The Buckeye Institute for Public Policy Solutions and Citizens Against Government Waste recently co-released the “2006 Ohio Piglet Book.” They hype it as the “book Columbus doesn’t want you to read.” Apparently no one wants to read it since I could only find one media mention of the publication and that was an oped written by the authors.

I also did a little online research on Citizens Against Government Waste and they appear to be nothing more than paid shills. A St. Petersburg Times article earlier this year found that they issued a report promoting the importation of avocados from Mexico after receiving a $100,000 “donation” from Mexican avocado growers. The article suggest that they were critical of government support for the YWCA and YMCA after taking $5,000 from the International Health, Racquet and Sportsclub Association. Sounds like pay to play to me.

One expenditure that didn’t make the "Ohio 2006 Piglet Book” was the $500,000 the Ohio Rail Development Commission that Buckeye Institute co-founder and Senior Researcher Sam Staley is sharing in, to study passenger rail in Ohio. I wonder why?

The U.S. Department of Health and Human Services just released national data on combined federal funds spent in federal fiscal year 2005 (October 1, 2004 - September 30, 2005), and while this is an old story for Ohio (we've previously written about Ohio's unspent TANF funds) it's the first time we have a chance to compare ourselves to other states. As we expected, Ohio had the highest amount of unobligated TANF dollars in the country, the closest state to us (New York) had only has as much as did in the unobligated category and we accounted for roughly 20% of the total amount of unobligated dollars in the country. There is a wealth of other data on the site that allows you to do a number of other comparisons.

Federal Funds Information for States just published projections for the federal fiscal year 2008 matching rate for Medicaid. They are projecting that Ohio’s rate will climb to a 60.79 percent. According to the good folks at Ohio Health Plans (e.g. the state Medicaid department) the last time Ohio’s rate was over 60% was in 1996.

The increased rate will have the effect of Ohio picking up an estimated $159 million in additional federal Medicaid revenue during the state fiscal year 2008-2009 budget – only two other states, Michigan and Louisiana are expected to see larger dollar gains as a result of the shift in what are known as Federal Medical Assistance Percentage (FMAP) rates.

So what’s the bad news? The rates are based on a three-year average of state per capita personal income compared to the national average, so that means Ohio’s state per capita income is lagging the national average and therein lives the bad news.

Of course if Ohio cuts its Medicaid budget (not just reducing the rate of growth) it would see a corresponding decrease in FMAP payments.

A recent article in the Akron Beacon Journal was followed by an editorial today that reinforces points that my colleague Dr. David Ellis often makes, Ohio doesn't have the 3rd highest tax burden (that phony ranking comes from the discredited Tax Foundation), that if their is any correlation between tax burden and state wealth it's that higher tax states tend to have higher income levels, and finally the difference between states in terms of tax burden continues to shrink. The ABJ points out for instance the the dollar difference between the 20th and 27th state on U.S. Census bureau rankings is only $300. If anything is driving up Ohio's overall tax burden its the rapid growth in local taxes and that is the result of two decades of the federal and state government pushing responsibilities onto local governments and communities.

Secretary of State Ken Blackwell's proposal to increase the state share of the cost of K-12 education funding in Ohio to 57 percent caused me to ask two questions, how much would it cost and where would the new dollars go? I posed the question to my colleagues Rich Marountas and Dr. David Ellis. Rich, being the king of Excel spreadsheets and formulas that he is, built a district by district spread sheet in the time it normally takes me to open Excel. David formulated a method to understand where the new money was going and where it wasn’t going, or even who might lose money.

We've posted a new report on our website that reflects our answers to these questions and here are the two major conclusions of their work:

Increasing the state share of overall K-12 spending to 57 percent would cost nearly $5 billion a year.

Under each scenario we examined, in terms of distributing the money, we found that wealthier districts tended to do better, in some instances much better, and that low-wealth districts, particularly those in rural areas tended to do worse and in one scenario could actually see their funding drop.

Of course the $5 billion dollar question is how this proposal would be paid for, because that’s where the rubber hits the road. It's also where the proposal seems to come up short. As far as I can see there isn't a plan for where these dollars would come from. There have been suggestions that the funds might come from Medicaid, but to fund an effort of this magnitude you would have to eliminate the entire Medicaid budget (not a very likely scenario). It's also difficult to see how you could fund a proposal of this magnitude and still live within the state appropriation limitation that was adopted by the legislature just a few months ago.

For those of you who want to look at district level information, just check out the Marountas spread sheet, it's a marvel to behold.

Last week the Ohio House Ways and Means Committee passed HB 626, which would accelerate the personal income tax cuts that were a part of H.B. 66, out of committee and sent it to the House floor for a vote after the November election. The effect of the legislation is to deprive the next Governor and Legislature of $765 million in revenue during the SFY 2008-2009 state budget. All members of the committee who were present voted to report the bill out except for State Representative Mike Skindell (D-Lakewood). Proponents argued that growth in state revenue and savings from the newly adopted state appropriation limitation would more than make up for the lost revenue. Unfortunately neither of the arguments appear to based on anything more than a hunch. If this legislation is passed by the House and the Senate it will make an already difficult budget much more difficult for Ohio's new Governor and legislature.

