Thursday, November 4, 2010

Question from audience: how do you build a positive bi-partisan climate to make this budget happen?

Sykes: open meetings will help a lot. Important decisions should be made in a public forum. The governor should offer the minority to have input into the process, but I see rep Carey laughing here, so I will ask how he can offer more opportunities

Carey: the last budget became very difficult for everyone - people become very passionate during this process - there are arguments in the caucus - when people have limited resources...people should be allowed to have their say and be respectful;no one will get their way 100%. I think the minority should be respected and included - probably every member of my caucus has been mad at me more than once... but that is why we're here, we have to talk about the issues and be respectful, learn what is important to my colleagues...

Pari Sabety: HB 119 was the Strickland budget that passed with only one dissenting vote...everyone has a different view... views are not right or wrong, they are views...that is why we live in a democracy. The budget sometimes becomes arms in an ideological battle and that does not foster progress, but impedes it. The next successful facet to bipartisan governing - all three branches - we are brought here to serve our public and our public expects us to deliberate together with common sense and come forth with a solution that may be painful for some, less painful for others, but moves us forward in a positive direction. They do not expect us to assassinate each others' characters or fiddle while Rome burns and the economy is in a state of collapse.

AND ALL AGREE THAT THE BUDGET WILL BE FINISHED EARLIER THIS YEAR THAN LAST.

Questions

Rep Ron Amstutz: 90% of taxpayer money goes to health and human services, education, prison... and spending outpaces revenue by 10%, how do you want to balance the budget?

J. Pari: we have to make hard choices... I don't think people understand how dependent they are on the state government
c $1 out of every $6 spent on healthcare in this state is spent by the state of Ohio. It is a devil's choice you must make as you walk through the budget process.

Casino question: What effect does this have?
Sykes: We don't have an estimate of how much money will be generated.

J. Pari: there are as many estimates of the size of the budget hole as there are people in the room. The size of the hole depends on your assumptions - what matters, what you want to invest it, and how you are going to live within your means. This will be decided in the next two months. The message from my presentation is to say that the risks we were dealing with in HB1 - those risks, those shifting sands are gone. The new budget will be built while the economy is growing, not in freefall.

And here we go...

...back to the budget.

John Carey (R-94th district): We are going to have to make cuts, but we need to decide what sacrifices are the least painful. As a result of this election we have a mandate to cut - Schools need to prepare for a 10-15% cut...

J. Pary Sabety (Director Ohio Office of Budget Management): We are on a sound fiscal course - to end the suspense, let me tell you where we are today: over the biennium we are absolutely on track and our economy is making progress. There are no secrets. When we began this administration (Strickland and two years ago) we had a mix of bad (red) yellow (caution) and green (good). Now we are all green with one yellow... our revenue is on track. We have been doing well since September 2010, solid. We are moving out of the recession which we were in 2008-2009... started to improve in January 2010. We are turning over an economy and tax system that is starting to perform well. Pink slips aren't flying the way they were. Ohio unemployment down 6 mos. in a row, one of only 8 states that can say that.
In January of 2011 jobs should start to pick up. This will, however, be at a slow pace. Traffic growth on turnpike has been 5.6%... meaning more trucks are on the road. Moody bond rating said that After months of recession, Ohio is back on path to recovery. This administration is handing over a stronger economy to this new administration.
Vernon Sykes (D-44th district): Chair House Finance and Appropriations Committee
I am proud of what we did ~ we only wanted to prop up the budget for a short term with one-time money to make sure that all had access to the services they need. And I am glad to say this is working. We are above expected revenues and below expected expenses. It is unfortunate, though, that this was not fast enough for the election. I teach at Kent State University - usually an election is a report card on how we are doing - but I am proud of our accomplishments. I am hopeful that before the end of this month we can make some recommendations to the new general assembly. Now you know, people trust us to govern - but we shouldn't misuse that trust by keeping them out of the process. I sponsored the open meeting legislation - but now we are going back to closed meetings. We need transparency. I am hopeful that in this coming session we will have media advocacy to open up the finance committee. Some of my colleagues feel it is impossible to make some decisions with public scrutiny, and it is difficult, but I am hoping that we can have that transparency.

