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Legislators send state budget to Strickland

July 13, 2009:

By Mark Niquette, Cathy Candisky and Joe Hallett
The Columbus Dispatch

The General Assembly sent to Gov. Ted Strickland a delayed state budget  tonight that adds electronic slot machines at horserace tracks and slashes funding for numerous state services.

The $50.5 billion, two-year spending plan was supported by only six Republicans, including five in the Senate to provide the narrow 17-15 approval, ending a bitter stalemate 13 days after a new budget was due.

Almost no one on either side of the partisan divide liked the finished product, but lawmakers gave into the pressure caused by the loss of $2 million in federal and other funding each day the budget impasse persisted.

"I have very strong reservations about a lot that's in this budget, but we can't continue losing $2 million a day," said Sen. Dale Miller, D.-Cleveland, a member of the House-Senate conference committee that hurriedly amended the budget bill and sent it to both floors.

"Our people and our businesses are struggling to stay afloat in the midst of the worst economic crisis since the Great Depression," Strickland said in a statement tonight. "This budget protects them from tax increases they simply cannot afford. And while so many states are giving up on education to get through this recession, we can take heart that in Ohio we are strengthening our commitment to schools."

The House approved the measure 54-44, with only one Republican, Rep. Scott Oelslager of Canton, supporting it. Surprisingly, the Senate debated the bill less than a half-hour before approving it, with all 12 Democrats voting yes.

Democrats said they weren't happy with all aspects of the bill but said they did the best they could with plummeting state revenues in the worst recession since the Great Depression and without raising taxes.

"It's not all that we wanted to offer, but it's a good product," said Rep. Vernon Sykes, D-Akron, and chairman of the House Finance Committee.

"I believe this budget is a very serious effort to deal with the state's problems under the most difficult circumstances I have ever seen," Miller said.

But Republicans complained that the final version of the bill was rushed, relies on $7 billion in "one-time" money and accounting gimmicks while approving expanded gambling that voters have rejected four times during the past decade.

"(The budget) really isn't balanced unless you count a whole lot of unlikely revenues and a lot of one-time revenue and one-time spending delays," said Rep. Ron Amstuz, R-Wooster, who also was the lone vote against the six-member conference committee report reconciling previously passed House and Senate versions of the budget

Amstutz and other Republicans also complained that members did not have time to read the 1,800-page bill before voting and that there was no time for needed public debate on the final version.

The legislature also passed a third interim budget today to take effect Wednesday if needed. That is being done as a precautionary measure to allow more time if needed to prepare the final budget document for Strickland's signature and any line-item vetoes later this week.

The budget, combined with a directive issued to the Ohio Lottery Commission this afternoon by v. Ted Strickland, allows up to 2,500 electronic slot machines at each of Ohio's seven horse-racing tracks as a way to raise $933 million for the two-year budget.

The plan, which includes $65 million in up-front license fees paid by each track and proceeds split 50-50 with the state to help fund education, calls for 80 percent of slots to be operational at temporary structures at each track by next May.

The budget also adopts Strickland's "evidence-based" education reforms to be phased in during the next decade, such as all-day kindergarten and a longer school year.

But although other changes included restoring some of the funding cuts that had been proposed for libraries, and other and other areas, advocates noted that the cuts still would mean a drastic reduction in services.


Nursing homes owners said they stand to lose $184 million in the amount they receive from the state to provide care for 80,000 frail elderly and disabled patients. They said many nursing facilities will have to close or reduce staffing levels.

After seeing what could have been a funded windfall in the Senate version of the budget, nursing homes ended up with what they calculated will be a five percent cut in state funding.

"As a result, nearly 90 percent of Medicaid-participating facilities will be losing money compared to what they received this last year," said Peter Van Runkle, executive director of the Ohio Health Care Association,


The compromise called for slashing more than $2.5 billion in state spending over the two-year biennium, a move expected to trigger additional layoffs of state workers and elimination or scaling back of many programs and services.

Sykes predicted as many as 3,000 state employees will lose their jobs.

"We cut $2.5 billion in this budget," he said. "We will suffer the hardship of those cuts."

Those reductions include state aid for mental health services, home care for low-income seniors, protective services for abused and neglected children, job training for the unemployed and child care for low-income families.

