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Ohio state budget (2008-2009)

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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.^[1] However, in early May 2009 it was reported that Ohio was facing a $600 million to $900 million budget gap for fiscal year 2009.^[2] According to the Strickland Administration, 2009 and 2010 will witness the most serious erosion in revenues that has taken place in 40 years.^[3]

Office of Budget and Management Director J. Pari Sabety's testimony to the Ohio House Finance and Appropriations Committee, she said:

"While these are indeed extraordinary times, and some might suggest these are unusual measures, we are seizing the opportunity that this economic crisis provides us to restructure the state budget for a sustainable future through a variety of measures. These measures will result in cost savings, make government operations more efficient and responsive to our citizens and will lower the call on scarce general fund tax dollars in the future."^[4]

[edit] Finalized budget

The legislature and Governor failed to approve the budget by the end of June and extended the deadline by a week.^[5] The state is looking at a $3.2 billion shortfall in the 2010-2011 budget.^[6] 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.^[6] 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.^[6]

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.^[7][8] The governor signed the budget into law on Friday, July 17, 2009.

• Two higher education programs were removed from the final budget: a 2-year tuition freeze was removed, giving universities the ability to raise tuition by 3.5% for the next two years; and a 5-year $250 million program to give college students opportunities to work at local businesses.^[9]
• The final budget agreement calls for the governor to issue an executive order to authorize the video slot machines at Ohio racetracks. Gov. Strickland originally proposed video slot machines as a method to attract new forms of revenue to solve the state's budget gap problem, however, Strickland's proposal did not call for the use of an executive order. Disputes about video slot machines delayed legislators from deciding on a final budget agreement.^[10]

[edit] Impact of budget woes

Main article: State budget crisis, 2009-2010

• In April 2009 the unemployment rate reached 10.2 percent, hitting double digits for the first time in more than 25 years. In March 2009 the rate was 9.7 percent. The last time the rate reached 10 percent was in October 1981 when unemployment rose from 9.7 percent to 10.1 percent. The rate didn't drop until February 1984.^[11]
• Planned cuts to Ohio's early childhood education programs total approximately $244 million in the two-year budget plan approved by the Ohio House. The cuts would nearly erase a $270 million boost in funding the programs received in the current budget that ends June 30,2009.^[12]
• The Columbus, Ohio police chief warned residents that they will have to cut one out of every six of its officers (approximately 297 officers) if voters reject the city's half-percent income tax increase in August 2009. The Columbus Police Department proposed budget cuts total almost $26 million. The city has already slashed $13 million in 2009 and may have to cut another $16 million.^[13]
• Cincinnati, Ohio officials said that layoffs and budget cuts are necessary due to a looming budget deficit. Cuts are estimated to reach $40 million by 2010. Chris Bortz, Cincinnati Council Member said that he expects to see a $20 million deficit in 2010.^[14]
• Ohio University announced that they will be raising tuition by approximately $200 to $300 to make up for lower than anticipated state support.^[15]

[edit] Budget background

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.^[16]

• The proposed 2010-2011 budget allocates $54.7 billion, but the budget's workability hinges upon receipt of $4.9 billion in federal funds.^[17]

[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 [18]	$372.0 [18]
2001	$74.6 [18]	$374.7 [18]
2002	$80.8 [18]	$389.8 [18]
2003	$85.2 [18]	$402.4 [18]
2004	$85.2 [18]	$423.7 [18]
2005	$92.0 [18]	$439.3 [18]
2006	$97.4 [18]	$451.6 [18]
2007	$100.0 [18]	$466.3 [18]
2008	$102.7 [18]	$481.7 [18]
2009	$105.4* [18]	$480.9* [18]

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.

