Ohio State Budget 2012-2013Ohio State Budget 2012-2013

Ohio 2012-2013 Budget SummaryWhat is lost?

Ohio 2012-2013 Budget SummaryWhat is lost?

School kids lose …. $2.3 billion reduction over the biennium to K-12 education, 610 out of 613 school districts see cuts.

College kids and their parents lose …. $413 million or 8.1% cut for Regents over the biennium; $490 million or 12.3% cut in state share of instruction, which supports classroom learning.

Low-income kids who want to go to college lose…. Cuts of 5% to financial aid through Ohio College Opportunity Grants.

Local government loses…… $1 billion in revenue distribution and committed tax replacements.

Community medical services lose: Federal qualified health care centers are cut. Immunization programs are cut.

School kids lose …. $2.3 billion reduction over the biennium to K-12 education, 610 out of 613 school districts see cuts.

College kids and their parents lose …. $413 million or 8.1% cut for Regents over the biennium; $490 million or 12.3% cut in state share of instruction, which supports classroom learning.

Low-income kids who want to go to college lose…. Cuts of 5% to financial aid through Ohio College Opportunity Grants.

Local government loses…… $1 billion in revenue distribution and committed tax replacements.

Community medical services lose: Federal qualified health care centers are cut. Immunization programs are cut.

Stakeholder suggestions for Medicaid efficiencies and reform are included.

Prison sentencing reform is to be implemented.

School vouchers and charters will grow even as the rest of the education budget is slashed.

Infrastructure spending is up at the Ohio School Facilities Commission and ODOT.

Some small services to businesses and residents get badly needed boosts – Environmental Review Appeals Commission, Board of Tax Appeals.

Energy Companies get to drill in parks and preserves.

128 Tax loopholes worth $7 billion are preserved.

Stakeholder suggestions for Medicaid efficiencies and reform are included.

Prison sentencing reform is to be implemented.

School vouchers and charters will grow even as the rest of the education budget is slashed.

Infrastructure spending is up at the Ohio School Facilities Commission and ODOT.

Some small services to businesses and residents get badly needed boosts – Environmental Review Appeals Commission, Board of Tax Appeals.

Energy Companies get to drill in parks and preserves.

128 Tax loopholes worth $7 billion are preserved.

Ohio 2012-13 Budget: Who Wins?Ohio 2012-13 Budget: Who Wins?

Themes of the Executive BudgetThemes of the Executive Budget

• RISK:

Sweeping changes, including some very good and needed changes, are proposed for Medicaid programs and the prison system, yet cuts or lack of clarity in policy for programs with new responsibilities may cloud chances for success.

• RISK:

Sweeping changes, including some very good and needed changes, are proposed for Medicaid programs and the prison system, yet cuts or lack of clarity in policy for programs with new responsibilities may cloud chances for success.

Themes of the Executive BudgetThemes of the Executive Budget

Pushing the fiscal crisis to locals:

Over a billion dollars in revenue sharing or funds to help replace taxes lost through state action are recaptured by the state, pushing the fiscal crisis down to the local level.

Pushing the fiscal crisis to locals:

Over a billion dollars in revenue sharing or funds to help replace taxes lost through state action are recaptured by the state, pushing the fiscal crisis down to the local level.

Themes of the Executive BudgetThemes of the Executive Budget

Job loss:

OPERS estimates the state’s seizing of local government funds will cost 5,000 jobs. Up to 7,500 teaching positions are thought to be at risk. This is on top of the 16,000 passenger rail-related jobs sent back to Washington.

Job loss:

OPERS estimates the state’s seizing of local government funds will cost 5,000 jobs. Up to 7,500 teaching positions are thought to be at risk. This is on top of the 16,000 passenger rail-related jobs sent back to Washington.

Themes of the Executive BudgetThemes of the Executive Budget

Privatization/ Sale of taxpayer assets:

• Ohio’s liquor profits, which garners hundreds of millions of dollars for state services annually, would be sold.

• Five prisons will be sold, all to be operated by contractors.

• Leases for private fossil fuel drilling is to be encouraged in state parks.

