Ohio's $54 Billion Operating Budget

Yesterday was an historic day for the State of Ohio. Of course, House Democrats claim it's historic because of the changes to Ohio's Education funding - like many other things they have decided the debate is over and are claiming victory. But to those who pay attention, we know that it was historic not because we fixed education funding, but because for the first time since the DeRolph case was originally filed, Ohio is CUTTING funding for education! I don't think anyone thought when the governor campaigned on fixing education funding that he meant he was going to reduce the funding! And, the House Democrats continuously stated that we "finally have a funding mechanism that is constitutional". Excuse me, but I thought the legislature just wrote the law, I didn't realize that they interpreted it too! I thought that's what we had courts for.

When we passed (rather they; it passed along party lines 53-45 with one R absent) the budget yesterday, it had grown by about $600 million since the governor presented it, is 10% larger than last year and cuts funding to education by roughly $383 million over the course of the next two years! Much of the money for the new school funding formula is expected to come from somewhere, we just don't know where yet. But have no fears, the House Democrats have PROMISED to get the money. This led Rep. Seth Morgan to proclaim that we have created a new class of "unfundeds". We no longer just have unfunded mandates on the schools, but we now also have "unfunded promises" for the schools!

There are the conversion levies too! This is a difficult to explain idea that I'm not going to go into a great deal of detail on. But in a quick nutshell; conversion levies, if passed by the voters, will allow school districts to convert certain milage that we pay property taxes on to grow as your property value increases. Another easier albeit basic way to think of this is that your property taxes or at least a portion of them will rise at the rate of inflation.

Charter schools, E-schools, and higher education were also hurt in this budget. Charter schools will see a 20 percent cut in their funding. Institutions of higher education are asked to freeze their tuition increases for another two years and limit it to 3.5 percent after that while at the same time funding for two-year institutions were cut. E-school students were hit the hardest with a cut that will likely force many of their students back into traditional brick and mortar classrooms. The 74 percent cut in their funding will likely prove insurmountable.

The leadership of the House Democrats has been lacking during the entire process. Compare the passage of this budget (53-45)to the passage of the budget two years ago (98-1). I believe a nearly unanimous passage two years ago speaks volumes of the leadership while the party line vote yesterday tells a story too. And don't let anyone fool you into believing the Republicans had much of anything to do with this budget either, not that we didn't offer to help. Of the 150 or so amendments offered by Republicans both in committee and on the floor of the House, only about 2 were actually agreed upon by the Democrats. Talk about being bi-partisan and working together for all Ohioans! We are putting a lot of faith into the Republican controlled Senate to clean up this mess. Of course, they might be better off to pitch the whole thing and start over! Which, by the way, was an amendment we offered-to allow more time so some real progress could be made on fixing it-and guess what, it was denied. Go figure.

The budget is unsustainable and fiscally irresponsible. It uses over $5 billion in one-time revenue sources, including approximately $3.1 billion from federal bailout funds totaling nearly 10 percent of the GRF revenue. The use of this one-time money is setting us up for disaster in two years. The governor's own budget forecasters are predicting a $2 billion hole in the budget during the next budget cycle. Auditor of State Mary Taylor believes it will be closer to $8 billion. According to a report by the Legislative Service Commission, it would take a 24 percent increase in income taxes or a 31 percent increase in the sales tax to offset this hole. Of course, the governor is expecting that this won't matter because it will occur after his bid for re-election.

Current revenues are coming in under their original estimates and when House Democrats couldn't balance the budget as required by Ohio's constitution, they decided to use more optimistic revenue forecasts! Now, I've had to make lots of budgets, but never have I heard that when you can't make it balance that you should just adjust your revenues up, but that's what happened in the House.

The bill also includes over 150 new fees, fines, and penalties as proposed by the governor that will raise nearly $1 billion for the State. Most of which, amount to nothing more than tax increases because the funds are being used to free up funds in the tax-supported General Revenue Fund. The House Democrats added an additional $70 million in fees on top of those proposed by the governor. These fees apply across the board to everything from increased birth certificates and increased motor vehicle registration and vision screening to penalties on cosmetologists to increased livestock fees. Consumers will likely bear the brunt of the fee increases as businesses pass the costs on in the form of higher rates.

One of the most egregious of the new fees is the "Hospital Assessment Fee". The Ohio Hospital Association estimates this new fee will cost Ohio 6,800 jobs as hospitals lay off personnel to offset the more than $500 million they will be paying to the State. It is essentially a new tax on hospitals to help pay for the increases in Medicaid, which will now cover children up to 300 percent of the federal poverty level. This is a little over $60,000 for a family of four. We are likely to see employers reconfigure their health care plans to shift children of employees to Medicaid coverage and thus to state taxpayers.

A few other things in the Democrat budget that will affect your health care coverage (and costs)are the new requirements for all health plans to cover non-married, dependent children until age 29, and the elimination of the requirement that in order to receive unemployment coverage an individual must be eligible for continuing coverage through the employer and extending this coverage from six months to nine months. Here's the real kicker with health care coverage and the one that may leave your employer wondering if they should provide health care at all, is a new requirement that Autism Spectrum Disorder be covered up to $36,000 per year. Sounds nice, there's lots of kids with this debilitating condition and surely we want to help them, but the devil is in the details. This requirement is mandatory, the disorder MUST be covered, even if there are no dependents that need it, you will be required to carry a rider to cover it! Estimates have this costing $40 per employee per month. The exception...it is not required if insurance is not offered.

In these challenging economic times, the number one challenge confronting Ohio is job creation and job training to get Ohioans back to work. The budget as passed lacks focus on a job plan. But it gets worse because funding for some of our job training entities was actually cut!

The bottom line is that the governor and the House Democrats took the easy way out. They did not make the tough decisions that needed to be made. They did not prioritize. They kicked the can down the road and presented the State of Ohio with a 4,086-page behemoth of a budget that over-spends, over-taxes, and grows the government. It is irresponsible and Ohioans deserve better than that.