State Budget Watch List: Our Top 4

January 31, 2013 by Gavin DeVore Leonard

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With the state budget set to be introduced on February 4th, there are bound to be many, many issues of importance that we’ll be watching closely. But, our Top 4 currently include:

Income Tax Cuts – These cuts will lead directly to service cuts. We should be investing in education, public safety, and more, not further cutting these and other services that Ohioans rely upon. The Governor is very likely to include the income tax/severance tax swap (we think that’s a bad trade) he proposed last year, but may go further. We are opposed to income tax cuts that disproportionately benefit the wealthiest Ohioans.
Medicaid Expansion – A program that both insures approximately 500,000 Ohioans AND is expected to bring in $1.4 billion in revenue over the next decade?! This is exactly the kind of investment we should be making for the future of Ohio, so One Ohio Now supports the Medicaid expansion.
Education Funding/Formula – Details will be released later today, but we’re hopeful that the Governor will recognize that after $1.8 billion in cuts to K-12 education and $500 million in cuts to higher ed, it is time to re-invest in our education system in Ohio. The new funding formula will be inevitably be hotly debated and we’ll be keeping a close eye on the process.
Local Government Fund (LGF) Funding – After being cut in half in the current budget, we believe restoration of the LGF is the right choice for Ohio. But, it seems likely that the General Assembly will at least not make any further cuts to the LGF. Our voices have been heard on this issue, but we still have more work to do to ensure we’re investing appropriately and adequately at the local level.

What are you paying close attention to in the budget? What are you wondering about? Many questions will be answered on February 4th with the budget’s introduction, and full information should be available in the weeks following.

Stay tuned!

Filed Under: One Ohio Now Tagged With: state budget

Fiscal Focus: Local Government

January 29, 2013 by Nick Bates

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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
Our local governments provide the most direct services to us. We drive on local roads, walk on local sidewalks, and throw our trash in local trashcans picked up by local refuse collectors. Our parks are local, our fire fighters are local, and our social workers are local. Local government services are visible to us everyday and are essential to our daily lives.

Ohio has established a Local Government Fund and other revenue sharing mechanisms to make sure that our local counties, cities, and townships are able to provide these basic services for us. Revenue sharing has been viewed as a promise by the state to guarantee that local government will be able to provide services.

The Current Reality
When the Local Government Fund (LGF) was first established in 1934, it gave local governments 40% of all revenue generated by the newly enacted sales tax. Over the years, the LGF was scaled to be a percentage of overall revenues collected by the state. In July 2001, the state froze funding for the LGF at $821 million. This policy cost the LGF over $600 million in lost revenue. During the recession of 2008, Ohio revenues decreased and the LGF was cut another $177 million down to $641 million in fiscal year 2010 but increased spending slightly in FY2011 to $694 million. For 2012-13, the state cut the LGF by $504 million compared to the previous budget. This left the local government fund 50% of what it was in 2011 and well below where it needs to be to ensure basic services for the common good are provided for all Ohio’s local communities.

In addition to the Local Government Fund, the state has greatly modified other revenue sharing with local governments. The state passed two major tax changes that impacted how local communities could tax local property. First, in 2001, the state modified how property taxes would be assessed on utilities. Then in 2005, the state eliminated the tangible personal property (TPP) tax. The state knew that these changes would have a negative impact on the revenues that local government could collect through property taxes. To assist the local government entities, they created revenue sharing streams to help supplement the lost revenue. In the last budget tax reimbursements were reduced $582 million over the previous budget cycle.

The previous legislature passed legislation that eliminates the estate tax beginning in 2013. 80% of the estate tax went to the county of the decedent and distributed accordingly. For some counties, they relied upon millions of dollars a year from this funding source. While varying year to year, this revenue source brought in over $300 million in 2011 for local government.

In the most recent budget, Ohio communities have lost $504 million from the LGF, $582 million from reimbursements for over $1.08 billion worth of cuts. Now local communities will also deal with an additional cut of over $300 million a year from the loss of the estate tax.

The 2014-15 Budget
As we prepare for the next budget, we need to remember that there is a better way than a budget filled with cuts. Through effective advocacy, we can help legislators know the value of state and local government working together to fund and provide great public services. Advocates across Ohio are hopeful that the LGF will not be cut any further, but we cannot allow the status quo to become the new normal. It is time to restore great public services that lead to stronger communities.

After the last budget, advocates expected the LGF to be completely phased-out in this budget. However, over the course of the past two years consistent advocacy from struggling communities gives us hope that the LGF will not be eliminated in the Governor’s budget proposal.