The Columbus Dispatch printed an editorial today that is largely on target in terms of the federal deficit and the need for pay as you go legislation and raising questions about making the Bush tax cuts permanent. Voinovich's call for a commission to hold down entitlement costs we would be more effective if it was empowered to look at all the special tax breaks and loopholes that Congress has created. Most of them have never been evaluated and some of them are targeted at a single individual or company. In the meantime, Senator Bill Frist and others in Congress are pushing another effort to repeal the estate tax on multi-millionaires and tying it to an increase in the minimum wage -- that's cynical politics at its worst. My letter to the Editor of the Dispatch is below:

September 18, 2006


The Editor
The Columbus Dispatch
34 South Third Street
Columbus, Ohio 43215

Dear Editor:

Your editorial today was on target when it recognized Senator George Voinovich for trying to restore some federal fiscal sanity. It’s especially timely in light of ill conceived efforts to repeal the federal estate tax on multi-million dollar estates. Such measures, often disguised as “reform” would add hundreds of millions of dollars to the federal deficit and hurt our economy and ordinary Ohioans who depend on important domestic programs.

In 1990, the last time the nation faced large deficits, Congress agreed on a bipartisan basis to begin restoring fiscal discipline by reducing entitlement costs, raising taxes, and then establishing “pay-as-you-go” (“paygo”) rules. Under these rules, any bill either to cut taxes or to expand entitlement programs had to pay for itself by raising tax revenue or reducing other entitlements so it did not enlarge the deficit. The paygo requirement played a big role in eliminating the deficit and creating a budget surplus by 1998. However, it expired in 2002.

What is needed now is a balanced approach to addressing the deficit. In 1990 (under the first President Bush) and in 1993 (under President Clinton), Congress adopted bipartisan, balanced deficit reduction plans that included revenue increases as well as program reductions, and that largely shielded many important domestic programs from deep cuts. That is why any successful deficit reduction commission should be charged with looking at both revenues and expenditures. Such a balanced approach seems unlikely in this Congress, but Senator Voinovich should keep speaking out on this important issue.

Sincerely,


John R. Corlett,
Senior Fellow
The Center for Community Solutions
Cleveland, Ohio

The Joyce Foundation conducted a survey of public attitudes toward political reform and state government in five Midwestern states, including Ohio. The report found that Ohioans have the least amount of trust in their state government compared to the other states that were surveyed. When asked how often they expect state government to do “what is right,” 69 percent of Ohioans said “never” or only “some of the time,” while only 30 percent said “always” or “most of the time.” The survey was conducted in conjunction with the Ohio Citizens Action Fund and the Ohio League of Women Voters.

The Ohio Department of Job and Family Services announced another failure to properly account for and spend public dollars yesterday. They released a Draft County Audit Report: Hamilton County which states that the Hamilton County Department of Job and Family Services is responsible for $224 million that was misspent between 2002 and 2004. In addition ODJFS said that $1.7 billion in expenditures on public assistance, child support, and children services funds were "unauditable."

Last year it was revealed that ODJFS had illegally used hundreds of millions of TANF dollars to match federal Medicaid and Food Stamp funds. Add to this, the fact that the agency has never accurately predicted TANF funds and allowed its TANF reserve to climb over a billion dollars at one point and it makes you wonder what kind of fiscal controls or oversight exists in this agency. Of course Hamilton County officials are contending that everything they did was with the blessing of the state, so this is all bound to end up in court and may even require a state bailout at some point.

Unfortunately while the squabbling continues, Ohio's poverty rate will continue to climb and the publics’ confidence in state government will continue to decline.

Earlier this year the secretary of Housing and Urban Development (HUD) announced proposed legislation to change the formula governing the Community Development Block Grant (CDBG). The effect of the new formula is to shift the flow of funds from older, northern states to southern and western regions.

A recent report from the Federal Funds Information for States found that if the new formula had been in place in Ohio during federal fiscal year 2006 the state would have seen its CDBG funding cut by $16.6 million – only 5 other states would see larger funding cuts. The Bush administration has been critical of CDBG for some time now and has tried to cut funding in the past. At Congress’s behest, GAO is undertaking an effort to assess alternative formulas for allocating CDBG funds. As it awaits GAO’s analysis, Congress is unlikely to either approve the president’s proposed formula or adopt a new formula of its own.

Ohio housing and community development advocates should work with our state congressional delegation to block this funding shift, especially in light of the recent U.S. Census report that showed Ohio was the only state in the country with two cities on the top ten list of poorest cities.

I thought State Representative Barbara Sykes raised an important issue in a recent letter to the Columbus Dispatch regarding a little noticed provision in the most recently passed state budget legislation (Ohio Am. Sub. H.B. 66). The provision removes the state auditor’s authority to sign state-issued checks. Instead, starting Dec. 1, this authority will transfer to the director of the office of budget and management, an appointed position that reports directly to the governor. It seems to me that recent history in Columbus would argue for increased checks and balances rather than less of them. After the November election the legislature may want to revisit this issue, or at the very least have a public conversation about the provision and why it was included.

