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Policy Matters Ohio. Balancing the budget on the backs of the children: Ohio’s budget proposal heads into the home stretch. Wendy Patton, May 16, 2011. www.policymattersohio.org. House changed little in the budget.

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Policy Matters Ohio

Balancing the budget on the backs of the children:

Ohio’s budget proposal heads into the home stretch

Wendy Patton, May 16, 2011

www.policymattersohio.org

slide3
Growth in Medicaid shapes the budget: Share of Ohio general revenue fund by major program (state & federal funds together)

Source: Policy Matters Ohio based on Ohio Legislative Services Commission historical tables, Table 3 - Total State and Federal GRF Expenditure History

slide5
A somewhat different storyShare of expenditures in the Ohio general revenue fund by major program (state funds ONLY)

Source: Policy Matters Ohio based on Ohio Legislative Services Commission historical tables, Table 2 - State - Source GRF, LPEF, and LGF Expenditure History 

characteristics of the budget
Characteristics of the budget:
  • Risk - Sweeping policy changes, some with inadequate funding.
  • Passing the buck – Revenue sharing and tax replacements to local government and schools seized by the state.
  • Privatization – Prisons, schools, turnpike, liquor profits, even charter universities.
  • Job loss – Education cuts alone to cost close to 50,000 jobs
some policy is good
Some policy is good
  • Medicaid eligibility is not cut.
  • Optional medical services are preserved.
  • Prison sentencing reform is embraced.
  • Elder care balanced between home and institution.
  • Privatization will permanently drain public wealth
  • Seizing local funds does not stabilize state finances yet destabilizes public finance at all levels of government
  • The unspoken agreement that elimination of collective bargaining rights will restore fiscal stability is a myth.

Inadequate financing negates progress

top ten spending cuts
Top Ten Spending Cuts

Source: Policy Matters Ohio based on data from Ohio Legislative Services Commission - Budget in Detail

top ten increases
Top Ten Increases

Source: Policy Matters Ohio based on data from Ohio Legislative Services Commission - Budget in Detail

overwhelming demand for local access to safety net programs
Overwhelming Demand for Local Access to Safety Net Programs
  • 1 of every 4 Ohioans will seek assistance at a local job and family service agency this year.
  • 1/3 of those seeking assistance are new to the system.
  • 1 out of every 6 Ohio citizens receives food assistance (increase of 61%)
  • 1 out of every 5 Ohio citizens receives Medicaid (increase of 30%) with a projected growth of 158,000 in the next two years.
cuts affecting services for children
Cuts affecting services for children
  • Cuts to public education total $2.1 billion biennium to biennium
  • Other cuts are found throughout the budget.

Source: Policy Matters Ohio based on Ohio Legislative Services Commission, Budget in Detail

local governments
Local governments
  • Lose $1 billion from state seizing of tax replacements and half of revenues sharing.
  • Face another $230 million loss from repeal of the estate tax in 2013, 80 percent of which goes to local governments.
  • Cleveland anticipates closure of firehouses, reduction of police patrols, cuts in ambulance services, 80% reduction in substance abuse services.
  • A survey of townships in southwest Ohio found that on average, 16 percent of their GRF depends on the LGF.
legislators continue to ignore the revenue side of the ledger
Legislators continue to ignore the revenue side of the ledger
  • $7.7 billion in tax expenditures are not touched, although almost every agency is cut.
  • The proposed budget contains implementation of the final year of the tax overhaul of 2005, an $800 million tax cut which favors top earners.
  • The proposed budget expands tax credits and eliminates sources of revenue to local government (the estate tax).
tax loopholes spending cuts
Tax loopholes….Spending Cuts

Source: Policy Matters Ohio budget Brief, May 10, 2011

the 2005 tax cuts favor top earners
The 2005 tax cuts favor top earners

Source: Policy Matters Ohio based on data from the Institute on Taxation and Economic Policy

business taxes have not kept up with inflation for a long long time
Business taxes have not kept up with inflation for a long, long time

Source: Policy Matters Ohio based on Ohio Legislative Services Commission historical revenue data

why are legislators not taking a balanced approach
Why are legislators not taking a balanced approach?
  • The myth is jobs grow where taxes, wages, standard of living, public services and human rights are low.
  • We can’t be China – the low road has not worked in Ohio; low taxes have not yielded a burst of jobs.
ohio jobs as a share of u s jobs the tax overhaul of 2005 did not make a difference
Ohio jobs as a share of U.S. jobs:The tax overhaul of 2005 did not make a difference

Source: Policy Matters Ohio, drawn from US Department of Labor, Bureau of Labor Statistics, CES, non-agricultural employment, annual averages

a balanced approach to budgeting
A balanced approach to budgeting
  • Leadership needs to take a balanced and responsible approach to budgeting.
  • Service delivery must be efficient, but the budget should not be balanced on the backs of Ohio’s children.
  • Ohio corporations have said that a well trained workforce, quality of life and good public schools for employees children matter to their location decisions.
  • This budget works against what makes Ohio a great place.