The Ohio Budget: Recovery. Relief. Reform.A presentation on job growth, economic opportunity & fiscal responsibility

August 2011

$8.6 Billion Deficit / one-time funds in previous BudgetOhio School Facilities Commission Loan $ 250,000,000Rotary Fund Transfers $ 45,000,000Fund 4K90 Transfer $ 30,000,000Human Resource Rotary Transfer $ 142,000,000Human Resource Lapse in GRF $ 130,000,000Tobacco Interest from Bond Fund $ 65,000,000Public Library Fund Temporary Reduction $ 84,317,620Delayed Portion of Income Tax Reduction (HB318) $ 844,000,000Unclaimed Funds Transfer $ 335,000,000ARRA State Fiscal Stabilization for Education $1,463,709,963ARRA State Fiscal Stabilization for Govt. Services $ 325,666,520eFMAP in GRF $ 488,764,741eFMAP in non-GRF $1,890.000,000Prior Fiscal Year Roll-Forward Balances $ 364,300,000Assumed Spending Lapses $ 428,185,965Medicare Part D Payment Reduction $ 151,000,000Tobacco Funding Redirected for Human Services $ 257,600,000Federal Match from Tobacco Funding for Human Services $ 369,000,000eFMAP – August Extension $ 293,400,000Debt Restructuring $ 735,900,000TOTAL $8,692,444,809

The Ohio Budget: Recovery. Relief. Reform.

Emergency Purposes Fund; $20,000,000

Budget Stabilization Fund; $246,900,000

Disaster Service Fund; $25,000,000

Outstaning Encumbrances$413,800,000

Board of Regents Payment (scheduled to be be lapsed); $127,500,000

Carry-over Balance; $138,000,000

FY 2011 Fiscal Responsibility

2011 Revenues were $973M above estimates, but bills were owed and funds needed restored

The Ohio Budget: Recovery. Relief. Reform.

Note: The massive decrease in non-tax receipts is due to the elimination of temporary transfers. Much of this was the one-time money such as rotary raids, unclaimed funds, tobacco settlement interest, furlough days, liquor transfers to the GRF, and the school facilities commission

What can Ohio do to be competitive & create jobs?

• 1. Need Leaders…not politicians

• 2. Privatize Economic Development

• 3. Perception of high business taxes

• 4. Perception of unionized work force(13% nation/14.7% Ohio - 45.9% is public sector)

• 5. Privatize workers comp system

• 6. Connect worker training to company needs

The Ohio Budget: Recovery. Relief. Reform.Budget PrinciplesThe budget is a means to an end—economic

competiveness and job growth Return Ohio to firm financial footing Reduce the tax burden on families and

businessesPay down Ohio’s debt obligationCreate an environment of economic

opportunity and job growth Help those most in need

The Ohio Budget: Recovery. Relief. Reform.

Providing Tax Relief in Tough Times:Income Tax Cut - reinstates a 4.2 percent annual

reduction in state income tax rates for every Ohio taxpayer (approved in 2005)

Property Tax Relief - provides $1.7 billion annually in property tax relief over the biennium

Tax Incentives - enacts tax credits for community revitalization efforts, job retention for major employers and economic development

Estate Tax - eliminates the job-killing, anti-small business Death Tax in 2013

The Ohio Budget: Recovery. Relief. Reform.Putting Students & Quality Education First:Basic Aid - holds every school district harmless so that state funding per student is not reduced below current levels (excluding federal stimulus dollars)

Excellent Schools Incentive - provides a $17 per pupil supplemental payment for schools rated excellent or excellent with distinction

Charter School Reform - upholds quality and operational controls in existing law and adopts new accountability measures

Parochial Schools - restores baseline funding for chartered non-public schools to ensure parity in support levels with public schools

The Ohio Budget: Recovery. Relief. Reform.Investing in Health Care Transformation for Kids and SeniorsChildren's Hospitals Supplemental Funding – In addition to Medicaid funding, the

budget reinstates full funding to the children’s funding supplemental line item to $6 million a year, allowing the hospitals to draw down additional federal support

Help Me Grow - restores funding for a program that provides expectant parents with health and developmental services

Kinship Care - restores funding for a program for relatives who become primary caregivers when parents are unable or unavailable to care for a child

Accountable Care Organizations - creates a process for developing coordinated pediatric services for children with disabilities

