Fiscal Focus: Privatization

November 29, 2012 by

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Each Fiscal Focus will look at our vision for key areas of public investment in Ohio and provide insight into current budgetary trends for that sector. All Ohioans are impacted by our elected officials’ budget decisions. In 2013, a new two-year state budget will be crafted – this series will provide a comprehensive overview of the major questions and concerns for Ohio’s 2014-15 biennial budget.

Why the Public Should Invest
 As Ohioans, we expect public services to be established for the common good.  Privatizing our services – through sale of government assets or paying private business to do tasks government has done in the past – risks placing profit motives over the needs of our community.  Despite any initial financial benefit from the sale of a public asset, the expected quality of service, effects on workers, and financial ramifications over time need to be taken into account.  Long-term solutions – like stable and secure revenue sources – not short-term fixes, should be our goal.

The Current Reality
 In recent years, Ohioans have seen privatization of prisons and schools, as well as our state economic development efforts with JobsOhio and parking at Ohio State University (OSU).  Each of these actions brings promises of tax savings and improved services.  But, charter schools’ performance remains low, Ohio’s recently privatized prison has raised concerns for health and safety, JobsOhio lacks basic accountability, and the OSU parking sale leaves major long-term financial questions.

Looking more closely at JobsOhio, created in 2011 under Governor Kasich, is instructive. When Ohio invests in development, social services, or other areas of public concern, Ohioans must have accountability and an ability to weigh in on the use of our investment.  As a private organization, much of JobsOhio’s work is done beyond the scope of public input and scrutiny. For example, they invested public dollars into a company that was previously found guilty of Medicaid fraud. Regardless of the wisdom of this particular investment, shouldn’t the public have the ability to review this expense? Because of privatization, Ohioans lack oversight and there is little accountability.

In another example, our neighbors in Indiana privatized their turnpike in 2006.  The state received over $3 billion for a 75-year lease.  That money will be gone within the next 5 years, and beginning in 2016, the turnpike can increase tolls in every year of the lease.  The foreign companies that own the Indiana turnpike garner their profits from higher tolls, less maintenance, and lower salaries and benefits for employees. In instances like these, the quality of service rarely is increased.

The 2014-15 Budget
 We are likely to hear a lot more about privatization in the next budget, including our turnpike, prisons, and schools.  While we expect other privatization efforts to be discussed, these three will top the list in the budget. We should not sacrifice quality of service, transparency, or the public interest for quick cash.

People for the American Way have developed a list of 10 questions that should be considered prior to any efforts to privatize essential public services.  These should be taken seriously in Ohio as we debate policies around privatizing public services.

The Ohio turnpike discussions are arguably the most talked about issue related to privatization.  Immediate money from a sale will undoubtedly intoxicate legislators, particularly as the Ohio Department of Transportation has delayed many crucial highway projects across the state.  But, amongst many concerns, a sale or lease of the turnpike for 50 or 100 years will leave Ohioans vulnerable to changing needs in our state.  This vulnerability is exacerbated because some road privatization efforts have non-compete clauses limiting infrastructure development for generations.  Such contract limitations could also include a state takeover provision that requires the government to be on the hook for the losses.

Prison privatization has been largely unsuccessful. Governor Kasich did privatize one formerly publicly run prison in Ohio, but ODRC has delayed other privatization efforts over public concerns.  Private prisons limit the staff numbers, benefits, and salaries.  Some private prisons lack enough trained staff to maintain a safe and secure facility.  The companies often overcrowd the prisons, because most states have a “per-prisoner” payment schedule.  Finally, the prison will cut the most helpful services – mental health treatment, education, job training, and counseling.

Education is another government service being privatized.  Charter schools are set up by private entities, often corporations.  These entities receive money based on each student that they enroll and this is money pulled out of our public school system.  Despite performance measures far below traditional public schools – 70% of public schools rate excellent or above, compared to only 16% of charters – policymakers continue to push this system of privatization.

As we move forward with the debate of public and private services, we need to remember that the 21% cut to the state income tax since 2005 has caused many financial constraints for the state.  Ohio does not need to sell all of our assets and long-term investments this year.  We can restore budget shortfalls by keeping public investments and ensuring stable and secure revenue sources.

Speak Up!
 If you would like to get involved as the state budget nears and our advocacy increases, please follow us on Facebook, Twitter, or sign up for our emails. Please read our past Fiscal Focus article on Education or State Parks and stay on the look out for the next articles on corrections, health care, and the arts!

