Public Policy Advocates

Last Friday, July 17, Governor Ted Strickland signed into law the biennial operating budget, House Bill 1, after vetoing 61 items.  Among the provisions vetoed by the Governor were limitations on executive authority and a prohibition on the use of prison labor at the Governor’s residence.  However, the most controversial veto was on a provision regarding local tax revenues.

Beginning with the 2005 budget, local governments and school districts would have suffered losses due to the repeal of the tangible personal property tax.  House Bill 1, as passed, included a provision to hold these local governments harmless from such losses going forward.  The provision would direct dollars from the Commercial Activities Tax to schools and local governments to make up for the loss in reimbursements from the tangible personal property tax.  In vetoing these provisions, Governor Strickland stressed that schools would still be held harmless until FY 2013, while local governments would be covered through FY 2011.

“This budget process has been long and difficult. However, we have come to an agreement on those things that matter most to Ohio families and businesses who are struggling through the worst economic crisis since the Great Depression,” Strickland said.

The Governor’s complete veto message can be found here, while the changes to legislative language can be found in boxed text, Part 1 and Part 2.

Budget Highlights

The Strickland administration announced that the changes made to the operating budget would allow for an additional 100,000 Ohioans to receive access to healthcare.  Most of that increase is due to a provision which changes the open enrollment program.  This program requires health insurance providers to offer individual health plans during a certain time period, regardless of their current health status.  House Bill 1 reduces the rates which insurers can charge during open enrollment by about 25% by 2012.  This change is expected to allow some 52,000 additional people to enroll.

Senate Republicans and industry groups were strongly opposed to most of these changes, but the Conference Committee included them in its report.

Conference Committee Report Shows Partisan Trades Were Key To Compromise

The Conference Committee on House Bill 1 met for nearly 6 weeks to hash out a compromise budget which could be passed by both chambers, while reducing spending by nearly $2.3 billion.  All of these changes were contained in an omnibus amendment passed by the committee, nearly 1,500 pages in length.  Within that amendment were changes to almost every major government program and service.

The changes illustrate that the conference committee reached their compromise by exchanging certain related budget provisions to acquire enough bipartisan support to pass the final report.  For example, Democrats were granted their wishes on collective bargaining for home-care workers, while Republicans won on labor issues related to courts, community corrections facilities, and the State House.  The Governor issued an executive order early in his term to allow these home health care employees to join unions, despite objections from legislative Republicans.  This order was made permanent through statutory language in HB 1.

In the end, many compromises of this type were made in order to strike a budget deal.  Despite all of the give-and-take, House Bill 1 passed both chambers by very narrow margins.

Budget Cuts

Despite the projected revenues from the institution of VLT’s at Ohio’s horse racing tracks, the state budget needed approximately $2.3 billion in additional cuts to be balanced.  The chart below outlines some of the difficult funding cuts made.