Adoption Assistance - provides $7 million to counties for adoption services

Child Support Enforcement - provides $7 million to counties, allowing a $14 million draw-down of additional federal support

Immunizations - added $2.5 million in FY 2013 for the purchase of child health immunizations

Other****, $1,491,430,000

In-Process Revenue

Revisions***, $793,750,000

Medicaid Reform and Spending

Change*, $3,182,600,000

Redirection of State Revenue**,

$2,234,000,000

How we filled the $8 Billion budget gap

Changes from Initial GRF Baseline to Executive Budget Proposal (FY12 & FY13)

* - Medicaid Related Change from Initial Baseline (State and Federal) (FY12 -$1,133,890,000) (FY13 - $1,090,360,000); Change in Federal Medicaid Reimbursement (FY12 - $611,020,000) (FY13 - $416,820,000); Tax Receipts-Expansion of Medicaid Managed Care Program (FY12 - $52,930,000) (FY13 - $94,820,00); Net Spending Changes from Initial Baseline (FY12 - $916,840,000) (FY13 $921,610,000)

** - Local Government Fund Change (FY12 - $180,000,000) (FY13 - $399,000,000);Public Library Fund Change (FY12 - $62,000,000) (FY13 - $65,000,000); CAT-Phase Out Hold Harmless (FY12 - $289,700,000) (FY13 - $589,200,000); CAT Hold Harmless GRF Subsidy Reduction (FY12 - $235,900,000) (FY 13 - $187,600,000);Kilowatt Hour Tax Phase Out Hold Harmless (FY12 - $105,400,000) (FY13 - $120,200,000)

*** - Revenue Revision Tax Sources (change in base) (FY12 - $381,800,000) (FY13 - $440,200,000); Revenue Revision Policy Changes (FY12 - $12,200,000) (FY13 - $13,500,000); Non-Tax Revenue Revisions (FY12 - $8,900,000) (FY13 - $6,350,000)

**** - Debt Restructuring (FY12 - $440,000,000); Debt Baseline Change (FY12 - $33,370,00) (FY13 $6,410,000); FY11 Payment of Assumed Lapses ($567,080,000);Loss of Federal Revenue on Assumed Lapses (FY12 - $280,280,000); Non-GRF Payment of Unemployment Compensation Interest (FY12 - $110,000,000) (FY13 $193,000,000); Net Changes in Transfers (FY12 - $41,280,000) (FY13 - $39,080,000);Liquor Enterprise Income (FY12 - $500,000,000); Prison Sale Income (GRF only) (FY 12 - $50,000,000); Liquor Profit Phase Out (FY12 - $69,500,000) (FY13 - $139,000,000)

The Ohio Budget: Recovery. Relief. Reform.

All Funds Spending Decrease, FY11 to FY12 and FY13

The Ohio Budget: Recovery. Relief. Reform.

Note: This chart only shows GRF, so "off-budget" Medicaid spending from the last biennium is seen coming back in FY12 and FY13. Other causes for increase in Medicaid are the passage of federal healthcare reform that will lead to higher caseloads, medical inflation, and patient acuity.

The Ohio Budget: Recovery. Relief. Reform.Job Growth: JobsOhio

• Ohio’s state-funded economic development system has become bureaucratic and ineffective

• Replaced it with a new, innovative private sector approach called JobsOhio.

• We created a unique and reliable funding stream for this effort by dedicating profits from the state’s liquor wholesale enterprise.

• This permanent financial source will provide significant funding to cut through the bureaucratic red tape that has stifled job retention and creation efforts for too long.

The Ohio Budget: Recovery. Relief. Reform.Economic Investment: InvestOhio• Ohio’s high taxes drive job-creators to other states -

discourage risk-taking. Ohio residents pay a 21 percent tax on their investment earnings

but only 15 percent if they become Florida residents.

• InvestOhio encourages investment in key job-creators—small businesses:

Under InvestOhio, Ohioans making an investment in a small business an investment of up to $10 million in a business with less than $50 million in assets or $10 million in annual sales would receive a tax credit of 10 percent if they keep the investment two years.

• Reducing costs and reducing taxes creates jobs and makes Ohio more competitive

InvestOhio helps foster more investment in key engines of job growth—small businesses.