Another issue of concern to local governments is the taxation of property. First we have the changes to utility taxation and the elimination of the TPP that have cost local communities revenue. In addition to the cuts at the state level, local property values have not risen back to pre-recession levels. Local governments are heavily reliant on property taxes to fund basic services, and the state has the capacity to fill in the budget holes of many communities using other revenue streams, such as the income tax.

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 articles on K-12 education, state parks, , , or privatization.

If you’re interested in additional information on funding of local government or have any other related question, please contact us.

Filed Under: One Ohio Now Tagged With: Fiscal Focus, local

Call to Action: Send a Letter to the Editor Today!

January 18, 2013 by Gavin DeVore Leonard

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Today we’re launching our first call to action of the state budget season – join Ohioans across the state in letting your local newspaper/s know what you hope to see in the upcoming state budget!

It’s simple: click here and follow the steps. It just takes a few minutes.

This “prebuttal,” before the budget is introduced on February 4th, is an important opportunity to influence the conversation about the state budget – a major topic that affects you and your community. Join in and make your voice heard!

Filed Under: One Ohio Now

Fiscal Focus: Medicaid Expansion

January 17, 2013 by Nick Bates

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Why the Public Should Invest
When people have adequate health insurance coverage, they can receive preventative care, treat illness early on, and are more productive individuals in life and work. We should strive for all Ohioans to have health care that meets their needs and let them live to their full potential. Individuals without insurance utilize emergency rooms for primary care, where costs for care of the uninsured are then passed on to all Ohioans. A healthy society is happier and more productive, and a strong health care system can reduce costs for everyone.

The Current Reality
The Affordable Care Act (ACA), signed by President Obama in 2010, triggered the most significant changes to the health care system in the United States in decades. One major provision of the ACA leads to a discussion in Ohio (and all 50 states) about Medicaid Expansion. But, here are the basics on Medicaid today—pre-ACA implementation.

Medicaid is a state program that provides health coverage to low income individuals. In Ohio, around 64% of the funding comes from the federal government and 36% comes from the state. If the Ohio legislature decides to scale back funding, it reduces the federal match as well.

In 2010, approximately 2.2 million Ohioans were insured through Medicaid. Between 2009 and 2011, Ohioans who were covered by private insurance dropped from 66% to 57%. In 2011, more than 1.5 million Ohioans were uninsured.

Medicaid conversations invite much debate and interest due to the size of the program. Medicaid alone represents 4% of the Ohio economy. About 30% of the state budget is dedicated to this one program. Almost 70% of Medicaid spending is directed towards the disabled and seniors. The remainder is spent on families with children who represent a larger number of individuals served but are less costly. Because of the changing economic realities and policy decisions that have benefited the wealthy, we continue to see the number of poor and uninsured Ohioans at an alarming rate.

Currently, Medicaid eligibility is based on where a person falls on the ‘federal poverty line’ (FPL) and one additional characteristic. Eligibility exists for disabled workers up to 250% of the FPL, children and pregnant women up to 200% of the FPL, parents up to 90% of the FPL, and the disabled up to 64% of the FPL. Childless adults without a disability are not currently eligible for Medicaid.

The 2014-15 Budget
On January 15, 2013, released a non-partisan study of the impact of Medicaid expansion in Ohio. Medicaid expansion will be hotly debated based on the sheer amount of dollars tied to the program, moral and ethical calls to care for the sick, political ambitions and ideology, and philosophical differences about the proper size and role of government. The ACA allows states to expand Medicaid beginning in 2014 to cover the disabled, parents, and childless adults who fall beneath 138% of the FPL. In 2012, 138% of the poverty line for a family of 4 was $31,809.

The HPIO study estimates this expansion of Medicaid will encompass about 456,000 people. Between 2014-2017, the federal government will pay 100% of the expansion, and then they will slowly scale back until 2020 where the cost share will be 90/10 split between the federal government and Ohio. It is important to remember that other aspects of the ACA will take effect regardless of Medicaid Expansion in Ohio, such as the health insurance exchanges and the individual requirement.

In addition to providing more health care services to more people, Medicaid Expansion will be a financial gain for the state. There will be massive federal investment of $5 billion (over 10 years) in Ohio for healthcare. This will create jobs in the healthcare industry, increasing sales tax revenues and income tax revenues at the state and local levels.

Medicaid expansion will also generate savings in the state budget and free up resources for restoring and expanding services. Over 10 years, it is estimated the state will save $273 million on prison-related health expenses and $389 million on mental health services. There are other areas of savings as well such as cancer screenings.

In 2022, once the federal-state share has settled into its 90/10 cost sharing, Ohio will receive $610 million in new revenue and cost savings and have to spend $609 million for our 10% match. Unlike many policy debates, where there are a variety of options that can be chosen, Ohio policymakers have two options: Yes or No.

