www.policymattersohio.org 

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)

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

K-12 Higher Ed Medicaid Other HHS Corrections

Medicaid

K-12 educa-tion

Higher education

Health and human services other than Medicaid

Corrections

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, 2010 - 2010

Change in Medicaid Utilization in Ohio, 2010 - 2010

• Kai• Kai

A somewhat different storyShare of expenditures in the Ohio general revenue fund by major program

(state funds ONLY)

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

K-12 Higher ed Medicaid Other HHS Corrections

K-12 education

Non-Medicaid health and human services Medicaid

Higher education

Corrections

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

Lowest 20% (<$17,000)

Second 20% ($17 to $32,000)

Third 20% ($32-48,000)

Fourth 20% ($48-$74,000)

Next 15% ($74-135,000)

Next 4% ($135-$319,000)

Greater than $319,000

$19

$73

$180

$329

$700

$1,710

$10,089

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

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

5.91% 5.80% 5.80% 5.81% 5.74% 5.70% 5.63% 5.56% 5.51%5.31% 5.38%

4.27% 4.20% 4.18% 4.15% 4.11% 4.06% 3.99% 3.95% 3.92% 3.88% 3.87%

Ohio manufacturing jobs Ohio total employment

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.