Redfern and DeWine - Party chairs review

Redfern (abbreviate): Thanks for this gathering. Congratulations to Kevin DeWine. We served together for 8 years in the legislature. Politics often swings as a pendulum but I did not realize it would swing so strong and so quick. I'll offer up some thoughts about the election...the Republican party is strong because of Kevin's leadership, which makes us as democrats fight harder and be better. There are more democratic officials in Ohio at the local level than there have been in 50 years. The legislature. Between now in 2012 we will work to elect more democratic city councilpeople across the state...we will work to build upon what we learned on Tuesday. Obama won 22 Ohio counties and won Ohio. Strickland won 26 Ohio counties, but the shades of blue where lighter; that was the difference. The majority of those votes are in Northeast and rural Northwest Ohio. With Sarah Palin as the nominee who will be running in 2012... well no one is more scared of that than Kevin DeWine. The same four states will open the presidential cycle in 2 years - the primary in Ohio will be in May. If you have a base of support like Governor Palin has, well, she can come out of those states and win. I believe and I know that Sherrod Brown is right - healthcare, auto jobs - these are the issues that will help us win in two years. I will be here, reminding those that made the promises that now it is time to keep them. Income taxes have been cut in the last four years and we are not more competitive for it. Thanks very much.

DeWine: If any of you were expecting Chris to be gracious in defeat - well you are disappointed. But I know how it goes I have been there... and I wish you many more opportunities to be there. There are so many new fresh faces that are coming to Columbus - this is the first opportunity to let the healing process begin and work on behalf of the 11.5 million people of Ohio. It is kind of difficult for me to put into words what happened on Tuesday. Chris and I have different styles, those of you who know me - I am not up here to be braggadocio, to pound my chest - what happened is seismic, this is bigger than 1994, bigger than anything they have experienced in their political lifetimes. Let's focus on what happened in Ohio. We defeated an incumbent gov. for the third time ever in the history of Ohio. I recognize Ted Strickland for coming here today. It speaks to the character of the man who led this state for four years. We swept the statewide offices. We have the largest majority in the senate since 1967 (that was the year I was born). We won 13 of 18 US house seats. We kept all 3 seats on the Ohio Supreme Court. Picked up 23 county commissioner seats. Broke every volunteer record, turned out more voters than the ODP. Tuesday's victory for the GOP is deep and wide for Ohio government. We need to make sure we understand the lessons of this election. Voters have unhappy with what is going on in Ohio - the pendulum swings hard in Ohio. This is correction of the democratic overreach, a message to Barack Obama that you went too far. The independents left him. This is a rejection of the party in power rather than an embrace of the GOP agenda, to those who were elected, remember that please. Voters want checks and balances. They want bold, decisive leadership and that's what they saw in Kasich.

Question from audience

We have a constitutional right to collective bargaining... how do you deal with this? to Mary McCreary:

Teachers don't work as many hours... when you pro-rate it out, they make over 100,000 dollars.

Begala

Begala: We need some combo of taxes and reductions in spending.
We have an 8 billion dollar budget deficit.
Here are some points about Ohio taxes. State taxes are low, local taxes are high. Everybody is right, on the right and on the left. We are one of only four states with municipal level taxes. If you look at who is paying taxes: Ohio incomes have stagnated more than those in other areas. For those on the left: Ohioans didn't enjoy the good times in the 1990s. It didn't reach Ohio.
How do we reduce programmatic expenditures, tax expenditures? There are innumerable solutions (we have a book with resource to do this).
The same solutions play out differently in different locations in Ohio.
10-12,000 people brought in to prison system for less than 12 mo. terms. We need sentencing reform - can save 100 million dollars...but passing sentencing reform is a big deal. But you would have to do this 75-80 times over to fill the deficit.
We need to protect education as a basic investment. We can do work on the Medicaid program... the people who will be cut are not low income mom and kids. 2 million + covered by Medicaid in Ohio - biggest insurer in Ohio. Insurance, hospitals, nursing himes, HMOs - they are prospering. There is room there to squeeze out money.
You can take education cuts off the tables and not sink the ship. This is not the option that the most current election yields... but there is a difference between getting into office - by today's standards, Governor Rhodes is a flaming leftwinger.
We need smart, wise and cool heads around that say look, there are real implications in people's lives... we are all in this thing together - there is no reason that anyone needs to get thrown out of the boat. There is no need to get rid of any gov't services completely, but some sorting needs to be done.

