Ohio's extended budget forecast looks gloomy.

• Position: Ohio

Annual budget deficits of $500 million to $3.5 billion are facing Ohio over the next several fiscal years, according to some analysts. Actions by the Taft administration seem to support the projections. State agencies are being forced to find additional savings as they prepare upcoming budget requests for fiscal years 2006 and 2007.

The Federation for Community Planning and Policy Matters Ohio joined businesses from around the state for a "Tax Reform Business Roundtable," at which the policy groups projected an annual 2-12 percent revenue gap. The group attributed the gap to a "structural deficit" caused by demographic and economic factors and current tax policies.

The state will lose $2.6 billion in biennial revenue when the temporary one cent sales tax increase expires in July 2005. The absence of one-time revenue sources and federal Medicaid bailout dollars will also make budgeting more difficult.

Corporate franchise tax collections have also slumped in recent years, though businesses are quick to point out that raising rates is not the solution. Rather, reforming Ohio's anti-competitive tax system in order to attract more businesses is the key to...