Kasich Balances Ohio Budget By “Seizing $2 Billion From Libraries, Local Governments And Schools”

In this You-tube video, Zach Schiller, the research director of Policy Matters Ohio, discusses Governor Kasich’s budget proposal. The organizer of the program is Dan Moulthrop, the “curator of conversation” for a northeast Ohio organization called the Civic Commons.

I’d like to know more about Civic Commons. This article says that it was initially funded with a $3 million grant from the Knight Foundation.  Moulthrop comes from a radio background —   former host of Cleveland’s WCPN 90.3 FM, “The Sound of Ideas” program.

Prior to joining Policy Matters in 2001, Schiller was a business reporter for The Plain Dealer and Business Week.  In this interview, Schiller says the Kasich budget is a plan to “Seize $2 billion over a two year period from libraries, local governments and schools.”

Schiller explains that sources of revenue long established for local communities is being eliminated in Kasich’s budget proposal.  Some of these changes go back to the 2005 Tax Reduction Act, that changed the taxation structure of business tax.  For some time, local schools and local governments were reimbursed by the state for the reduction in these taxes.  Now, the Kasich budget is eliminating these reimbursements.

One interesting point Schiller makes is that most Ohioans don’t appreciate the excellence of the state’s library system. Schiller says that Ohio has outstanding libraries — that Ohio regularly wins 30% of the awards for best libraries, with a population of 3.5% — and that part of what has made the library system great is state funding.  In Ted Strickland’s last  budget, the state reduced library funding by 23%.  Now Kasich is cutting library funding even more.

I received an interesting note from Mike Robinette, who is now involved in a new organization that I’d like to know more about, Integral Development. In his note, about the Kasich budget, Mike said:

  • Local governments and schools districts are hit hard, facing nearly $2 billion less in total payments from the state in 2012 and 2013 under Gov. John Kasich’s budget proposal, according to details released shortly after noon.
  • The Local Government Fund is cut by $555 million in the $120 billion, two-year budget which amounts to a 25 percent cut in the first year and a 50 percent cut in the second year. Additionally, the Kasich budget makes tax policy changes raiding a trio of reimbursement fund payments that local governments and schools receive, costing the entities roughly $1.3 billion.
  • The tax changes quicken the pace of phase-outs of payments to local governments and school districts for previous changes in state policy. The changes were made during electric deregulation in 1999 and when lawmakers overhauled business taxes in the 2005 budget. That $1.3 billion is then moved into the state’s general revenue fund to pay for state government programs.
  • Kasich’s budget also includes extensive privatization moves, including selling off five state prisons for $200 million and the leasing of the state’s liquor distribution network to JobsOhio, Kasich’s private development board.
  • The budget proposal takes steps to prepare for the possible sale of the state turnpike, but the sale proceeds are not included in the budget.
  • The main payment made by the state to school districts — known as the state’s foundation formula — goes up slightly in Kasich’s budget — 1.4 percent in 2012 and 1.3 percent in 2013.
  • However, the total amount that school districts get drops by 11.5 percent in 2012, and 4.9 percent in 2013. That adds up to a drop of $3.14 billion over both years combined — a sum that includes the loss from the tax policy changes as well as the loss of federal stimulus funds used to prop up the current budget.  Library funding under Kasich’s plan drops by 5 percent each year for a total cut of $168 million over both years.
  • Timber sales and oil and gas drilling on state parkland is included in Kasich’s plan and a sentencing reform piece that keeps low-level offenders out of jail is also part of the two-year spending blueprint.
  • At the Ohio Department of Job and Family Services, the state’s largest single agency, a $6 million pot of money for funding children’s hospitals is zeroed out.
  • It isn’t immediately clear how expected Medicaid restructuring within ODJFS shakes out in Kasich’s budget, but major savings are expected to come in this area.
  • The state’s Medicaid program, which serves 2.1 million low-income children, families, older adults and Ohioans with disabilities, represents roughly 30 percent of the state’s general revenue fund budget.
  • Overall, the state’s “all-funds” budget is $120 billion, a drop of 5.3 percent in the first year and a 1.3 percent rise in the second year when compared with the state’s current all-funds budget. In terms of the state’s general revenue fund numbers, the budget rises by 5.1 percent in 2012 and 6.3 percent in 2013.
  • The Kasich administration says in the budget proposal that it is expecting continued modest economic growth, with employment rising by 1.1 percent in 2012, and 1.3 percent in 2013. The tax policy changes that hit local governments and schools, combined with natural tax revenue growth, will mean revenues growing by 7 percent in each year of the budget.
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