Fiscal conservative think-tank - McCreary

McCreary: Fiscal conservative think-tank member.

Under Republican control, our budget grew by 66% (mids 90s- early 2000s). Median household income increased, however...
...contrary to what Zach said, taxes are a big problem. Private sector needs to be strong to support government. State gov. workers make 25% more than private sector workers - pensions, benefits, healthcare. Pensions are a big problem. Police officers and firefighters - can enter pension at age 48 - they continue to work, but pensions continue to accumulate at 8% interest. They are public service millionaires... they can get pensions in excess of $100000 for the rest of their lives. This is nothing again police officers and firefighters...we obviously need them. The problem is with pension at all levels of govt. We recently had a woman go to work for Ohio State - she made around 86,000 but now makes over 300,000 - now her pension will be over 200,000 because it is calculated from highest three years. We have a lot of double dippers even in our state legislature. They are also collecting pensions in addition to salaries. Nothing like this exists in the private sector. Public sector pensions are not a reflection of reality. The Buckeye institute is dedicated to government accountability and transparency - we want Ohioans to know how their tax money is being spent.
We need to take on unions, pensions, and the compensation of government workers. Ohio is at a crossroads. We can have more of the failed leadership from Repubs and Dems alike or we can return to the days of limited govt. in Ohio.

Schiller, Policy Matters Ohio

Zach Schiller: The biggest problem with the budget is conscious state policy. 2005 tax cut cause 2.1 billion deficit per year. Our problem is self-inflicted. Was this done to help the Ohio economy? Didn't work. We see no (or few) benefits from tax cuts. People seem to see a connection between tax levels and economic development...look at the Dakotas - one has the highest and one has nearly the lowest income taxes... and economies are same. Tax structure is much less significant than often suggested. Forty year of state economic performance indicate no correlation between tax levels and economic performance. The share of taxes paid by business has dropped dramatically - from over 40% several decades ago to under 30% - has the roughly $8000 increase that the top 1% earning income people from Ohio (that resulted from the 2005 tax cuts) helped the economy?
We have tax breaks for banks which are much greater than the entire corporate taxes paid by banks.
We have state subsidies for taxes for property taxes... Governors Voinovich and Taft tried to keep these to go only so far... Husted tried... this is not a partisan issue.
We have special breaks for special industries - for breweries, for instance. If they pay taxes early, they get a break. No one knows the purpose. We need to look at these things.
There are 17 different tax breaks for commercial activity taxes. Some are for losses prior to 2005 - you can write that off against commercial activity taxes if you are abig company, not if you are a small tax. These breaks were given under the assumption that companies would pay other taxes (corporate franchise) which they are no longer paying - so why do they get the tax break?

These are just a few examples. These are permanent parts of the tax codes - AZ and WA have sunsets, moratoriums on these breaks, these tax credits - we need to look at this.

On to Yuskewich, CPA discussing budget

Yuskewich (CPA): recommendations about how to deal with financial crisis - as if Ohio were our client.
We have four types of recommendations.
Either bring in more revenue or reduce expenditures. One-time income/expenditures go below the line - we do not count on them as recurrent. We do not want to become so focused on 2-year-cycle that we lose sight of longterm... look at Pennsylvania. Over 2000 vendors for office supplies... some selling at full retail price - so just bid out, get a single source - they saved 2 billion dollars. This is not rocket science but basic business best practices - sometimes we lose sight of this. What about healthcare? Employees have to share in the cost of health insurance. Wellness programs are helpful - if people participate, they pay less. Pension: addressed by other states and fed gov. - business recognizes that a defined benefit plan cannot be sustained. Why don't we create a two-tier? Defined contribution, 401k model, cap benefit, reasonable retirement age.
Strategic planning needed - longer look than a budget - bi-partisan group needed, from academia, business, etc. None of us like an 8 billion dollar surprise.
Efficiency in government: require performance auditing. Send a group in to look at a program or deptmt and see if they are using best practices and meeting constituent needs. Does not have to be political -
Consolidation. Trying to find another word for this. Want to consolidate backroom operations (accounts payable, etc. - more efficient)
Superintendent of Orrville school is now superintendent of another district as well, with no increase in salary.
Look at Revenue... you won't find one line that solves the problem. Every one will have to play ball to solve this problem and at the end of the day no one will be happy and that is probably a good result!