If you’re interested in additional information on state parks in the state budget or have any other related question, please contact us.

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Fiscal Focus: State Parks

November 20, 2012 by

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Each Fiscal Focus will look at our vision for key areas of public investment in Ohio and provide insight into current budgetary trends for that sector. All Ohioans are impacted by our elected officials’ budget decisions. In 2013, a new two-year state budget will be crafted – this series will provide a comprehensive overview of the major questions and concerns for Ohio’s 2014-15 biennial budget.

 

Why the Public Should Invest
 The Ohio State Parks attract more than 50 million visitors and generate over a billion in tourism dollars each year with 85% of Ohioans utilizing this great public investment.  The value of the parks is bigger than tourism dollars—the real value is the enhancement of our lives and our state. My best memories as a child were sleeping in a tent, cooking over the fire, biking, hiking, and swimming in our state parks. Now as a father, I cannot wait for my son to have similar experiences.

Ohio established the Division of Parks within the Ohio Department of Natural Resources (ODNR) in 1949 to create, supervise, operate and maintain a system of state parks and to promote their use by the public.  It added ‘Recreation’ to its title in 1963 when the state developed the first state recreation plan for a parks system in the country.

The Current Reality
 Ohio now runs 75 state parks. When taking account for inflation, the parks have seen a loss of 23.5% of their state support since 1988. Ohio State Parks received $60.5 million from the General Revenue Fund (GRF) in the last biennial budget.  This is a $4 million decrease from the previous budget, and a $19 million cut compared to FY 2008-09.

Currently Ohio has over $500 million worth of delayed maintenance projects, including $83 million in shoreline erosion, $72 million in dam repairs, and $47 million in bathroom upgrades.  The state has attempted to fill its budget gaps over the past decade with a 45% reduction in staff, as well as closing hiking, biking, and horse trails that they couldn’t afford to maintain in a safe condition.

In addition to the continued trend of GRF cuts, in 2011 the Ohio legislature passed HB133 and HB153.  HB133 opens up state parks for oil and gas drilling and HB153 opens up the parks for logging.  Some advocates for this legislation point to the lease payments that the state will receive to supplement other state park operations.  The total amount of revenue these projects will produce is unknown.

The 2014-15 Budget
 Resource extraction from our parks will likely be the most contentious issue in our next state budget impacting parks.  ODNR’s website illustrates how oil and gas drilling can bring in revenue to support our parks’ infrastructure. But, drilling and logging are not the only options.  Ohioans must consider the cost associated with additional resource extraction – including park roads, loss of trees, repairs, and possible environmental clean ups.  Also, some estimates have identified only a few years worth of oil or gas from lands owned by the states.  If this ends up true, we will be looking for new revenues, once again, in a few years.  So we must look for long-term solutions, and not just a boom or bust industry that may provide temporary revenue.

The state may consider other revenues sources such as new fees. While the state charges some fees for services, such as renting a campsite, most services remain free for all Ohioans. The Ohio legislature has historically rejected this approach, because the state has established a public system that should be open to all regardless of ability to pay. In 2004, fees charged accounted for 42% of the parks operating budget.

Philanthropy is a necessary component of our State Park system – generosity reflects well on the character of Ohioans. However, it cannot make up for adequate state support. In 2004, over 7,000 people invested their free time into our parks for 346,000 hours of service. ODNR in conjunction with the Ohio BMV offers Ohioans an opportunity to place a Wildlife license plate on their car for a $15 donation. In 2006, Ohio sold just over 34,000 of these license plates.  While philanthropy is a great way to invest your own time and effort to preserve this public asset, State Parks need the type of investment that the state is able to make.

Fees and philanthropy will not be enough for the long-term investment our parks need. Drilling and logging must be balanced appropriately against the long-term financial costs and potential damage to natural beauty and intrinsic value. Long-term solutions would include how we structure taxes on corporate profits and the Ohio Income Tax. Since 2005, the income tax has been cut by 21%, and along with other revenue changes, has lead to $2.5 billion less in annual revenue. Governor Kasich has said he wants to cut the income tax again.

Speak Up!
 We must preserve our public investment that prior generations have made into a great system of State Parks that so many of us have enjoyed. If you would like to get involved as the state budget nears and our advocacy increases, please follow us on Facebook, Twitter, or sign up for our emails. Please read our past Fiscal Focus article on EDUCATION HERE and stay on the look out for the next articles on transportation, health care, and libraries.

