December 18, 2012 Presenters: Nicholas Bates, One Ohio Now Zach Schiller, Policy Matters Ohio

1. December 18, 2012 Presenters: Nicholas Bates, One Ohio Now Zach Schiller, Policy Matters Ohio

2. Who is One Ohio Now? • A coalition of over 80 non-profits, labor organizations, associations and others who have come together to advocate for great public services by making sure we have the revenue to support them.

3. What do we Stand For: • Reviewing Corporate Tax Loopholes • A Strong Income Tax • Appropriate Revenue’s from our Natural Resources • Reinstate Tax on Corporate Profits

4. Why does the state budget matter to me? • The state pays an average of about half of the cost of K-12 in school districts across Ohio • It helps keep police and firefighters at work • It helps pay your local property taxes • It helps provide medical care to 2.46 million Ohioans • It licenses practitioners from barbers to nurses • It supports human services from adoption assistance to food banks to programs that allow seniors to stay in their homes

5. Features of Ohio’s biennial operating budget • The main budget is the General Revenue Fund (GRF) budget, which covers two years, or a biennium • Fiscal years or FY 2014-2015 • Key dates • Gov. Kasich will submit his budget proposal to the legislature in early February. • The budget must be passed by June 30. • Ohio’s budget must be balanced

6. Budget timetable • The Governor’s budget proposal is submitted to the Ohio House of Representatives. • The House considers the budget proposal and makes changes and adjustments. They vote on it, probably in April. • The budget bill then is passed to the Senate for consideration. • Senators consider the budget proposal from the House, and make changes and adjustments. They vote on it, probably in early June. • A “Conference Committee” irons out the differences. • The governor may veto items in the budget, which the General Assembly can override, before signing it by July 1.

7. Ohio’s GRF Tax Revenues FY2012

8. Where the money goes(includes federal support for Medicaid)

9. Today’s financial picture • Rainy day fund has $480 million • Based on state projections, another $400 million is expected to be available by the end of this fiscal year • Total FY2013 GRF budget: $28.4 billion, including $8.2 billion in federal funds • Next budget will have to make up for new tax breaks, tax cuts and one-time revenues

10. What happened last time? • Tax cuts continued, expanded • Big cuts in K-12 support, local governments • Some human services reduced, but many attacks fended off • Inadequate services continue (e.g. state support for handling abuse and neglect of the elderly is practically nonexistent)

11. The state shifted its budget problems on to schools and local governments • Schools have cut teachers and courses because of $1.8 billion in cuts during this two-year budget • Services from recreation to road repair have been curtailed as aid to local governments has been sliced. For specifics on your county, see http://www.policymattersohio.org/county-budgets-nov2012 • Across Ohio, local levies for senior and children’s services, health, mental health and developmental disabilities will bring $210 million less in FY12-13 than in FY10-11

12. Tax cuts • Tax cuts from 2005 are costing the state $2.5 billion a year—that’s nearly a dime out of every budget dollar • These cuts went mostly to businesses, which no longer pay a tax on corporate profits, and affluent individuals, who got most of a 21% income-tax cut • Last budget: Estate tax eliminated, new tax breaks approved for investors, others

13. 2005 Tax Overhaul • 21% cut in Income Tax over five years (completed 2011) • Phase-out of Corporate Franchise Tax, Ohio’s corporate income tax • Phase-out of Tangible Personal Property Tax, a local tax on machinery, equipment, inventory, furniture and fixtures • Creation of Commercial Activity Tax on Ohio gross receipts • Effect of these changes: $2.5 billion in annual tax cuts

14. 2005 Income-tax Cut: Who benefited?

15. Has Tax “Reform” Worked? • Ohio has lost 223,000 jobs since June 2005, or 4.1% of its total. The nation has eked out a tiny gain of nearly 100,000 jobs over that time. • Ohio has lost a greater share of its manufacturing jobs than the U.S. • Though Ohio employment has grown at a better rate recently, this hasn’t made up for the big shortfall.

16. Taxes and the state economy • There is no direct relationship between tax rates and economic performance. • Public services that maintain the quality of life and support critical economic development goals also impact the business climate.

17. State and Local Taxes as a Share of Income, Non-elderly Taxpayers, 2007

18. Why We Need a Strong Income Tax, 2 • Vital to Ohio economy and quality of life • Accounts for 44% of state taxes and 31% of the operating budget – more than the state spends on K-12 education • Crucial to capital investment and debt repayment – 5% cap

19. Tax exemptions, credits and deductions (aka “tax expenditures) • More than $7 billion a year • Some, such as the sales-tax exemption on prescription drugs, go to individuals; most go to businesses • No review mechanism exists; many loopholes have gone unexamined for decades. • In 2012, the legislature has created or expanded tax credits or exemptions for companies that employ people at home, convention centers, financial institutions, motion-picture producers, and firms that do work for direct marketers, among others

20. Tax Expenditures: Some examples • Wealthy individuals who buy shares in jet aircraft pay little sales tax on their purchases • Big companies (but not small ones) that lost money years ago can write it off against the Commercial Activity Tax • Utilities buying mandated pollution-control equipment receive a sales-tax exemption, worth $17 million this year • Govs. Voinovich and Taft unsuccessfully sought to limit property-tax rollbacks to affluent owners

21. Top Issues Coming in Next Budget • TAX SWAP • Income tax and Severance Tax • School Funding Formula • Medicaid Expansion

22. Other issues to be aware of: • Elimination of the Estate Tax • Local Government (LGF, PLF) • Program Shifts, agency merger’s, funding formula’s…. WHAT ELSE ARE YOU PAYING ATTENTION TO?

23. Approach: • Non-Profits: We don’t take partisan stances, Instead: Great Public Services Lead to Stronger Communities • Connect advocacy efforts on individual issues to the issue of sustainable revenue. • Change public discourse using social & traditional media. • Community conversations • Talk to legislators

24. Messaging • It’s Time to Get Ohio Back on Track • Reference the Past • Define Income Tax Cuts • Provide an Alternative • More tax cuts are fiscally irresponsible—we need a balanced approach • Don’t accept bad trades/options • Income tax cuts shift responsibility from wealthy to everyone else. • Jobs, not cuts • The Budget is a Moral Document

25. Any Questions? Contact: Nicholas Bates Outreach Director 614-216-6306 nick@oneOhioNow.org www.oneohionow.org THANK YOU!