If you didn't know that Ohio Gov. John Kasich's middle initial stands for Richard, based on the volume of changes he made in his first two years as state CEO combined with even more proposed over the final two years of his first term, you might think it stands for reform.
Elected in 2010 with just two percentage points in a low turnout election, Ohio's rambunctious chief executive officer unveiled his second biennial budget at the Riffe Center in downtown Columbus. While reporters gathered to hear the presentation, the proceedings were live streamed via the Ohio Channel.
New, bigger budget proposed
Gov. Kasich and Timothy S. Keen, Director of the Office of Budget and Management, explained an executive budget that increases spending over the last budget. Governor Kasich recommends General Revenue Funding appropriations of $30.6 billion in FY 2014 (a 10.5 percent increase over estimated FY 2013 spending) and $32.7 billion in FY 2015 (a 6.8 percent increase over FY 2014). The Governor’s recommendations for all funds total $63.7 billion in FY 2014 (a 6.1 percent increase over estimated FY 2013 spending) and $66.8 billion in FY 2015 (a 4.8 percent increase over FY 2014).
In a 29-page budget document distributed to reporters today, Gov. Kasich, 60 years of age, said it was framed against a much brighter backdrop than Ohio faced just two years ago. Coming into that biennium, he said, Ohio faced an historic $7.7 billion fiscal imbalance and a sputtering economy that landed Ohio nearly dead-last in job creation.
"As a result of our decisive action, however, we prevented Ohio’s collapse and have gotten our state back on track. Things are dramatically better today. A strong commitment to fiscal restraint put Ohio’s budgetary house in order, and in the past two years Ohio reduced non-Medicaid spending from the General Revenue Fund (GRF) by 0.5 percent.
In the narrative of the document, state staffers said additionally, state agencies have seen staff levels reduced by 8.1 percent without hindering the delivery of services to Ohioans. These and other improvements helped Ohio cut taxes by approximately $800 million by eliminating the Estate Tax and cutting income taxes.
"Now, thanks to this new, transformative direction Ohio has taken – together with the additional reforms in our state’s first-ever Mid-Biennium Budget Review – Ohio is regaining its economic competitiveness," Gov. Kasich said, adding, "We are one of the nation’s top job creators, our unemployment rate is more than a full percentage point less than the national rate and responsible budgeting has allowed us to rebuild the state’s rainy day fund."
While his goal was to be optimistic, he also had words of caution. "Together we have made significant progress to lift Ohioans and get our state back on track, but too many Ohioans are still out of work. Our taxes are still too high and present a formidable barrier to job creation. Significant improvements remain undone to the programs that care for vulnerable Ohioans. Ohio must do better," he said. "We must further restrain the cost of state government and become more efficient to serve Ohioans better and more responsibly. That is our mission with this budget and in the next biennium."
Kasich's Ohio budget highlights:
Improving Education for All Children: To best serve Ohio’s children we need a world-class education system, one that constantly increases achievement and provides high-quality opportunities for all students – regardless of where they live, their circumstances or the way they learn.
Helping More Students Get Degrees: Despite Ohio’s nationally acclaimed colleges and universities, the percentage of Ohioans with a bachelor’s degree – 25 percent – is much below the national average. Turning this around helps more Ohioans get on the fast track to long-term success and stability, while also creating the highly skilled workforce that helps job-creators grow and expand.
Cutting and Reforming Taxes: Ohio’s high taxes and complex tax code are barriers to job creation. Worse, our excessive dependence on high income taxes only drives jobs to other states with lower income taxes. I propose cutting small business taxes in half for the first $750,000 in net income, cutting income taxes 20 percent and cutting the state sales tax rate from 5.5 to 5.0 percent – which also benefits low-income Ohioans who pay no income taxes, and eliminating severance taxes on small, conventional natural gas producers. At the same time, we will modernize Ohio’s tax code by broadening the sales tax base to apply to all economic activity on an equal basis and modernize the antiquated severance tax so all Ohioans benefit from Ohio’s shale gas boom.
Making Medicaid Work Better: Over the past two years, Ohio has made Medicaid work better for vulnerable Ohioans while also providing better value for taxpayers. With this budget, we build on Ohio’s important progress by increasing Medicaid’s efficiency by better combating fraud and improving payment processes to hospitals to reward quality, not volume. This budget also takes the significant step of helping more low-income and working Ohioans have access to health care through Medicaid, for which the federal government will pay 100 percent for three years and level off at 90 percent beginning in 2020. While a complex decision, this reform not only helps improve the health of vulnerable Ohioans and frees up local funds for better mental health and addiction services, but it also helps prevent increases to health care premiums and potentially devastating impacts to local hospitals. Additionally, it avoids leaving Ohioans’ federal tax dollars on the table and keeps the federal government from simply giving them away to other states. Importantly, Ohio will roll back this extension if the federal government changes the rules. Taken together, the budget’s comprehensive package of Medicaid reforms strengthens Ohio’s health care system in sustainable, responsible ways that help our state continue to foster the jobs-friendly climate we need.
Meeting Ohio’s Crucial Transportation Needs: This budget facilitates our plan to leverage the value of the Ohio Turnpike and inject up to $3 billion to strengthen Ohio’s transportation network, one of our most important economic-development assets. The vast majority of additional highway dollars raised by the sale of the new Turnpike bonds will go directly to benefit the Turnpike itself and accelerate other highway projects in Northern Ohio. But these additional
funds will also free us to direct revenue from traditional sources toward much-need improvements throughout the state, in addition to attracting increased local and federal matching funds.
Creating a Smarter, More Efficient State Government: Ohio’s state agencies have closely examined hundreds of state programs to ensure they’re providing solid value to Ohioans, a high level of care for our most vulnerable citizens and a jobs-friendly environment for our future prosperity. The reforms in this budget are the next steps in moving Ohio further down the road toward solid, sustained prosperity for all of us. Together, we have taken steps to get Ohio back on track, and I am confident we can continue to make Ohio a better place to work, live and raise our families.
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