Ohio state budget

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Ohio has had an ongoing budget saga throughout 2009 that remains unresolved while currently struggling with an $851 million, 2-year budget deficit created when the Ohio State Supreme Court on Sept. 21, 2009 ruled that the Ohio General Assembly's video lottery plan to balance the FY 2010-2011 biennium budget violates the Ohio Constitution.^[1] The General Assembly authorized installation of up to 17,500 video lottery terminals (VLTs) at Ohio horse racing tracks, but the Ohio Supreme Court found the plan must be subject to a statewide voter referendum because it does not fall within any of the exceptions to the right of referendum.^[2]

The 6-1 majority opinion of the Court stated, “We are not unmindful of the effect our decision may have on the state budget, nor of the commendable efforts of the members of the executive and legislative branches of state government to fulfill their constitutional duties to balance the budget in Ohio; however, our own constitutional duty is to ensure compliance with the requirements of the Ohio Constitution irrespective of their effect on the state’s current financial conditions.”^[3]

A bill (HB 318) was introduced in the Ohio House of Representatives on Oct. 16, 2009 to repeal the last reduction of income tax relief from 2005 to replace the video lottery revenue is effectively a 4.2% retroactive income tax increase. The 2005 income tax relief plan is a 5-year reduction by 21% with HB 318 suspending the last installment.^[4][5] The tax relief repeal bill passed the Ohio House of Representatives on October 21, 2009 by 55-44 votes and is currently in the Ohio Senate Finance and Financial Institutions Committee as of November 5, 2009.^[6]

Gov. Ted Strickland issued a statement of strong support for the bill to repeal the 4.2% of income tax relief the day it was introduced, citing the need to protect education.^[7] Critics of the tax relief repeal bill to balance the budget point out cuts and cost effective reforms with real, long-term solutions are needed and that raising taxes will further hamper economic recovery.^[8]

HB 318 will increase the General Fund budget for FY 2010 from $25.137 billion to $25.992 billion, and increase FY 2011 from $25.555 billion to $26.418 billion.^[9]

[edit] Budget Background

Ohio faced not only a budget deficit in fiscal year 2009, but also faced a budget deficit of more than $7 billion in the 2010 - 2011 operating budget, according to Governor Ted Strickland and Budget Director J. Pari Sabety.^[10] However, in early May 2009 it was reported that Ohio was facing a $600 million to $900 million budget gap for fiscal year 2009.^[11] According to the Strickland Administration, 2009 and 2010 will witness the most serious erosion in revenues that has taken place in 40 years.^[12]

The legislature and Governor failed to approve the budget by the end of June and extended the deadline by a week.^[13] The state is looking at a $3.2 billion shortfall in the 2010-2011 budget.^[14] The temporary budget allows most state agencies to operate at 70 percent their funding from the 2009 fiscal year, divided by a 52 week allotment.^[14] Other programs, such as adoption agencies, have been forced to shut down and it is expected their will be $2.4 billion in cuts for the new budget.^[14]

The finalized 2010-11 budget is estimated to include $50.5 billion in spending, a $0.7 billion increase compared to years 2008-09. The budget includes a cut in state aid to public education. For 2010, state aid will drop from $8 billion to $7.5 billion and in 2011 aid will drop to $7.2 billion. Despite the cut in state aid, the use of federal stimulus dollars increases total education funding by $502 million.^[15][16] The governor signed the budget into law on Friday, July 17, 2009.

Ohio operates on a biennium, covering two fiscal years at a time. For example, the 2009-2011 biennium consists of year 1, July 1, 2009 to June 30, 2010, and year 2, July 1, 2010 to June 30, 2011. For the legislature, work on the budget occurs during the first six months of the first regular session of the General Assembly. First, though, individual state agencies submit their budget requests along with past expenditures and revenue to the governor who proceeds to issue a budget recommendation for the upcoming fiscal year to the Legislature. In the years in which a new governor takes office, the report can be presented as late as March 15. Both the House and the Senate must approve the budget bill before it can be signed into law by the governor.^[17]

• The proposed 2010-2011 budget allocates $54.7 billion, but the budget's workability hinges upon receipt of $4.9 billion in federal funds.^[18]

[edit] Budget figures

The following table provides a history of Ohio's expenditures and gross domestic product (GDP).

Fiscal Year	Expenditures (billions)	GDP (billions)
2000	$68.4 [19]	$372.0 [19]
2001	$74.6 [19]	$374.7 [19]
2002	$80.8 [19]	$389.8 [19]
2003	$85.2 [19]	$402.4 [19]
2004	$85.2 [19]	$423.7 [19]
2005	$92.0 [19]	$439.3 [19]
2006	$97.4 [19]	$451.6 [19]
2007	$100.0 [19]	$466.3 [19]
2008	$102.7 [19]	$481.7 [19]
2009	$105.4* [19]	$480.9* [19]

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
• See Ohio state budget (2008-2009) for more information

[edit] Accounting Principles

The Ohio Auditor of State is responsible for auditing all public offices in Ohio, more than 6,500 entities including cities, counties, villages, townships, schools, state universities and public libraries as well as all state agencies, boards and commissions. Mary Taylor was elected Auditor of the State in 2006. Her office publishes the state's audit reports online, directly on the home page.^[20]

The Institute for Truth in Accounting (IFTA) rates Ohio “Worst” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Ohio's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[21] Ohio's CAFRs are prepared and published online by the Ohio Office of Budget and Management. J. Pari Sabety is the Director of the Ohio Office of Budget and Management.^[22]

Credit Rating	Fitch	Moody's	S&P
Ohio[23]	AA+	Aa2	AA+

Ohio currently has no statewide, official spending database online. However, House Bill 420 would make this information available.