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

Filed Under: One Ohio Now Tagged With: Fiscal Focus, healthcare

Fiscal Focus: The Arts

January 10, 2013 by Nick Bates

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Why the Public Should Invest
The aim of art is to represent not the outward appearance of things, but their inward significance.
–Aristotle

Art reflects who we are as a community. In addition to the intrinsic value of the art, we can quantify the gains by realizing that the arts create 231,000 Ohio jobs and bring more than $25 billion to the states’ economy. Studies consistently show how a strong arts program in a school leads to better student performance in other subjects. As we look at the world in which we live, we want to see, hear, and feel beauty around us. This is why businesses and individuals appreciate communities where the arts are strong.

The Current Reality
The Ohio legislature established the Ohio Arts Council (OAC) over 45 years ago to oversee public investments in art. In Ohio, the state investment creates further private investment. For every $1 of state money, private donors contribute $52. Studies have consistently shown that when the state cuts its investment, so do private individuals.

The OAC filters 82% of its resources out as grants to community groups, schools, organizations, and individuals. In times of economic uncertainty, investments into the arts are often the first things cut. We see this on the local level when schools cut back on art and music programs, and the state often acts in the same way.

In the FY 2010-11, significantly lower revenue from the 2005 tax overhaul coupled with the economic recession led to cuts to the OAC by 47%. This left the OAC with a 2-year budget of approximately $14.2 million. In Governor Kasich’s proposal for the 2012-13 budget, Governor Kasich proposed cutting an additional 19.5% to the OAC from the General Revenue Fund. However, this did not occur and instead, Ohio saw a funding increase to $17.2 billion. This increase in spending is notable because many other states were continuing to slash their public investments in art.

The 2014-15 Budget
Prior to the cuts to our revenue system and the economic downturn, Ohio invested over $20 billion in a biennium towards the arts. While the last budget made steps towards getting us back on track, we need to continue this effort.

As we learned in the last budget, a 19.5% cut can be turned into a budget increase when dedicated legislators hear from dedicated advocates on what these cuts mean. The governor has asked each state agency for budgets at 100% and 90% of current funding levels. Maintaining funding at the $17.2 billion level, factoring in inflation, is effectively a cut. Advocates will need to let their legislators know that flat line funding is unacceptable while Ohio is still recovering from the 2008-2009 recession. We need to get Ohio back on track by continuing to invest in the public services that make our communities stronger.

Also affecting the arts, as part of the upcoming budget season, Ohio will likely be presented with a new education funding formula. Many of the OAC grants are to schools and organizations that have strong collaborations with schools. The school funding formula could impact arts funding by requiring more OAC funds to be directed at schools to maintain current services and investments. The new funding formula could also impact the arts if some subjects are more weighted for funding than others. A well-rounded education needs to support strong investments in the arts for our students and community.

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

Filed Under: One Ohio Now Tagged With: Fiscal Focus, Humanities

How to Talk About the State Budget

January 8, 2013 by Gavin DeVore Leonard

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With 2013 comes the 2014-15 state budget (wouldn’t it be great if it was just called the 2013 budget?). Something will be introduced no later than February 4th -since that’s the law – and it’s likely that we’ll have a much better idea of the details within a week or so later. But we’ve already got three tips for how to talk (and think) about the budget:

Remember the past and learn from our mistakes. In 2005, a tax overhaul left us with $2.5 billion less in annual revenue in Ohio, leading to cuts of $1.8 billion to K-12 education and $1 billion to local governments in the current budget. The new budget cannot be considered the new normal – as the economy improves, we need to invest in the public services that make our communities stronger.
More income tax cuts mean more cuts to programs that Ohio families rely upon, like public education and public safety. Cuts to higher ed lead to higher tuition for students, health and human services cuts mean problems like mental health programs being underfunded, and many more. Be sure people you’re talking to understand that income tax cuts do not take us in the right direction.
We can get Ohio back on track. We need real reform that closes loopholes and balances our tax system so that the wealthiest Ohioans and corporations pay their fair share. We can give local governments who fix our roads and keep our communities safe the tools and resources they need. We can increase support for vital programs like those that support our seniors. And, by investing in our people and priorities like K-12 and higher education, we can create good jobs now and into the future. Together, we can ensure a fair state budget that works for all Ohioans.

Look for more from us in the weeks and months to come, but this primer should be a steady guide.