Community Solutions just released "Dear Governor," a special edition of our Planning & Action journal, which you can find here.

Health care, early care and education, jobs, government reform, juvenile corrections, land use, mental health, minority communities, older adults, persons with disabilities, arts/culture, and more. All are among the priorities identified by 27 Ohio residents in "Dear Governor."

"This special edition of our journal focuses on what the community feels are vital issues facing Ohio--issues that should be priorities for the next governor," according to Gregory L. Brown, executive director and president. "'Dear Governor' offers a collection of ideas and suggestions from a variety of perspectives, many from people with years of experience in working toward the common good."

He adds, "Ohio faces some serious issues, and most have a common thread--the health and welfare of people. Many 'Dear Governor' letters address the development of Ohio's people. They emphasize that human capital development is proven to improve lives and create healthier communities, with a proven return on investment.

"We invite all gubernatorial candidates, as well as all Ohio citizens, to read the letters with a view to how their recommendations might be implemented to rebuild Ohio into a great place to stay or relocate, raise families, work, play, and eventually retire."

The Center for Community Solutions' Board of Directors has endorsed the 2.9-mill replacement and reduction Cuyahoga County Health and Human Services Levy, which will appear on the November 7, 2006, ballot.

The proposed levy would replace the three-year levy approved by voters in 2004. If passed, it would go into effect in the beginning of 2007, generating $85.3 million annually and costing the owner of a $100,000 home, $88.82 a year in taxes. It is one of two local levies dedicated to health and human services for children and families, seniors, mental health consumers, the homeless, and others. Approval of the levy will enable the county to help many county residents in need, including those who may not be served currently but will need help due to changed personal circumstances (e.g., job loss, health crisis, or other serious situation) in the future.

Board Chair Stephen J. Ong noted that this endorsement "continues Community Solutions' tradition of supporting public funding of critical health and social services." Recognizing that passage of the levy will require community education about the need for, and use of, levy funds, the Board approved a $10,000 contribution to the County Action Committee.

"We are pleased to continue our support of this vital community levy," said Gregory L. Brown, executive director and president. "We are also pleased to loan the expertise of Ericka Thoms, our advocacy coordinator, to the levy's educational campaign. It's so important that people understand the value of this levy and the local services it supports--services that anyone could find themselves needing at any time."

For information about the Health and Human Services Levy, call 216-357-2352.

The Dayton Daily News and The Columbus Dispatch (see links below) have reported that Secretary of State Ken Blackwell has stated that he wants to increase the share of the state general revenue fund (GRF) going to education from 47 to 57 percent. Unfortunately Secretary Blackwell is wrong, K-12 spending will equal approximately 37 percent of the state GRF in the current state fiscal year -increasing it to 57 percent would require $3.8 billion in new spending.

According to final budget reports prepared by the Ohio Legislative Budget Office, primary and secondary education appropriations account for 19 percent of the all funds budget in state fiscal year 2007 or 27 percent of the GRF budget in 2007. Because Ohio includes federal Medicaid dollars in its GRF budget you typically back those funds out for a more accurate calculation of state only spending. Once that calculation has been made, primary and secondary education spending then accounts for approximately 37 percent of state only general revenue fund spending (this number could increase slightly if some smaller amounts of federal dollars that are also mixed in with state GRF spending were also backed out).

If primary and secondary education spending were increased to 57 percent of the state only general revenue fund, spending would need to increase by approximately $3.8 billion – representing a 54 percent increase in state only spending on K-12 education. The articles suggest that Secretary Blackwell would accommodate this increased education spending by redirecting $3.8 billion from the Medicaid budget to the K-12 budget.

Ohio’s Medicaid budget is a mix of state and federal dollars, and for every dollar that Ohio spends on Medicaid it receives $1.48 from the federal government. If Ohio cuts Medicaid spending, it then will also see a cut in its federal Medicaid aid. In short, in order for Ohio to save $1 in state Medicaid spending, it actually has to cut $2.48 to account for the lost federal aid. A spending reduction of $3.8 billion would require total Medicaid spending cuts of $9.6 billion – or 70 percent of Ohio combined state/federal Medicaid budget. Even if the Medicaid program eliminated every dollar spent on nursing homes, prescriptions drugs and hospitals and eliminated coverage for children you still wouldn’t reduce spending enough to free up the dollars required to increase state K-12 GRF spending.

Read more at:
http://www.daytondailynews.com/search/content/localnews/daily/081806campaign.html
http://dispatch.com/news/news.php?story=dispatch/2006/08/27/20060827-A1-06.html

If you want to learn more about the state spending and taxes an excellent resource is The Taft Record, What It Means for Ohio's Future written by noted state budget authority Richard Sheridan. You can findinformation at: http://www.communitysolutions.com/store/item.asp?ITEM_ID=1040&DEPARTMENT_ID=145