The Ohio Budget: Recovery. Relief. Reform.Investment In Jobs: Local Budget Initiatives

Defense/Aerospace Graduate Studies Institute (DAGSI)•increasing research that results in the commercialization of aerospace technology•boosting graduate education to fill the pipeline with talent to feed emerging and growing

businesses•Ohio will invest $11.4 million in DAGSI over the next two years, leading to the immediate

creation of 500 jobs and the potential for thousands more. Defense Development Assistance•the state will commit $10 million for the defense and aerospace workforce in the region

and throughout the state.•These funds will be used to leverage an additional investment of $6 million by private industry partners over the next two years Ohio National Guard Scholarship Program•Reform Ohio Guard Scholarship to ensure Ohio meets it’s obligations and provides educational opportunities to all members of the Ohio National GuardMental Health•Focused state revenues from Department of Mental Health to support local mental health

initiatives•Increased local mental healthcare line item by $3.5 million in FY2012 and $5 million in FY13 by reducing inflated mental health hospital services line item

1. HB 1- Jobs Ohio: Creates innovative new private sector approach to job creation and economic development in Ohio

2. SB 2- Common Sense Initiative: Establishes a process to eliminate unnecessary and burdensome regulations on small business

3. SB 4- Performance Audits: In-depth reviews of State agencies that will identify efficiencies and other cost-saving opportunities

4. SB 5- Collective Bargaining: Provides state and local government entities with the flexibility to manage costs and maintain key services

5. HB 58- Job Retention Tax Credit: Creates a tax credit that already saved 300 jobs at American Greetings in Cleveland

6. HB 86- Sentencing Reform: Diverts non-violent, low-level offenders away from prison system into community-correctional programs

7. HB 119- Transportation Budget: Invests wisely in the maintenance and repair of Ohio’s transportation infrastructure

8. HB 153- Operating Budget: Eliminates an $8 billion shortfall without raising taxes and makes critical government reforms

9. HB 194- Election Reform: Ensures a fair and uniform system of elections statewide while creating efficiency within the process

10. SB 171- Sunset Review: Eliminates 77 unnecessary public bodies

129th General Assembly Accomplishments

129th General Assembly – SB 5 / Issue 2Voter Beliefs -7/2011•64% voters dissatisfied w state•90% say State Budget problems are serious•60% of those say keep SB 5•55% say keep govt worker collective bargaining rights•55% would place reasonable limits on collective bargaining•17% GOP voters oppose SB5•40% Indep voters strongly opp•40% say govt workers losing their pensions w SB 5•37% say govt workers losing their health care w SB 5

Messages•57% favor SB 5 if believe govt workers doing better than them•77% like layoff by merit not last in first out•76% like 15% health care premium paid by employee•65% like raises by merit on performance not automatic•63% believe public employees should share in sacrifices•If debate stays on limiting barging rights – we lose•Reinforce public workers don’t lose pensions or health care•www.betterohio.org

Public vs. Private Sector Compensation in Ohio“Put in simple terms, if a private-sector worker earns a salary of $100, then a comparable public employee would receive a salary of $97.50. The private-sector worker’s total compensation would be $139.50, while the public-sector employees total compensation would equal $183.01. These figures produce a total Ohio public-sector salary and benefit premium of 31.2% over the comparable private-sector employees. In other words, Ohio state and local government employees receive total salaries and benefits almost one third above those payable to private sector workers with similar skills.”

-Ohio Business Roundtable study, September 2011

Building a Better Ohio: What’s Really in SB 5?Source: The Columbus Dispatch

Building a Better Ohio: What’s Really in SB 5?Source: The Columbus Dispatch

YES ON ISSUE 2 - Key Endorsements

• Ohio Farm Bureau Federation• Ohio Society of CPA’s• Ohio Chapter of NFIB• Ohio Chamber of Commerce• Columbus Chamber of Commerce• Greater Cleveland Partnership • Cincinnati USA Regional Chamber of Commerce • Dayton Area Chamber of Commerce• Associated Builders and Contractors of Ohio• Ohio Manufacturers’ Association

What’s Next To Retain and Create Jobs in Ohio?

• Workers Comp Reform

• Pension Reform

• Jobs Ohio 2

• Redistricting – Congressional & State Leg

• Cut Spending / Smart Spending

• Eastern Ohio - Energy Policy/ Oil & Gas

• Western Ohio - FAA Air Space Approval

State Senator Chris WidenerOhio Statehouse, Room 127

Columbus, Ohio 43215

Office: (614) 466-3780

Fax: (614) 466-7662

sd10@senate.state.oh.us

Twitter – chriswideneroh

Face book – Chris Widener