Policy Matters will be watching closely, analyzing, praising the smart solutions and suggesting other ways that the state budget can ensure that Ohio is creating a society that works for everyone.

Introduction

The state budget is the two-year blueprint for the services Ohioans depend on for a healthy environment and clean water, thriving communities, safe streets, and opportunity for children to grow and learn. In the wake of the recession, Ohio’s legislature faced a choice as it crafted the current two-year budget: whether to take a balanced approach that included new revenues to maintain services, or to just cut services. They chose to cut.

The current state budget slashed needed services, seized money from local government and put it toward state obligations, and sold off state assets for short-term gain (and at long term cost). It continued a tax-cutting agenda begun in 2005 that has deprived Ohio of the revenue needed for a well-functioning state. From mental health to maintenance of dams, resources for public services were deeply eroded going into the 129^th General Assembly. State Fiscal Stabilization Funds (part of the Recovery Act) expired with the prior budget, but no tax revenues were generated to replace these federal funds. Billions were cut from schools and communities and redirected to state uses. Public assets were sold and public operations – like prisons – were outsourced. An $800 million income tax cut that disproportionately benefitted top earners was allowed, and new tax expenditures were granted. [1]

Ohio started 2013 with a final blow to fiscally battered communities: elimination of the estate tax, a $200 million-plus annual loss to Ohio’s local governments.[2] Federal policy enacted under the Budget Control Act of 2011 (the “Sequester”) could cut around $180 million in federal funding from important programs needed by Ohioans this year, and could do the same in 2014 – and each year, though 2022.[3]  Ohio, the seventh most populated state with the eighth largest Gross State Product,[4] has now joined states near the bottom quintile in rankings that measure quality of life and investment in residents: healthy lives (42^nd),[5] need-based college aid (37^th),[6] state funding for public children’s services (50^th),[7] per-recipient spending for child care and development (37^th),[8] and state support for public transit (40^th):[9] services that affect the daily lives and opportunity of many Ohioans.

This year, Ohio should have a more balanced approach to state budgeting. This report highlights selected public services that will be impacted by the state budget in education, health care, and human services as well as selected local government funding and services. These are only some of the important items for the state to support, chosen either because of their importance or because of they are a focus area of Policy Matters Ohio.

Tax policy is the key to restoration: the final section provides an analysis of Ohio tax policy and how past tax decisions have helped or hurt Ohio.