[edit] Ideas about why the crisis exists

• April 2009 income-tax revenue was a full 22 percent below estimates. Those estimates had been downgraded for the third time in six months as recently as January,2009. State officials said income-tax revenue has plummeted 15.3 percent through the first 10 months of this fiscal year, the first drop in more than two decades.^[2]
• Not anticipating a budget gap for FY 2009, Ohio officials estimated using the $948 million rainy-day fund to balance the 2010-11 fiscal years, however, now that income-tax revenues have dropped, officials are searching for an alternative source of revenue to balance not only FY 2010-11 but also FY 2009. ^[2]
• In 2005, the Ohio General Assembly voted in a 21% across-the-board income tax cut. This tax cut lowered income tax revenue with the assumption that the economy would continue to grow. Now, in 2009, that tax cut on top of reduced income tax revenues from the deep recession (the economy is now shrinking) have combined to create greater deficits for the FY 2010-2011 budget.

[edit] Proposed actions

[edit] Governor Ted Strickland

Gov. Ted Strickland’s spending plan for the next two years calls for $54.36 billion for the state’s General Revenue Fund, up from $52.64 billion in the current biennium.^[19] In Gov. Strickland's 2010-2011 budget recommendation the governor called for state program reductions of 10 to 20 percent. In total the governor reduced spending by 3.2 billion dollars from 2009 planning levels. The budget plan utilizes $3.4 billion in federal stimulus funds. "Without the infusion of federal resources, we would have had to impose far more substantial cuts to balance our budget," said Strickland. For university campuses, the governor requested that the tuition freeze continue throughout 2010.^[20]

The Governor has proposed a plan that would expand the Ohio Lottery to include video lottery terminals (VLTs), which are similar to slot machines.^[21] These machines would be placed at horse tracks throughout the state and are expected to generate $933 million in revenue for the state. However a similar program that expanded Keno in restaurants was approved last year, which was expected to bring in $75 million and only garnered $20 million.^[21] In addition the popularity with the voters is questioned as ballot initiatives for gambling were turned down in 1990, 1996, 2006 and in the past election.^[21]

[edit] Republicans

Republican lawmakers said that they are frustrated with the current status of the budget, considering that the Governor's recommendation was based on little to no deficit for the ending fiscal year of 2009, which no longer is the case. Senate President Bill Harris said drastic cuts to state agencies were the only way out of the crisis."We have a budget from the governor and we've got a budget from the House, and neither one of them is fiscally balanced and fiscally responsible," he said.^[2] In late May 2009, Senate Republicans slashed approximately $1 billion from the state's budget. The Republicans' budget proposal included $417 million in cuts to agency budgets, including cuts to the Department of Development, $70 million, and Department of Job and Family Services, $150 million. "We simply did not have the money without raising taxes," said Sen. John Carey of the cuts. "I'm sorry it had to be cut, but if the money isn't there, we can't spend it."^[22]

[edit] Democrats

In response to the Governor's budget recommendation Democrat lawmakers in the House boosted total state spending to more than $114 billion for FY 2010-11, a $10 billion increase over the current two-year budget amount. In defense of the budget proposal, Rep. Vernon Sykes said his party’s bill provides “a balanced and responsible budget during a time of economic crisis.” Democrat legislators said that the the plan will spur economic growth, create jobs, protect state services for those hit hardest by the economic downturn, maintain affordable college tuition and replace Ohio’s “broken school funding system.” It is reported that House Democrats used a more optimistic revenue projection from the Ohio Legislative Services Commission than more recent budget numbers in May 2009 that reveal a drop in income-tax revenues. “We’re making investments that will allow us to grow out of this (economic) problem,” said Rep. John Carney.^[19]

[edit] Economic Stimulus Package

Ohio is expected to receive $8.9 billion from the $787 billion dollar economic stimulus.^[23] All told, the federal stimulus plan would create or save 133,000 jobs in Ohio, based on White House estimates.^[24] 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.^[23]

• 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^[25]
• $96.1 million for the state energy program^[26]
• $648.2 million for transportation highway projects^[27]

As of June 2009:^[23]

• $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] Budget transparency

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

[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.^[28]

• Ohio will receive an estimated $5,496,927,002.^[29]

• 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.^[30]

The National Taxpayers Union wrote a letter in favor of House Bill 420.^[31]

[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."^[32]

[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.^[33] 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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