Senate OKs budget with harsh cuts

Plan boosts school aid beyond House version

6/9/2011

COLUMBUS -- The Ohio Senate voted along party lines Wednesday to approve a $55.7 billion, two-year budget that delivers plenty of pain to schools, local governments, libraries, and human services on its way to climbing out of a multibillion-dollar hole.

House rejection of the many changes made in the chamber set up a joint conference committee that will fashion the compromise that must reach Gov. John Kasich's desk by the end of the month.

"Members of the Ohio Senate who vote for this budget have shown some backbone,'' Sen. Mark Wagoner (R., Ottawa Hills) said. "This really lays the foundation for future prosperity. The solution to our long-term problems is jobs and economic development, and by getting our fiscal house in order, and making smart investments in things like JobsOhio, I think Ohio will be in a much better place two years from now than we currently are.''

Democrats, however, argued that the roughly 4,800-page bill unfairly forces the poor, working families, schools, and cities to shoulder the burden of helping the state climb out of what the administration of Governor Kasich estimated as a $7.7 billion revenue shortfall at the beginning of the budget process.

"There seems to be more perks for the upper income rather than middle-class, working class people,'' Sen. Edna Brown (D., Toledo) said. "All of the tax relief is more for the wealthy rather than the people who really need it the most. It's not a middle-class, working-class budget.''

Democrats argued that the state continues to cut taxes while local governments and schools will be forced to turn to voters more frequently with tax levies.

Critics have challenged the $7.7 billion figure, saying that stronger-than-expected tax collections so far this fiscal year and stronger projections for the next two years should have reduced that number significantly.

Mr. Kasich, a Republican, suggested Wednesday that any excess revenue, if there is any, should be used first to help replenish the drained rainy-day fund budget reserves.

"When we started, we had a $7.7 billion deficit,'' he said. "We have had some economic improvement, but what's up today is down tomorrow. That's why we have to be careful. But don't minimize what we've had to do here.''

The plan does not interfere with a final 4.2 percent cut in the personal income tax that took effect on Jan. 1. The cut would be worth about $800 million over the life of the two-year budget.

The budget also calls for elimination of the estate tax beginning in 2013, a move that would have a major effect on local governments, which receive 80 percent of the revenue.

The Senate also added a 5 percent pay cut for themselves and their House colleagues, amounting to about $3,000 of lawmakers' roughly $61,000 a year in base pay.

The savings would be small, but Republicans said it would demonstrate a willingness to share in the pain that they admit this budget inflicts.

The Senate plan adds $115 million in direct basic aid to schools above what the House proposed -- $85 million more in the general pot of funds and $30 million in bonuses for high-performing districts.

But schools, nevertheless, still face major overall cuts as federal stimulus dollars dry up and the state reduces compensation for the loss of revenue from a pair of phased-out business and utility taxes.

The plan also takes $100 million that the House had set aside as incentives for local governments to collaborate and added it to the general pot for distribution to those governments without the strings attached.

But they still face $455 million in cuts.

The Senate added a ban on the performance of abortions at taxpayer-owned or supported hospitals unless the mother's life is endangered or the pregnancy is caused by rape or incest. It also prohibits health insurance policies for public employees from containing coverage for abortions.

Sen. Cliff Hite (R., Findlay) said he wouldn't presume to tell local school districts and governments that they should refrain from turning to the ballot to seek higher tax levies.

"I keep telling everybody I think there's a light at the end of the tunnel, and I don't think it's a train,'' he said. " I think we're making the right choices."

Senate Republicans rejected an amendment offered by Ms. Brown to remove a provision from the budget that opens a two-year window for members of the Toledo Area Regional Transit Authority to ask voters whether they want to cancel their membership.

She accused her colleagues of stepping into the middle of a "turf war'' between TARTA and the city of Perrysburg, which has tried to secede from the transit system.

BUDGET HIGHLIGHTS

The budget approved by the Senate:

• Requires new casinos to pay the Commercial Activity Tax on all revenue received, not just after winnings are paid out.
• Requires the state to sell six adult and youth detention prisons to private operators who, in some cases, would contract with the state to house prisoners.
• Eliminates, beginning in 2013, the estate tax, from which 80 percent of revenue goes to local governments.
• Authorizes the governor to pursue a long-term lease of the Ohio Turnpike by a private operator, but requires lawmakers' approval of the terms.
• Raises the threshold at which government must pay union-scale wages on public projects from the current $78,000 to $125,000 in 2012, $200,000 in 2013, and $250,000 in 2014.
• Allows counties and universities to sell buildings to private owners and lease them back.
• Does not include House-passed language introducing merit-pay system for teachers. Similar language is in the Senate Bill 5 collective-bargaining law.
• Eases restrictions on the expansion of charter schools in the state, although not to the extent proposed by the House.
• Provides no funding for enforcement of smoking in indoor public places and phases out support for the Quit Line.