Session: The Budget: Challenge, Opportunity and Ohio's Future

Moderator John Begala, Executive Director, The Center for Community Solutions
Panel:
Gene Krebs, Senior Director of Government Affairs, Greater Ohio Policy Center (non-partisan non-profit)
Mary McCleary, Buckeye Institute for Public Policy Solutions
Zach Schiller, Research Director, Policy Matters Ohio
J. Matthew Yuskewich, CPA, PFS, Partner, Winterset CPA Group

Krebs: Spending at the local government levels is one of the problems... every ten years we face a budget crisis, usually ending in the years ending in the number "1"
We need to re-structure the fragmented government structure... 3800 local taxing jurisdictions..."No one can answer the cost of local government because there is no central report" Ohio ranks 34th in STATE taxes...ranked 9th in LOCAL taxes. For example, what is a township, but a surveyor's construct on which we have imposed a level of government? Does Ohio need 1300 townships? 33 of our 88 counties are losing sales tax revenues... bleeding across borders... counties are based on a model from the 1800s... how long it took to ride a horse to the courthouse. Does Ohio need 88 counties? How do we do revenue sharing across the boundaries? Economics need to be done on a regional basis... we need a regional approach. Collaborate and consolidate. State needs to incentivize and mandate sharing, regional business plans, 8.65 billion dollars on schools - 614 SCHOOL DISTRICTS! SHARED SERVICE AGREEMENTS AND REDUCED ADMINISTRATION NEEDED. Getting rid of bureaucracy...doing more with less. He tells us "we are employed by the status quo to be sure that the status quo continues - sorry, it is not going to continue" Are we going to manage the change or will the change manage you? If Ohio were a house, we would have built the house so that every bedroom has their own stocked kitchen and we don't even buy our milk at CostCo or Sam's... we go to the corner convenience story and buy half a pint at a time...

10:10 AM

10:10 Columbus Dispatch (Mike Curtin) Cleveland Plain Dealer (Brent Larkin)... all of the newspapers oppose term limits

Gee: Things are not always what they seem to be ... here's a joke...to lighten the mood...monk arrives at the monastery, all monks are making copies by hand, but they are copying from copies... the head monk goes to check on this... the head monk begins to cry... he has an original copy... the word, he says, is "CELEBRATE!!"
Transparency and disclosure is the answer, not contribution limits (Davidson).
Gordon Gee - This is the nastiest campaign because of the amounts of money given... have we ever talked about public financing?
Davidson: There has been talk about this, but I do not see the move in this direction.

Transparency is the key -- it is not a big deal to let someone contribute half a million or a million if they disclose...

Was there anything that came out of the election that was a surprise to you? Dr. Gee, you were mentioning the tone and tenor...
--- we were used to distortions but the massive outright lies that we saw on every side - it is cancerous - if we don't find a bi-partisan way to deal with this. How do you allow free speech but exact a true, real penalty that will serve as a deterrent for this? The elections commission is impotent - it is a tool for people to go to to make a complaint.

Gee: We are in a dangerous time, the world is very competitive, the Indians and Chinese are aghast at our lack of policy conversations and the lack of respect here... we develop policy by outflanking and outyelling at each other - how do we develop a much more civil tone, which then contributes to the solution? Right now it is all about trashing...

Davidson: Term limits have contributed to this lack of working across the aisle...

9:55 AM

"Governor elect has himself in a box with no new taxes pledge... what can we sunset? we could broaden the revenue of the state by saying 'that is not a tax increase, that is the sunset of an old loophole!'" Jo Davidson discusses how this would then also have to apply to taxes...

Conversation about the funding of political campaigns... McCain/Feingold campaign reform bill - how "soft money" is still finding a place to go - contribution limits have been raised significantly.

Impact Ohio - Post Election Conference

9:35 AM Speaker Pro Temp Niehous mentions that "School choice is the key to quality education."
9:45 AM - Discussion on repealing term limits, first established in 1992. Term limits defeat experience...both sides say that the Tea Party stands in the way of eliminating term limits... Reapportionment is being discussed... how we divide up our districts... reapportionment reform is needed - perhaps in the middle of the decade... Gordon Gee is discussing the necessity of merit selection of judges