Privatization/ Sale of taxpayer assets:

• Ohio’s liquor profits, which garners hundreds of millions of dollars for state services annually, would be sold.

• Five prisons will be sold, all to be operated by contractors.

• Leases for private fossil fuel drilling is to be encouraged in state parks.

Inflation has eroded tax revenueInflation has eroded tax revenue

FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 $-

$5,000

$10,000

$15,000

$20,000

$25,000

$15,618

$20,912

Actual Inflation-adjusted

Total tax revenue, annual, ($billions)

Structural revenue imbalance persistsStructural revenue imbalance persists

FYS '00 - '01 FYS '02 - '03 FYS '04 - '05 FYS '06 - '07 FYS '08 - '09 FYS '10 - '11 FYS '12 -'130.0

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

30,000.0

35,000.0

40,000.0

45,000.0

31,267.3

39,032.3

36,372.8

Total tax revenue (biennium, $ in billions)

To

tal

Rev

enu

e (I

n M

illi

on

s)

Sources of funds for shortfall:Sources of funds for shortfall:

• K-12 and higher education• Recapture of funds for local

governments, libraries and schools• One-time revenues (sale of state

assets, debt refinancing)• Human services and some health

services are hit hard.

• K-12 and higher education• Recapture of funds for local

governments, libraries and schools• One-time revenues (sale of state

assets, debt refinancing)• Human services and some health

services are hit hard.

Key points:Key points:

• The fiscal crisis is not solved, it is pushed down to the local level.

• Safety net services are cut at a time of escalating needs.

• Structural imbalance in our system of public finance is not fixed.

• The fiscal crisis is not solved, it is pushed down to the local level.

• Safety net services are cut at a time of escalating needs.

• Structural imbalance in our system of public finance is not fixed.

The Problem : A Crisis in RevenuesThe Problem : A Crisis in Revenues

Recession led to a 12 percent decline in overall tax revenues, while service demands rose sharply.

Largest tax cut in 70 years enacted in the 2005 tax overhaul.

Recovery Act Funding was not renewed

Recession led to a 12 percent decline in overall tax revenues, while service demands rose sharply.

Largest tax cut in 70 years enacted in the 2005 tax overhaul.

Recovery Act Funding was not renewed

Source: Ohio Departments of Aging, Mental Health, Developmental Disabilities, and Job and Family Services. Figure for TANF is based on October.

December 2007(PRE - RECESSION)

September 2010(RECESSION)

Unemployment - 6% Unemployment - 10%

1.1 million food stamp recipients

1.7 million food stamp recipients

1.6 million Medicaid recipients

2.2 million Medicaid recipients

173,254 TANF cash assistance recipients

231,234 TANF cash assistance recipients

Change in Medicaid Utilization in Ohio, 2001 - 2010

Change in Medicaid Utilization in Ohio, 2001 - 2010

• Kai• Kai

1) Personal income tax cut by 21 percent, favoring top earners

2) End of Ohio’s corporate income tax and a major property tax on business – replaced

Net effect of all tax changes:

$2.1 billion in cuts a year,

(half the budget shortfall)

1) Personal income tax cut by 21 percent, favoring top earners

2) End of Ohio’s corporate income tax and a major property tax on business – replaced

Net effect of all tax changes:

$2.1 billion in cuts a year,

(half the budget shortfall)

2005 Ohio Tax CutsLargest in 70 years2005 Ohio Tax CutsLargest in 70 years

Tax Cuts Failed to Deliver JobsTax Cuts Failed to Deliver Jobs

2000 2001 2002 2003 2004 2005 2006 2007 2008 20090.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

4.30%4.13%

3.85%

5.91%5.70%

5.31%

"OH share of total national employment""OH share of national manufacturing employment"

Loss of school fundingmeans teachers willlose their jobs, crowdedclasses, closed schools.

Loss of school fundingmeans teachers willlose their jobs, crowdedclasses, closed schools.

Ohio 2012-2013 Budget SummaryOhio 2012-2013 Budget SummaryBad for public schools:Bad for public schools:

As teachers lose jobs, local businesses and stores feel the impact and the local economy suffers.

As teachers lose jobs, local businesses and stores feel the impact and the local economy suffers.

