.
Still, the impact in 2007 of the tax cuts was fairly light compared to the impact that had been projected for the current budget -- $4.2 billion. But when lawmakers adopted Strickland’s proposal to push back the final year of the income tax cuts that pushed back some of the effect. The state actually ended up with $3.4 billion less to spend in the current budget than if the tax changes of 2005 never happened.
So let’s get to the grading card and see what we got:
- Budish is right that Republicans never actually cut spending from 1994 to 2006.
- And he’s right that spending went up under Republicans even when tax cuts were passed in 2005.
- But the second part of his statement has a hole — the bill on the tax changes started coming due in 2007 when Republicans were still in charge of the legislature and were forced to balance the budget with $1.8 billion less in revenue.
Budish’s statement is largely accurate but needs additional information to see the full picture. That’s why we rate Budish’s statement as Mostly True.
Published: Tuesday, October 12th, 2010 at 6:00 p.m.
Phone Interview with John Kohlstrand, spokesman for Ohio Department of Taxation, Sept. 30, 2010
Phone interview with Keary McCarthy, spokesman for House Speaker Armond Budish, Oct. 4, 2010.
State budget office chart showing previous budget increases dating back to 1968
State budget office document that shows the loss of revenue from the tax changes in 2005
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