If you’re interested in additional information on state parks in the state budget or have any other related question, please contact us.

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Election Implications for Ohio’s Budget

November 8, 2012 by

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As election results have come in, besides watching Obama/Romney, the U.S. Senate, and major races in Ohio, here at One Ohio Now we were paying close attention to results in the state and around the country that tell us something about our state budget debate in 2013 and beyond.  And we’re not the only ones looking ahead.

Today, headlines and lead stories in Ohio and across the country are pointing to the federal “fiscal slope,” the drum beat for income tax cuts in Ohio, and how local levies fared.  Pundits on both sides of the aisle always talk about the mandates of elections, but things are rarely so clear cut.  My top impressions from the election, including links to many of the places I’ve looked for analysis and wrap-up:

  • Nationally: A large majority of Americans know that the wealthy and big corporations are not paying their fair share, and you can directly talk about that to voters and win. This has been shown in poll after poll, but this may be a turning point election in terms of the willingness of presidential candidates and other national figures to take it head on.  As the Bush Tax Cuts expire, at a bare minimum the top 2% (those making over $250,000/year) should be asked to do their part.  But, the conversation about who pays and for what is far from over.  Citizens for Tax Justice (CTJ) has a great overview here on where things stand.
  • The State Level:  It varies from state to state, and campaign by campaign, but when you make a clear case to voters about the value of public services and suggest a reasonable revenue source to pay for things like public education, there is support to be had.  California’s Prop 30 may be the biggest example of a win for revenue, and there several notable defensive wins as well (in Florida, for example, on its dangerous TABOR-esque ballot).  So, while there were bumps in the road for those of us working on budget and revenue issues, I think this will be seen as a largely very positive year at the state level.  See CTJ on state ballots (detail here) and the Ballot Initiative Strategy Center priorities list for more info on what happened at the state ballot level.
  • In Ohio: While the picture was largely positive nationally, moving forward a thoughtful conversation about the value of public services and the need for the wealthy and big corporations to pay their fair share arguably took a step back this week.  The Ohio General Assembly power structure, largely due to the gerrymandering of House and Senate districts that gives us representatives who are less moderate than the state as a whole, remains.  For those of us seeking legislators who will consider a balanced approach to balancing the budget, this is a serious challenge.  Thankfully, there was good news: every senior service levy passed, and many important school levies passed as well.  Hopefully, going forward, we can work toward a state budget will restore cuts to schools and local governments and not leave localities to make up the difference while the wealthiest Ohioans and profitable corporations carry even less of the load.  For a round up of human service levies, check out Advocates for Ohio’s Future list, and StateImpact has the school levy info.

I don’t think it’s hyperbole to say that budget issues are at the top of the priority list in our national and state politics.  That’s of course because how our economy is doing is wrapped up in the choices we make at the federal, state, and local level through our budgeting.  Our communities feel the affects of the choices we make, and the extent to which this year’s elections took this head on is a testament to where we’re at in Ohio and across the country.

It’s still too soon to draw many conclusions about how Tuesday’s elections will shape Ohio’s state budget process in 2013 and beyond, but hopefully this wrap up helps you see the big picture just a bit better.

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Is A Scary Budget Coming? Yes.

November 1, 2012 by

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The current state budget in Ohio is so bad – we cut $1.8 billion from K-12 education, $1 billion from local governments, and much more – that it’s hard to imagine how the 2014-15 budget that will be crafted in 2013 could be any scarier.  But in true Halloween spirit, the prospect of gutting our revenue system by giving state income tax breaks to the wealthy should be freaking plenty of people out.

In 2005, Ohio began phased in cuts to the income tax that left it down by 21%, leading to $2.5 billion less annually for schools, safety, social services, and more.  That’s not to mention eliminating the corporate income tax and more severely shifting the tax load to average Ohioans while the wealthy are on the upswing.  Why on earth would we cut taxes again, leading to more service cuts, when we didn’t see any job growth as a result the last time?

So, as the next budget round approaches and we prepare to make our case, we’re looking for every possible way to let people know about the tricks – and the treats – for Ohioans.  Enter our Halloween images!

This pumpkin is probably my favorite, but you can see plenty more here.  Please share with your friends and colleagues – help us get the word out build out network!

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