Senate Budget Has Investment Controls

Columbus Dispatch - June 1, 2005

Columbus Dispatch

By Jim Siegel and Catherine Candisky

With the coin-investment scandal fresh in their minds, Senate Republicans approved more budget changes yesterday, including limits on future investing and the elimination of a sales-tax exemption for coin and bullion investments.

Voting along party lines, the Senate Finance Committee approved the $51.2 billion budget that also makes significant changes to nursing-home funding starting in 2008. The House plan would give nursing homes an extra $800 million over two years.

The formula is unsustainable, said Sen. Jeff Jacobson, R-Vandalia, “so it’s hard to support that we ought to keep it going.” As the budget goes before the full Senate today, business and social-service advocates give it mixed reviews, although they agree it’s an improvement over the House-passed budget. Gayle Channing Tenenbaum, co-chairwoman of the Campaign to Protect Ohio’s Future, said she’s still worried that 25,000 low-income parents and 15,000 very poor, critically ill adults will lose Medicaid health coverage.

Daniel Navin, director of legislative affairs for the Ohio Chamber of Commerce, said his group still opposes the tax overhaul. The plan phases out two business taxes, creates a new tax on gross receipts, and cuts the state income tax by 21 percent over five years.

The package was made “minimally palatable” by some of the Senate changes, Navin said, including less compounding of taxes on items as they move from production to store shelves.

A group of tobacco producers and retailers said yesterday that the Senate’s 70-cent tax increase per pack of cigarettes would cost Ohio 1,900 jobs. Policy Matters Ohio, a Cleveland research firm, sounded warnings that the Senate’s cap on revenue generated by the gross-receipts tax means its impact will dwindle over time.

Senate President Bill M. Harris, R-Ashland, said the tax plan will create jobs, but changes will be discussed when the House and Senate work out their differences this month.

Much of the committee debate yesterday centered not on taxes or spending, but rather on how to ensure that the Bureau of Workers’ Compensation never again pursues a risky investment without proper oversight.

The bureau invested $50 million with Maumee coin-dealer and prominent Republican donor Thomas W. Noe, whose attorney said last week that up to $13 million in assets are unaccounted for.

Senate Republicans placed into the budget a number of reforms, such as putting two investment experts on the bureau’s oversight commission. Democrats, arguing that GOP plans do not go far enough, offered their own ideas, including a ban on contributions from bureau brokers to any statewide candidate.

Except for a proposal to require annual certified audits of bureau funds, Democratic ideas were rejected. Sen. Ray Miller, a Columbus Democrat, at one point called the proceedings “pitiful,” and protested by voting “Noe” instead of “no.”

Republicans say they will gain $6.9 million over two years by no longer exempting coin and bullion transactions from the sales tax — an exemption Noe persuaded lawmakers to pass in 1989. Harris said the move was not in reaction to the coin scandal.

But giving state Inspector General Thomas P. Charles’ office an additional $300,000 over two years is directly related to the extra work he is performing in the Noe case, Harris said.

Meanwhile, in an effort to curb soaring Medicaid costs, the Senate has proposed altering how nursing homes are paid for care they provide to low-income elderly and disabled people.

The state now pays nursing homes based on how much they report spending. Critics say the system does not promote efficiency.

Under the Senate plan, rates starting in 2008 would be set by the administration based on the level of care a patient requires.

“Our intent is to drive down costs,” said Barbara Riley, director of the Ohio Department of Job and Family Services, which oversees the state’s Medicaid program.

Medicaid pays for about 70 percent of all nursing home residents in Ohio.

Nursing-home operators say the plan won’t cover their costs.

“Providers would be paid rates that have no relationship to their costs,” said Peter Van Runkle, president of the Ohio Health Care Association.

“There will be many nursing homes who will get rate decreases, and that could put some out of business.”

To some, that’s not such a bad idea.

“We’ll let the best homes prosper and grow, and the lessdesirable homes can close their doors,” said Sen. Lynn R. Wachtmann, R-Napoleon.

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