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

House changed little in the budget

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

Change in Medicaid Utilization in Ohio, Kai

A somewhat different story Share 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:  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  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 Source: Policy Matters Ohio based on data from Ohio Legislative Services Commission - Budget in Detail

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

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

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 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  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.