The Ohio Budget: Recovery. Relief. Reform.

1. The Ohio Budget: Recovery. Relief. Reform. A presentation on job growth, economic opportunity & fiscal responsibility August 2011

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

3. FY 2011 Fiscal Responsibility 2011 Revenues were $973M above estimates, but bills were owed and funds needed restored

4. 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

5. 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

6. The Ohio Budget: Recovery. Relief. Reform. • Budget Principles • The 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 businesses • Pay down Ohio’s debt obligation • Create an environment of economic opportunity and job growth • Help those most in need

7. 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

8. 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

9. The Ohio Budget: Recovery. Relief. Reform. Investing in Health Care Transformation for Kids and Seniors Children'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

10. 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) *** - 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) ** - 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)

11. The Ohio Budget: Recovery. Relief. Reform. All Funds Spending Decrease, FY11 to FY12 and FY13

12. 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. 

13. 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.

14. 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. 

15. 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 Guard • Mental 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

16. 129th General Assembly Accomplishments • HB 1-Jobs Ohio: Creates innovative new private sector approach to job creation and economic development in Ohio • SB 2-Common Sense Initiative: Establishes a process to eliminate unnecessary and burdensome regulations on small business • SB 4-Performance Audits: In-depth reviews of State agencies that will identify efficiencies and other cost-saving opportunities • SB 5-Collective Bargaining: Provides state and local government entities with the flexibility to manage costs and maintain key services • HB 58-Job Retention Tax Credit: Creates a tax credit that already saved 300 jobs at American Greetings in Cleveland • HB 86-Sentencing Reform: Diverts non-violent, low-level offenders away from prison system into community-correctional programs • HB 119-Transportation Budget: Invests wisely in the maintenance and repair of Ohio’s transportation infrastructure • HB 153-Operating Budget: Eliminates an $8 billion shortfall without raising taxes and makes critical government reforms • HB 194-Election Reform: Ensures a fair and uniform system of elections statewide while creating efficiency within the process • SB 171-Sunset Review: Eliminates 77 unnecessary public bodies

17. 129th General Assembly – SB 5 / Issue 2 Voter 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

18. 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

19. Building a Better Ohio: What’s Really in SB 5? Source: The Columbus Dispatch • Bans strikes by public employees • Eliminates binding arbitration for law enforcement and firefighters to settle disputes • Requires public employees to pay at least 15% of health-insurance costs and no longer allows unions to bargain for customized health insurance • Replaces automatic pay increases for longevity with a new system of merit pay • No longer allows government employers to pick up a portion of an employee’s share of pension contributions • Eliminates ‘fair share’ fees • No longer allows unions to bargain for items deemed ‘management rights’ including staffing levels, building assignments, and promotions • Eliminates seniority as the sole factor when determining layoffs due to budgetary shortfalls or enrollment reductions

20. Building a Better Ohio: What’s Really in SB 5? Source: The Columbus Dispatch • Eliminates the 15 sick days for teachers from state law; caps sick days for most other workers at 2 weeks per year; caps accrued leave paid out upon retirement at 50% of 1,000 hours • Allows voters to go to the ballot to reject a contract if the governing body picks the more costly of final offers, and its determined the contract cannot be paid for with current revenue • Requires more transparency of negotiations and terms of the union contract • No longer automatically rolls over prior contractual agreements into the next contract • No longer allows employers to do automatic paycheck deductions if money is earmarked for PAC’s unless worker gives written authorization • Reduces the petition requirement for a public union decertification vote from 50% to 30% of members

21. 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

22. 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

23. State Senator Chris Widener Ohio 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