[edit] Accounting transparency checklist

Comprehensive Balanced budget Timeliness Usability

[edit] The good

• The website has Comprehensive Annual Financial Reports (CAFR) dating back to 1997.^[24]
• An independent auditor’s report is published on page 1 of the document.^[25]
• It provides supplements to the budget workup, starting on page 141.
• The budget is posted using organized and consistent methods of financial reporting.
• Ohio law requires a balanced budget, but allows a deficit under $750,000.^[26]
• It includes all costs incurred by the government, including long-term liabilities, starting on page 36 of the document.^[25]
• The CAFR compares estimated and actual budgetary numbers, such as on page 38 of the document.^[25]

[edit] The bad

• The Ohio office was tardy in submitting the budget.
• The CAFR is posted in a PDF format, so it’s not searchable online.

[edit] Economic Stimulus Package

Ohio is expected to receive $8.9 billion from the $787 billion dollar American Recovery and Reinvestment Plan.^[27] All told, the federal stimulus plan would create or save 133,000 jobs in Ohio, based on White House estimates.^[28] However, in July of 2009 concerns are being raised that point to tracking the impact of the recovery funds as agencies are receiving guidance on how to spend the money from federal agencies.^[27]

• For more information on how the federal stimulus funds are being used in the state of Ohio, visit the state recovery website.

According to preliminary reports, Ohio is expected to receive:

• $104 million towards the Ohio Housing Finance Agency^[29]
• $96.1 million for the state energy program^[30]
• $648.2 million for transportation highway projects^[31]

As of June 2009:^[27]

• $711 million has been dedicated to maintaining and increasing medicaid assistance.
• On June 25th, the legislature had obligated $384 million of the $936 million highway infrastructure stimulus dollars to the Federal Highway Administration.
• The federal Weatherization Stimulus Program, totaling $267 million in funding, will begin work on weatherizing 32,000 units. The cleared for half that cash and obligated another $20 million.

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[32][33]

ARRP's website overestimated Ohio's Congressional Districts by 10. Congressional District 00 and 99 were two of ten new congressional districts listed as receiving federal stimulus dollars this year. Eight of those districts received money but did not create any jobs.^[34]

[edit] Budget transparency

Ohio currently has no statewide, official spending database online. However, House Bill 420 would make this information available.

[edit] Website evaluation

Budget Usability Elected Officials Administrative Officials Ethics Audits Contracts Lobbying Public records Taxes

Ohio.gov is the website for the state of Ohio.

• Main article: Evaluation of state websites

[edit] The good

• Site has a search function and is easy to navigate.
• Budget is published.^[35]
• Information about taxes is provided.^[36]
• Audit reports are published.^[37]
• Contact information is provided for elected and administrative officials.^[38]
• Ethics information is posted.^[39]
• Current state contracts are available in a searchable database.^[40]

[edit] The bad

• Information on Ohio Open Records Law is provided,^[41] but no forms/contact information for making public records requests is available.
• Does not provide information on lobbying.

[edit] Legislation

Although no legislation is currently in place to create spending transparency, House Bill 420 will do so if it is adopted by the Senate and by Governor Ted Strickland.

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary	Exemption Level
None	n/a	n/a	n/a	n/a	n/a	n/a	n/a

The Ohio Arts Council has posted a searchable database of the grants that it awards during each fiscal year. Click here to access it.

[edit] Limitations and Suggestions

[edit] Economic Stimulus Transparency

• The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[42]

• Ohio will receive an estimated $5,496,927,002.^[43]

• The economic recovery website to show how legislators and government officials in Ohio are spending Federal funds is available here.

[edit] Support for creation of the database

Americans for Tax Reform State Government Affairs Manager Sandra Fabry submitted a statement in favor of Ohio House Bill 420.^[44]

The National Taxpayers Union wrote a letter in favor of House Bill 420.^[45]

[edit] Independent transparency sites

The Buckeye Institute has launched a website, www.ohiosunshine.org. According to the site,

"Our mission is to serve as a convenient place where Ohio citizens and others with an interest in ensuring that government is open, honest and accountable may join together and work to ensure that government data is available to everyone. This includes government officials and offices at all levels that might find OhioSunshine.org a convenient place to post information that is commonly requested, thereby reducing their own burden while simultaneously easing the burden of citizens seeking information."^[46]

[edit] Public employee salary information

• The Buckeye Institute posted, on January 1, 2006, a state employee salary database here.

• As of January 2009, the Buckeye Institute has provided information on certain salaries received by Ohio State University employees. The database is available here.

• In July 2009, the Buckeye Institute requested a salary database for all City of Columbus employees. Detailed salary information on the top 10 salaries in 2008 can be found here.^[47] Information on the top overtime earners for 2008 can be found here.

• Salary 2005 data on certain state employees is available here.

[edit] See also

• Ohio taxpayer-funded lobbying

[edit] External links

[edit] Additional reading

• Gov. Ted Strickland,"2009 State of the State," retrieved June 1,2009
• Associated Pres,"Perspective: Ohio budget hurt by economy, politics," May 18, 2009
• Dayton Daily News,"State lawmakers hold noses, approve budget," July 14, 2009

[edit] References

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	v • d • e State of Ohio Columbus (capital)
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