Ohio 2012-2013 Budget SummaryOhio 2012-2013 Budget Summary

Spending for federally qualified health clinics drops, even while federal funding for such clinics is also on the block. These clinics serve the working poor who cannot afford health insurance, but do not qualify for Medicaid. Immunization programming for the same population is also cut.

Spending for federally qualified health clinics drops, even while federal funding for such clinics is also on the block. These clinics serve the working poor who cannot afford health insurance, but do not qualify for Medicaid. Immunization programming for the same population is also cut.

Cuts in needed services

Cuts in key programs for kids – including kinship permanency program, a $5 million program to keep children with relatives. Eligibility for child care subsidies is reduced.

Cuts in key programs for kids – including kinship permanency program, a $5 million program to keep children with relatives. Eligibility for child care subsidies is reduced.

Local government funds and human service programming for local service delivery are cut

Ohio 2012-2013 Budget SummaryOhio 2012-2013 Budget Summary

Less local services, like snowplowing

Fewer funds for human services

Less for public safety

Fewer resources for environmentalclean-up

These cuts are not necessary !!

Let’s talk about a balanced approach that adds REVENUE to prevent drastic cuts

Let’s talk about a balanced approach that adds REVENUE to prevent drastic cuts

Fiscal Fact: Ohio is not a high tax state.

Ohio is not a high-tax state – even the Tax Foundation, the source of the mistaken notion that we have the 7th highest taxes in the country, now pegs our taxes 18th, a tad below the national average as a share of income.

There are options for raising revenue that increase accountability, equity and balance in our system

There are options for raising revenue that increase accountability, equity and balance in our system

• Tax expenditures: $7 billion in tax loopholes.

• Balance taxes between families and businesses.

• Restore top rates on the income tax.

• Prevent elimination of the estate tax, which would benefit a small share of citizens (8 percent).

• Prevent the proposed capital gains tax cut, which would help only a small group (8 percent)

53% of Ohio citizens believe revenue should be part of the solution

53% of Ohio citizens believe revenue should be part of the solution

Tax expenditures are spending, but they are not viewed in that way. Ohio allows more than $7 billion a year in exemptions, credits and deductions.

– No sales tax is paid when a company hires a lobbyist -

– One single tax break amounts to more than all the franchise tax banks pay -

– Wealthy individuals who buy shares in jet aircraft pay little sales tax on their purchases –

Many loopholes have gone unexamined for decades.

Tax expenditures are spending, but they are not viewed in that way. Ohio allows more than $7 billion a year in exemptions, credits and deductions.

– No sales tax is paid when a company hires a lobbyist -

– One single tax break amounts to more than all the franchise tax banks pay -

– Wealthy individuals who buy shares in jet aircraft pay little sales tax on their purchases –

Many loopholes have gone unexamined for decades.

A Balanced Approach includes Revenue

A Balanced Approach includes Revenue

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: Institute on Taxation and Economic Policy

2005 Tax Cuts Favored Top Earners

2005 Tax Cuts Favored Top Earners

• The business share of Ohio state and local taxes has fallen from almost 40% in 1976 to less than 30% today.

• A family of four at the poverty line pays nearly as much state income tax as a business with $1 million in receipts pays in Commercial Activity Tax.

• The business share of Ohio state and local taxes has fallen from almost 40% in 1976 to less than 30% today.

• A family of four at the poverty line pays nearly as much state income tax as a business with $1 million in receipts pays in Commercial Activity Tax.

2005 Tax Cuts – Reduced business tax revenue, led to imbalance in system

2005 Tax Cuts – Reduced business tax revenue, led to imbalance in system

It is time to stand up and fight for our families and

communities

It is time to stand up and fight for our families and

communities

1. Tell your State Legislators that you expect responsibilityand balance in pubic finance in Ohio

2. Talk to your friends, family and co-workers.

3. Join One Ohio Now to advocate for a fair and balanced biennial budget!!!

1. Tell your State Legislators that you expect responsibilityand balance in pubic finance in Ohio

2. Talk to your friends, family and co-workers.

3. Join One Ohio Now to advocate for a fair and balanced biennial budget!!!