School Finance Plan Fails by 2 Votes in Ohio

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Ohio lawmakers are struggling to meet a mandate from the state supreme court to devise a new school finance system by next month.

Last week, a plan that would have placed a 1-cent sales-tax hike before voters in May died when it fell two votes short of the supermajority needed in the House.

The Feb. 4 vote came on the deadline day for the legislature to approve placing a state constitutional amendment on the May 5 election ballot. It was preceded by a two-week flurry of debate and backroom dealing over various proposals for a new funding plan.

But the state's voters may yet get to vote on a tax increase. Some lawmakers were talking late last week about employing a never-before-used constitutional provision that might allow a tax increase for education to go on the ballot by a simple majority vote of the legislature. Under that approach, legislators would have until next week to work out a plan.

The proposed tax increase is the cornerstone of a $1 billion school funding package that also includes local property-tax relief.

The supreme court last March declared the finance system to be in violation of the state constitution's "thorough and efficient" standard for Ohio public schools. ("Justices Reject Ohio System of School Finance," April 2, 1997.)

The court gave the legislature one year, or until March 24, to devise a remedy in the finance lawsuit brought by a coalition of 553 of the state's 661 school districts.

Close to Consensus

Gov. George V. Voinovich, a Republican, recommended raising the state sales tax from 5 cents to 6 cents per dollar last summer in the hope of placing the proposal on last November's ballot. But the plan went nowhere. Lawmakers revived talk of a sales-tax increase late last year, but at half a cent instead of 1 cent.

Meanwhile, the legislature passed a bill early this month that guarantees spending levels for Ohio's 1.8 million public school children through 2002. Now lawmakers must find new revenue or cut spending to be able to meet the target levels after next year, legislative observers say.

The state Legislative Budget Office said in a report that without a supporting tax increase, the state could fall about $1.5 billion short of the new spending levels by 2004.

The 1-cent sales-tax increase, which would raise about $1 billion in new revenue, was revived early last week. Lawmakers then spent several long days trying to line up the 60 House votes needed to send the measure on to the Senate.

The vote in the House was 58-40 in favor of the increase, two short of the number needed.

Jo Ann Davidson, the Republican House speaker, told reporters that she and other supporters of the tax plan "came very close to a consensus." The measure was opposed by conservative legislators who do not want any increase in the sales tax.

Ms. Davidson said legislative leaders planned to consider whether to rely on a provision of the state constitution that allows lawmakers to delegate their authority on education to the voters. Some legal experts interpret the provision as allowing a tax increase for education to go before voters by a simple majority vote of the legislature. Others apparently are not as sure and believe that path might face a legal challenge.

At the very least, legislators were planning to hold hearings early this week on a regular bill that included the sales-tax increase.

Robert E. Wehling, the co-chairman of an education reform group known as Ohio's BEST, said last week that lawmakers are on the right track.

"The legislature is really trying hard," said Mr. Wehling, a senior vice president with the Procter & Gamble Co., the Cincinnati-based consumer-products giant. "But this is really complicated, and that is why it is taking so long."

Ohio's BEST, which stands for Building Excellent Schools for Today and the 21st Century, supports an increase in the sales tax for education.

"We want a system which will produce better outcomes for all students and is funded to do so," Mr. Wehling said. "We're not there yet. But we'll get there."

Engine Overhaul

Observers say that if the legislature cannot agree on a tax increase, or if voters reject the plan, state leaders might go back to the courts and argue that the state has taken enough steps to improve the adequacy and equity of its finance system since districts first sued in 1991.

That argument would probably not go over well with William L. Phillis, the executive director of the Ohio Coalition for Equity and Adequacy of School Funding. The coalition is behind the suit that resulted in the state supreme court's ruling.

Mr. Phillis said the tax-hike options being considered by the legislature do not come close to the complete overhaul of school finance called for by the high court.

"In terms of a systematic overhaul, they haven't even steam-cleaned the engine," Mr. Phillis said last week.

"The discussion has been how much tax relief can they get out of this, and how much can they get by with," he added. "Republican leaders have spent a lot of time figuring how to get out from under the [court] decision, as opposed to confronting the decision."

Mr. Phillis also argued that lawmakers should make the decision on the tax increase themselves rather than passing the buck to voters.

"The General Assembly is required to confront these kinds of issues," he said.

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