Joel Potts, executive director of the Ohio Job and Family Services Directors Association, said the new state budget is a "huge gamble" that will put the lives of the state's neediest families at stake.

Lawmakers are betting "that we really don't need money for these people and they will get services somewhere else and children will not suffer," he said.

Advocates for the elderly said $30 million in cuts over the next two years to home- and community-based services for seniors will create waiting lists of up to 10,000 and force those who cannot wait into nursing homes at three times the cost to taxpayers.

"It makes no sense to deny in-home care and community-based services to older Ohioans who must rely on Medicaid for long-term care services," said Jane Taylor, state director for the AARP Ohio.

Ohio food banks will receive a boost in state aid but not enough to meet spiraling demand.

Lisa Hamler-Fugitt, executive director of the Ohio Association of Second Harvest Foodbanks, said the compromise allocates $12 million a year to the feeding program, which is more than the $8.5 million the group is now receiving, but below the $17 million it requested. Demand has been rising 30 percent while food costs are up 26 percent.

"I'm conflicted," Hamler Fugitt said. "We're pleased and thankful that the House and Senate recognized a need to fund food assistance. We're extremely grateful. Will it be enough? No, it won't be enough."

With cuts to or elimination of funding for Boys and Girls Clubs, after-school programs, early childhood initiatives and other programs, Hamler-Fugitt said demand for emergency food assistance will grow.

"We know the cuts in other areas are going to have an impact as more and more people will be standing in food lines."


One major change to help balance the budget is a plan to generate an additional $247.1 million from "cash management" and other moves. The bulk of that amount comes from restructuring more state debt, said David Ellis, assistant director of the state budget office.

That means that instead of using state tax money to pay the interest and principal due on certain bonds, the state is selling new bonds payable in the future to cover those costs and free up cash.

The state previously approved restructuring or refinancing $53 million in Ohio bonds for the budget that expired June 30 and $400 million for the upcoming two-year spending plan.

The additional moves help replace $256 million in revenue that the state had proposed to generate by borrowing from the Ohio Public Employees Retirement System. That controversial plan was scrapped.

The revised budget bill also:


Jack Shaner, lobbyist for the Ohio Environmental Council, said he was pleased that the compromise eliminates drilling for oil and gas in state parks, which was included in the budget by the Senate.

But he lamented that funding was eliminated for the Ohio Department of Natural Resource's efforts to preserve of natural areas and reserves and for the division of geological survey. Among other things, the geological division helps identify and protect new sources of fresh water. The budget also transfers preservation of scenic rivers from the taxpayers to boat owners and canoe livery owners, who will be assessed additional licensure fees.

"It's appropriate to put it in the hands of users," Shaner said, noting that the fees will raise $550,000 per year.

Today's action comes after Strickland and legislative leaders agreed on a compromise last week to break a stalemate that forced two interim budgets to keep the state operating after the current budget expired June 30.


Strickland issued a directive to the Ohio Lottery Commission today to add electronic slot machines at Ohio's seven racks. The legislature would include language in the final budget bill authorizing the slots.

The move to add slots gambling generated new opposition today from the Ohio Christian Alliance, which said Strickland's order would "cheat the voters of Ohio the opportunity to weigh in on this issue."

Senate Republicans previously had opposed allowing racetracks slot without a public vote, and Strickland, who wanted the slots plan included in the budget, had complained that Republicans were failing to offer a viable alternative.


Critics say today's action will not settle the budget dispute. The Ohio Roundtable has promised to challenge the racetrack slots plan in court, possibly delaying any revenues, and opponents say the revenue projections are iffy at best.

There also are concerns that overall tax revenue projections won't be accurate or other problems will emerge, and with the state spending all but 89 cents of its rainy-day fund, more spending cuts or other adjustments will be needed.

Opponents also question using the debt restructuring and other accounting moves not to mention use of billions of dollars of federal stimulus dollars and other "one-time" money that won't be available later.

"We're pushing all this into a huge pile that's going to collapse on us in not too far down the road," Amstutz said.

Inspector General Thomas P. Charles, a state government watchdog, said his overall budget was cut by $112,000, or about 10 percent. Charles particularly was disappointed that the $500,000 he sought to monitor the Ohio Lottery Commission's operation of slot machine gambling at the racetracks was cut to $50,000.

"The inspector general's office needs the resources to oversee the lottery's expansion into gaming," Charles said.