Filed Under: One Ohio Now Tagged With: state budget

Fiscal Focus: Transportation

January 3, 2013 by Nick Bates

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Why the Public Should Invest
Like 90% of Americans traveling this holiday season, my family and I utilized the interstate highways to visit family and friends. Our federally integrated network of highways, airports, canals and rail lines allow individuals to travel for the holidays, businesses to cheaply transport goods, and first responders to quickly respond to emergencies. Through strong state and federal collaboration, transportation infrastructure serves to connect all of us.

The Current Reality
The Ohio Department of Transportation (ODOT) oversees infrastructure in the state of Ohio. In addition to our roads, ODOT oversees 166 public use airports and oversees Ohio’s rail lines through the Ohio Rail Commission.

The primary funding for transportation infrastructure and maintenance in the country comes from federal and state gas taxes. The federal governmenthas a gas tax of 18 cents and Ohio has a 28-cent gas tax. The majority of the Ohio tax goes to ODOT—14.9 cents—and the rest is divided between counties, cities, townships, highway patrol, other state agencies, public works, and debt services to fund infrastructure.

The ODOT budget in FY 2012 was $2.70 billion and $2.85 billion in FY 2013. However, this is down from $3.23 billion in FY 2007, a cut of 12% over five years. As part of the FY 2007 budget, ODOT allocated $838 million towards major new projects, compared to the current budget that has less than $100 million allocated for new projects.

We have already seen the negative impact of less investment in transportation. ODOT has delayed 34 major projects and has reduced staff by 400 people since 2011. Two of the most notable delayed projects are the I-70/I-71 split project in Columbus and inner-belt work in Cleveland. In addition, the Brent Spence Bridge in Cincinnati will likely be funded using tolls instead of state investment.

As our transportation needs change, Ohio needs to adapt. An opportunity was missed when the federal government offered Ohio $400 million through the American Recovery and Reinvestment Act in 2009 to fund high-speed rail service connecting Cleveland, Columbus, and Cincinnati (the “3-C rail project”). Unfortunately, Governor Kasich chose not to accept this funding. Local communities continue to explore non-automobile options but find it difficult with decreased state support.

The 2014-15 Budget
In the 2014-15 budget, potential changes related to the turnpike – in addition to questions about funding for major infrastructure needs – will be important. Following a study, the Governor has proposed the issuance of $1.5 billion in bonds leveraged on the turnpike. This money will be borrowed now and paid back in the future by revenues generated by the turnpike. While the specifics are still being discussed, some have expressed concerns of toll increases and the diversion of revenue from the counties around the turnpike. The governor’s proposal will need legislative approval.

Revenue streams must remain up-to-date to reflect a 21^st century Ohio economy. The gas tax is seen as a barrier to transportation funding and investments, because cars are becoming more fuel-efficient. It may be worth considering if this tax is an appropriate and adequate mechanism to fund infrastructure investments. We need to have open conversation of what transportation infrastructure will need to be in the 21^st century for all of Ohio’s individuals and businesses.

It is also worth noting that as the oil and gas boom continues in Ohio, transportation infrastructure will be in drastic need of repair, expansion, and maintenance as a result of heavy truck use. Local communities will need state assistance in maintaining these roads and expanding some routes to handle the increased industrial activity. This is one potential use of an increased severance tax on oil and gas drilling. If we instead use additional severance tax revenue for an income tax cut, local community infrastructure will continue to be a concern.

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

Filed Under: One Ohio Now Tagged With: Fiscal Focus, state budget, transportation

New Set of Legislators, Same Need for Balanced Approach

January 2, 2013 by Gavin DeVore Leonard

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2013 has come, and with it a new set of legislators who will join those returning for the 130th General Assembly. The top agenda item entering the new year: Ohio’s 2014-15 state budget.

In particular, new legislators will likely make big decisions about income tax cuts, education funding, Medicaid expansion, and much more in the coming months.

On the income tax, Governor Kasich has clearly heard at least some of the questions – here’s a quote from this week’s piece in the Dayton Daily News:

This income tax is too darn high, and people say we’ve already lowered it and did it do any good? Yeah, it’s done good,” Kasich said at a news conference touting his administration’s 2012 accomplishments. “We’re at about 127,000 jobs, including a more business-friendly climate. But this tax, at 5.9 percent, is too high.

Over the coming months, we’ll have a chance to let Ohioans know about how the 2005 tax changes have led to places like Huber Heights seeking revenue due to state cuts. We’ll be able to contextualize the jobs info and show that Ohio has not seen the growth and jobs promised with tax cuts – in fact we’ve faired worse than the country as a whole. And the 5.9% – only the rate for the wealthiest Ohioans, who have done very well while wages for the majority of Ohioans have stagnated or dropped.

Indeed, there is much work to do as 2013 begins!

Filed Under: One Ohio Now


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