Friction expected in budget's next step

6/13/2011

COLUMBUS -- Will the House pull out the ruler to force the Senate into line on how teachers should be paid?

Are casinos ready to play by Gov. John Kasich's rules?

And are all three prepared to take on the powerful nursing-home lobby by deciding how -- and how much -- the homes should be funded?

Now that both the House and Senate have put their brands on the budget proposal submitted by Mr. Kasich nearly three months ago, the focus will shift to a six-member joint conference committee. The $55.7 billion, two-year spending plan has gotten this far solely on the backs of Republicans, and that's not likely to change as budget debate enters the final inning.

A final bill must reach Mr. Kasich's desk before the next fiscal year begins on July 1.

The bills that passed both chambers work largely within the framework laid out by Mr. Kasich -- heavy on cuts to schools, local governments, libraries, nursing homes, child care, the Ohio Consumer's Counsel, and numerous social programs.

The plans agree on preserving the final 4.2 percent personal income tax cut that went into effect on Jan. 1 and eliminating the estate tax that kicks in on estates valued at $338,334 or more. Eighty percent of the revenue from the latter tax goes to local governments, beginning in 2013.

The governor's proposals to increase the privatization of state functions such as some prisons and the Ohio Turnpike only increased as the budget moved through the chambers to also include the Ohio Lottery.

"It's historic," Mr. Kasich said. "We will go to conference committee. I don't anticipate any major problems. We're all on the same wavelength. Some things have to be worked out, but nobody would have thought that we were going to balance this budget, cut taxes, and eliminate this structural deficit. We're about to do it. … "

But a handful of major issues remain unresolved and are likely to cause friction in coming weeks.

The Senate struck from the bill a Kasich-supported plan inserted by the House to require schools to replace automatic, contract-tied step and longevity pay increases for K-12 teachers with some form of merit pay system based in part on student performance.

The language is similar but not identical to that in Senate Bill 5, the much broader law passed this year that weakens the collective bargaining power of all public employees.

That law is expected to be the subject of a bitter ballot fight on Nov. 8.

Sen. Mark Wagoner (R., Ottawa Hills) said on the Senate floor that he considers this unfinished work.

"We need to recognize and hold high great teachers," he said. "Their work is of the highest order. They are Ohio's real heroes. We shouldn't be afraid to recognize and reward them, and history will prove us right on this issue."

The Senate also severely curtailed House proposals to dramatically loosen restrictions on the operation and expansion of charter schools that operate free of many of the regulations of their more traditional public brethren.

Senate Republican also took their House counterparts by surprise when they inserted a last-minute prohibition on the performance of abortions by public hospitals or any other health facility owned or funded by state dollars.

The Kasich administration would like to restore a provision to the plan that would have required all public employees to pay 2 percentage points more of their paychecks into their pension funds in exchange for a 2 percent reduction in their government employers' share.

The House took the language out of the plan, and the Senate didn't revive it.

Both the House and Senate punted on the issue of nursing homes, preserving a $470 million cut in subsidies that had been included in Mr. Kasich's proposal.

But from the day the budget was passed by the House, legislative leaders were looking ahead to the conference committee to find some compromise as to how much to fund nursing-home beds under Medicaid at a time when the state is looking more closely at less costly, in-home care for the elderly.

And both sides are eager to see what will come of ongoing negotiations between the Kasich administration and the operators of the voter-approved casinos in varying stages of development in Toledo, Cleveland, Columbus, and Cincinnati.

Mr. Kasich has made it clear he wants more from the casinos and has talked of adding slot machines to the mix. The House inserted language insisting that the casinos pay the state's commercial activity tax on gross receipts collected, not what's left after winnings are paid out.

The casino operators have argued that the latter definition should apply as it does under the voter-approved constitutional amendment to the collection of a 33 percent wagering tax.

The conference committee, like the rest of the General Assembly, will be controlled by Republicans.

Members are yet unnamed, but the committee would be expected to include the GOP chairmen of the chambers' respective finance committees, the two ranking Democrats on those committees, and one additional Republican from each chamber.

Democrats will attempt to restore some of the funding to programs that were cut under the budget.

"The voice and the values of the many are eliminated for the wants of the few," Sen. Charleta Tavares (D., Columbus) said during budget debate. "We have talked about shared sacrifice. However, the only ones sacrificing are those who are hurting financially, those who are vulnerable, those who are sick, those who are unemployed, those who live in urban centers and rural towns and villages. We should be ashamed of ourselves."

The likely first point of the business will be hearing updated revenue projections from Mr. Kasich's budget director, Tim Keen, which could indicate whether additional funds may be available to put into nursing homes or ease some of the pain caused by cuts.

With just one month of the fiscal year to go, state tax collections have come in $837.2 million, or 5.5 percent, ahead of projections.

Collections in May, however, were below expectations.

Contact Jim Provance at: jprovance@theblade.com, or 614-221-0496.