Tuesday, May 22, 2018
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Selling prisons, cuts to local governments, privatizing liquor sales proposed to balance Ohio budget



Ohio Governor John Kasich introduces the newly proposed budget during a press conference in the Riffe Center in Columbus.


COLUMBUS — Ohio would sell off five state prisons to raise $200 million, cut half a billion that would have headed to local governments, and privatize the state’s liquor system for a lump sum of $1.2 billion under Gov. John Kasich’s first two-year budget proposal unveiled Tuesday.

He’s proposed doubling the state’s school voucher program and eliminating the cap on the number of charter schools in the state while cutting overall support for public K-12 schools to reflect the evaporation of one-time stimulus dollars.

Mr. Kasich’s first budget promises plenty of pain, but he said there will be less of it during the second year of the plan.

“Things are going to start to get better,’’ he said. “Stay with us.’’

Read the 500 page Executive Budget for Fiscal Years 2012 and 2013.

Mr. Kasich will personally try to sell his plan to Ohioans via a televised town hall meeting Tuesday night. His team promised that the plan does erase an $8 billion spending shortfall due largely to the current budget’s heavy reliance on federal stimulus dollars and other one-time funds.

Budget Director Tim Keen, however, said the plan does use some of the one-time money from sale of prisons and moving the state’s liquor sales division to the new JobsOhio economic development entity for continuing operating expenses in the first year.

“Yes, but modest amounts,’’ he said. “No one-time money to speak of next year.’’

In Toledo, the Bell administration was overly conservative when it guessed back in November how much the state would slash from local governments — meaning Tuesday’s budget release means the current proposed Toledo budget won’t have to be cut further in that specific area.

In fact, the city now can add another $1.8 million into the revenue side of its ledger book, Deputy Mayor of Operations Steve Herwat said.

Mayor Mike Bell’s proposed 2011 budget, which must be approved by City Council in 15 days, assumed that Toledo’s allocation from the state’s “revenue sharing” would be down 50 percent, or about $3.8 million, to $11.5 million. It is slated to be cut 25 percent.

The $55.7 billion, two-year plan is larger than the current $50.5 billion budget that will expire on June 30. Mr. Keen said this increase is partly due to some Medicaid and other programs that were being funded by the one-time stimulus dollars being moved back onto the state’s general fund.

Democrats contend that Mr. Kasich could have eased some of the pain by again delaying the last installment of a long-term income tax cut that would be worth about $800 million over the next two years.

The plan does not propose privatizing the Ohio Turnpike or the Ohio Lottery, but he said Tuesday that more privatizations are likely to come. His plan also does not pursue further cuts in the state income tax or the elimination of the estate tax, which some Republicans have championed in the General Assembly.

The plan does not factor in savings at the state level from the proposed restrictions on public employee collective bargaining that Republicans are pushing through the General Assembly. But the plan would eliminate seniority as the deciding factor for schools when it comes to making decisions on which employees to let go, and it proposes paying bonuses to teachers whose students meet certain performance standards.

Mr. Kasich’s budget cuts 25 per cent in local government funds next year and 50 percent in 2013 saving the state $167 million next year and $388 million more in 2013.

Counting all sources of funding, K-12 schools would receive a total of $10.2 billion, or 11.5 percent less than they received this year, largely because of the loss of federal stimulus dollars. In 2013, schools would get $9.7 billion, of 4.9 percent less that they received in the prior year.

The Kasich administration, however, prefers to look strictly at state general fund support for schools, which would climb 1 percent in the first year and then 1.4 percent in the second.

Oregon City Schools, which in recent years has slashed $7.5 million from its annual budget and plans to cut another $2.4 million next school year, is concerned Mr. Kasich’s budget will cost the suburban school district $2 million next school year alone, said Mike Zalar, district superintendent.

Instead of phasing out tangible personal property tax replacement monies over the next few years, it appears that funding will end next school year, said Mike Zalar, district superintendent. That will hurt school districts with large industrial bases such as Oregon, which make up about 20 percent of districts statewide, he said. 

“This is a concern,” Mr. Zalar said. “We don’t want to be too quick to react because we don’t know exactly what it means.”

School administrators next week are to begin attending regional meetings so state officials can explain what the budget contains, Mr. Zalar said.

Even without that $2 million from the state, Oregon should end next school year in the black, Mr. Zalar said. But more cuts, a tax levy, or both will be needed for Oregon City Schools, which has a $40 million operating budget, he said.

The governor outlined the cuts to cities and counties in his proposed budget under the heading “Local Government Relief and Reform.” To help deal with the state cuts to local governments Mr. Kasich projected “an estimates $1 billion in savings that local governments will realize annually from collective bargaining reforms pending in the General Assembly.”

He did single out seniority in union contracts as something he’s against.

“This business of the last one hired you’re the first one out no matter how you’re doing, whose that designed to help?’’ Mr. Kasich asked., “Who’s that designed to protect? That’s gone.’’

The spending plan would cut basic subsidies to K-12 schools, but not to the extent many districts feared. Many of the cuts are tied to the loss of the tangible personal property tax that lawmakers started to eliminate several years ago and for which the hold-harmless period for school districts is running out. That revenue is not being replaced.


But by far Governor Kasich saved the biggest budget cuts for mental health services, proposing cuts of $100 million in 2012 and $555 million more in 2013.

Mr. Kasich has also proposed selling four adult prisons currently in operation plus the closed Marion Juvenile Correctional Facility. None are in northwest Ohio, but he has proposed closing the prison camp at Toledo and merging it with its parent institution. That would be one of four such camps statewide to be closed to save money.

Two of the adult prisons in northeast Ohio, Lake Erie Correctional Institution and the North Coast Correctional Treatment Facility, are already privately run, but the state owns the buildings. The other two state-owned and run facilities that would go on the auction block are Marion’s North Central and Grafton correctional institutions.


Although the spending plan is packed with proposals sure to generate controversy and debate over the direction Ohio should take, the proposal holds little that comes as a true surprise. Mr. Kasich has talked openly about privatization of state assets.

His lieutenant governor, Mary Taylor, encouraged the Ohio Lottery Commission to look at privatization in a special audit she conducted as state auditor last year. And Mr. Kasich’s new director of the Department of Rehabilitation and Correction, Gary Mohr, has a background as a consultant for a private prison operator.

An Ohio Poll released Monday by the University of Cincinnati found that 53 percent of Ohioans would prefer to see the state’s budget balanced with a combination of tax hikes and spending cuts. If forced to choose between the two, 35 percent prefer spending cuts. Just 6 percent support closing the spending gap solely with unspecified tax increases.

When asked where to cut, 33 percent of those polled pointed to local governments, 15 percent to prisons and public safety, 13 percent to higher education, 8 percent to health care for the elderly and lower incomes, 6 percent to K-12 schools, and 5 percent to libraries.

-- Blade staff writers Tom Troy and Nolan Rosenkrans contributed to this report.

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