Kasich prepares to ax budget

3/13/2011

COLUMBUS — For more than a year as a candidate and two months in office, Gov. John Kasich has vowed that he would balance the state's budget that everyone knew would start out billions in the red.

Tuesday, Mr. Kasich will get his chance to make good on his promise as he proposes a two-year budget that is likely to be heavy on privatization of what are now government services, set up a showdown with the powerful nursing home lobby over the future of long-term care in Ohio, and cut everything from human services and local governments to K-12 schools and universities.

"While I believe we can't tax our way to prosperity, we can't cut our way there either,'' the Republican governor said last week in his first State of the State Address.

In that speech, he did something that his administration and that of his predecessor, Democratic Gov. Ted Strickland, had previously been unwilling to do. He put a firm number on the revenue chasm from which discussions had to start — an $8 billion hole. The current $50.5 billion two-year budget will expire on June 30.

Mr. Kasich said there will no further delay in the final 4.2 percent increment to complete a total 21 percent cut in the personal income tax that was begun in 2005. That 4.2 percent represents roughly $800 million, or 10 percent of that $8 billion hole.

Mr. Strickland and lawmakers in 2009 delayed the last installment for two years after the courts slammed the brakes on plans to bring slot machines to racetracks as a means of generating more than $800 million for the state.

That last cut officially went into effect on Jan. 1, and it would take a vote of the General Assembly to retroactively shelve it again.

"We will not be raising taxes in this state,'' Mr. Kasich said. GOP lawmakers have also introduced bills to eliminate Ohio's estate tax. Mr. Kasich is a fan of the idea, but it is not clear whether he will pursue another tax cut with this budget.

OneOhioNow, a coalition of 40 labor, education, and human service organizations, was heartened to hear Mr. Kasich say he realized the state can't cut its way out of the budget hole. But they also heard him vow that there would be no tax hikes.

"We need to have an honest conversation about what steps to take to reasonably and responsibly address this budget shortfall,'' said Andrea Fejes, the group's coordinator. "Cutting $8 billion, we don't see how that can be done without decimating our state. It would not put us on the path to economic prosperity.''

Revenues have to be on the table for discussion, she said. The group, however, has not cited specific taxes to raise.

Reporters will be shown details of the proposal Tuesday afternoon, and then Mr. Kasich plans to hold a ticket-only town hall meeting tomorrow night that would be televised and streamed on the Internet.

"We are not peddling in any speculation about what is and is not in the budget,'' Kasich spokesman Rob Nichols said. "It will be revealed very publicly and openly on Tuesday.''

Among the things to look for:

• The budget will assume cost savings from state workers, either through forced changes in collective bargaining under the controversial Senate Bill 5 now moving through the General Assembly or through more concessions at the bargaining table if the bill is placed on hold for a voter referendum.

• Look for a proposal to privatize some Ohio prisons and correctional services, a move that's been fully expected given Mr. Kasich's choice of Gary Mohr to head the Department of Rehabilitation and Correction. Mr. Mohr has a background as a consultant for Tennessee-based Corrections Corporation of America, which operates a low-security federal prison in Youngstown.

• Mr. Kasich is not expected to revive Mr. Strickland's proposal to allow Ohio's seven horse-racing tracks to install slot machines to generate state tax and licensing revenue, at least not yet.

• The state would again try to overhaul its sentencing guidelines to divert more nonviolent, short-term state inmates to community treatment and rehabilitation programs.

• The state has warned schools, local governments, and universities and colleges to prepare for substantial cuts in state subsidies while offering the consolation prize of restricted collective bargaining by their employees as a potential cost-saver. To a large extent, the cuts will be tied to the evaporation of one-time federal stimulus dollars that temporarily shored up their budgets.

• To raise revenue, the budget may propose allowing drilling for oil and natural gas in some state parks.

• Eligibility for state-funded child care is expected to be reduced from 150 percent of the federal poverty level to 125 percent, although there will reportedly be an attempt not to kick out children who are already in the program whose families earn incomes between those two thresholds.

• A proposal to contract with a private company to operate the Ohio Lottery is expected, although there are questions about how this with mesh with federal law and the Ohio constitutional requirement that all lottery profits go to K-12 education, not a private company's administrative fees.

• Mr. Kasich has talked about a long-term lease of the 241-mile Ohio Turnpike across northern Ohio, but only if the numbers work out. Indiana Gov. Mitch Daniels leased the 157-mile Indiana Toll Road to an Australian-Spanish group for 75 years for an up-front lump sum of $3.8 billion.

• Human service advocates have been told that the administration will not look first to cuts in dental, optical, chiropractic care, podiatry, and other lower-cost Medicaid services that are not mandated by the federal government.

• Mr. Kasich's Medicaid reform will focus on elderly long-term care, the biggest cost driver in the federal-state health insurance program of last resort for lower-income families. The Passport program would be expanded to keep more seniors in their homes as long as possible. "Nobody should kid anybody else,'' Mr. Kasich said. "This was about a money game. That's why we didn't let mom and dad have the resources necessary to be in their own home rather than a nursing home.''

• Cuts are expected in county child welfare services and adoption services.

• The Kinship Navigator program, which provides assistance to grandparents and other relatives to keep child care in the family, may be eliminated.

• Medicaid's focus will shift more toward improving prenatal care to reduce the number of low birth-weight babies, whose care costs six times as much that of a healthy baby, and to better coordinate services to reduce costly emergency room visits and hospital stays.

• Mr. Kasich has said to expect "more choice, more accountability, more dollars in the classroom instead of the bureaucracy'' in K-12 schools. He has also gone to bat for an Akron woman who was convicted of a felony for lying about where she lived so she could send her children to another school district, so many are expecting expansions of Ohio's voucher or charter school programs.

• Mr. Kasich's new chancellor of higher education, former Attorney General Jim Petro, has talked about creating charter universities, giving the schools more autonomy. This is expected to accompany a drop in state support, which, in turn, will likely to lead to higher tuition.

"We have put off problems for far too long, and we need to fix them to grow and prosper in the future,'' state Sen. Mark Wagoner (R., Ottawa Hills) said. "It's the whole approach to state government, putting every program under a microscope, what's working and what's not working.

"We have limited dollars, so we have to be disciplined and invest in smart programs that work—for example, the prenatal care that the governor has talked about,'' he said. "If we invest there, we save significant dollars in other parts of the budget.''

Gayle Channing Tenenbaum, co-chairman of Advocates for Ohio's Future, noted that many of the human service programs that are in doubt are part of the safety net for the most vulnerable Ohioans.

"We have to recognize that these are all interrelated, and we have to make sure that there aren't holes in the safety net,'' she said. "We need to look at how these impact not only families, children, single adults and seniors, but also the economies and communities we work in.''

Cathy Levine, executive director of the Universal Health Care Action Network of Ohio, applauded the encouraging signs received so far that the focus of the budget ax will not fall first on dental, vision, podiatry, and other optional Medicaid services.

"We've heard consistently from the administration that they do not plan to cut optional services, so we're cautiously optimistic,'' she said. "They understand that when you cut dental care and other optional services, people will seek care in more expensive settings.''

Even before Mr. Kasich formally unveils his budget, Toledo-area workers are expected to hold a press conference Monday at 3:30 p.m. to decry state cuts to local governments and schools that everybody knows are coming. The event is set for the Mulford Library on the University of Toledo Health Science Campus, the former Medical College of Ohio.