Public Policy Advocates

Good afternoon:
 
Conference Committee on HB 1 announced it will meet tomorrow at 4:15PM in Statehouse Rm. 313.
 
Thank you.

Today Senate Republicans unveiled a joint resolution, which proposes Ohio Lottery-operated slots at seven locations around the state but does not specify horse racetracks. If eventually placed on the ballot and approved by voters, the proposal calls for the operations to be licensed to the highest bidders. The resolution will be officially introduced this afternoon.
 
Senate President, Bill Harris (R-Ashland) sent a letter to the Governor to urge him to support the Senate’s proposal. In his letter he stated that the Governor’s proposal did not include funding from the video lottery terminals until May 2010, so Sen. Harris believes that there is ample time for voters to decide the issue on November 3rd.
 
We will keep you posted as additional information is made available.

Thank you.

Political tensions grew to an all time high yesterday with the Governor accusing the Senate republicans of game-playing and using the budget for political advantage. During the House Finance and Appropriations hearing, democrat members continued to accuse the Senate republicans for delaying the budget process by not accepting the Governor’s video lottery terminal (VLT) proposal. Meanwhile, the Senate Select Committee on VLT continued its hearings on the Governor’s proposal, and have identified major areas of concerns.   There is a “clawback” provision that would return the $65 million license fee paid by each racetrack owner ($455 million of the estimated $933 million the proposal is to generate for the state) if a competing casino issue that will be on the ballot in November passes.  The Governor stated he does not support the “clawback” provision, but it is included in the draft legislation the Senate was asked to approve. Sen. Husted, a member of the Senate panel, responded, “If that’s not the plan, what is the plan?” The Committee is scheduled to meet again today at 10:00AM to review constitutional issues.
 
Yesterday, the Senate passed HB 245, which is another one-week interim budget. The bill provides 70% funding for the state to continue to operate from July 7th-July 14th. This will provide another week for Ohio’s leaders to finalize the budget. Sen. Harris and Speaker Budish are scheduled to meet this afternoon to try to work through some of the issues. There is speculation that government could shut down if a deal is not agreed to this week. The Governor has stated his concerns about a third interim budget and the federal funding the state loses everyday. Without a full operating budget, a part of government would have to shut down.

The Ohio Senate begins hearings today on the Governor’s video lottery terminals (VLT’s) proposal today. The Governor’s VLT proposal is estimated to raise $933 million in revenues to help fill the current $3.4 billion deficit.  Sen. Mark Wagoner (R-Toledo) will chair the Select Committee on Video Lottery Terminals. The panel also includes Sen. Jon Husted (R-Kettering), Sen. Timothy Grendell (R- Chesterland), Senator Capri Cafaro (D-Hubbard) and Sen. Dale Miller (D-Cleveland).  The hearings are intended to help Senators better understand the specifics of gambling proposal the Governor has proposed. The Lottery Commission Executive Director, Michael Dolan, the Office of Budget and Management Director, Pari Sabety and other interested parties have been invited to testify. The Committee is scheduled to meet at 10:00AM on Friday, Saturday and Sunday if needed.
 
In response to the Senate’s plans, the Ohio House Finance and Appropriations Committee is holding hearings beginning today at 3:00PM to provide interested parties the opportunity to testify on the “impact of potential Senate budget decisions.”  The hearings are also scheduled for Monday at 10:00AM and Tuesday at 2:00PM. The House hopes these hearings will put pressure on the Senate to adopt the Governor’s gaming proposal.

The Ohio Senate announced plans this morning to pass a seven-day budget extension.  With negotiations on House Bill 1 in a stalemate over expanding gambling to include slot machines at Ohio’s seven race tracks, lawmakers have determined that a compromise can not be reached by the June 30 deadline.  In order to prevent a government shutdown on July 1, the Senate has added an amendment to the Industrial Commission budget (HB 16) which would give the legislature an extra seven days to finalize the biennium budget.  The amendment will appropriate funding for government programs and services at 70% of FY 2009 levels. 
 
If enacted, this will be the first time in nearly 20 years that the Ohio Legislature has failed to produce a budget by the June 30 deadline.  In 1991, the General Assembly used a 30-day budget extension to determine how to deal with a $100 million revenue shortfall in a $27 billion budget.  The issue currently facing the Legislature is a $3.2 billion revenue shortfall out of a total $54 billion budget.

Conference Committee on HB 1 (Sykes) is scheduled to meet on Monday, June 29th at 7:00PM in Statehouse Room 313.  After delaying and then finally canceling the weekend meetings, the Governor and Senate President Harris both released statements explaining the reason for the breakdown in negotiations.

Late Saturday, Senate President Bill Harris (R-Ashland) issued a statement, saying that the issue that stands in the way of a budget agreement is the governor’s asking the General Assembly to authorize VLTs at racetracks. “I have acknowledged many times that the governor has the authority to expand the lottery. He has done it before and should he decide to exercise his authority again in allowing VLTs at racetracks . the Senate will account for the revenues . However I cannot get past the fact that the voters of Ohio - our constituents have spoken on expanded gambling time and again. Asking the General Assembly to circumvent their will in such a short time frame when there has been no formal public debate and there are so many questions left unanswered is unreasonable.”

Lat Sunday, the Governor issued the following statement, “There are now only two days remaining until the legislature must send me a balanced budget.  Senate Republicans refuse to support my balanced budget framework that invests in our schools while avoiding a tax increase on Ohio families and businesses.  We have heard the objections, but unfortunately still no solutions.  I believe that the Senate Majority understands the gravity of the situation before them. I continue to wait for them to say what taxes they would increase or what services they would further reduce to address the budget gap.”

The Governor, House and Senate leaders continue to meet to discuss how to address the estimated $3.2 billion shortfall. Until decisions are made, the Conference Committee will not begin the public portion of the process, which they expect will begin the middle of next week. If so, that will allow less than a week for the Conference Committee to meet the June 30th deadline.

It has been reported that the Administration has shared with House leadership a potential $2 billion cut scenario, which includes reductions or eliminations to TANF Title XX, child care, kinship care, PASSPORT and PACE programs for seniors, Medicaid optional services, Medicaid provider rates, MR/DD Services, the children’s Buy-in Program, as well as others. The Administration did not share these scenarios with the Senate, and is not making this information public at this time.

Ohio leaders continue to deny the possibility of a tax hike to address the budget deficit. They prefer to pursue budget cuts and reductions due to the economic implications of increasing taxes during the current recession.  However, several legislators are beginning to promote revenue enhancement ideas within their caucus, such as a temporary sales tax increase, an increase in cigarette tax or expanded gaming, as possible ways to generate revenue.

Yesterday, Pennsylvania’s Governor Rendell announced a proposal to increase his state’s personal income tax by a half percent to address its  $3.2 billion deficit.