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The League of Women Voters of Metropolitan Columbus

News

Policy center offers ‘unthinkable’ solutions to looming budget crisis

Tuesday, Jun. 29, 2010

Just in time for the Budget Planning and Management Commission's first meeting, the Center for Community Solutions on Thursday released a white paper entitled "Thinking the Unthinkable: Finding Common Ground for Resolving Ohio's Fiscal Crisis."

The report includes an analysis of Ohio's current fiscal status and FY12-13 budget issues, and proposes two scenarios to reduce budget deficits for FY12-13.

According to the report, the CCS does not presume that the two scenarios are the only ways to resolve the anticipated state budget deficit, but the scenarios are "illustrative of the scope and policy changes required to erase the structural deficit during the next biennium." They represent a framework for reforming the structure of the state's budget to strengthen public services and investments to ensure Ohio's future prosperity.

The authors write, "The Center for Community Solutions (CCS) hopes above all else that it will contribute to moderation in tone and spirit, and pragmatism in the face of a crisis of the first order."

The authors of the report identify current budget realities facing Ohio in FY12-13, including a structural deficit that ranges from $6 to $7 billion, and propose that lawmakers use a three-part "balanced" approach that reflects the short-term impact on citizens and businesses and the future impact on Ohio's economy when developing the next biennial budget. The balanced approach includes "new tax revenue, reduced tax expenditures, and reduced programmatic expenditures," and is based on the following principles, taken directly from the report:

The report also includes an analysis of income and taxes, tax expenditures, and programmatic reductions that lawmakers and policy makers could consider as options for balancing the FY12-13 budget. The following is a summary of the recommendations from the Executive Summary of the report:

Taxes

Tax Expenditures

Programmatic Reductions

Long-term Structural Problems

The appendix of the report, starting on page 37, includes line items targeted for reductions of 10, 15, or 20 percent in FY12-13, including line items for primary, secondary, and higher education, based on the scenarios.

The proposed reductions in primary and secondary education could save between $62 and $125 million over the biennium. Excluded from reductions under primary and secondary education are line items for property tax relief, foundation funding, pupil transportation, special education enhancements, career-technical enhancements, public preschool, and lunch match.

The proposed reductions for higher education could save between $41 and $82 million over the biennium. Excluded for reductions under higher education are line items for the state share of instruction, Ohio College Opportunity Grant, War Orphans Scholarship, National Guard Scholarship, and adult education and workforce programs.

The report also recommends that property tax relief for homeowners be "means tested" based on income, wealth, and other factors. Property tax relief for homeowners includes the 10 percent rollback for all residential property owners, the 2.5 rollback for owner-occupied residences, and the Homestead Exemption. Adjusting property tax relief through means testing could save $230 million to $640 million over the biennium.

According to the report, the CCS will be posting on its website updates of data and a discussion board to "encourage and facilitate discussion of these and related topics, throughout the balance of the year."

Read the full report.

Policy Matters Ohio

In related news, Policy Matters Ohio has collected information about several reports published over the previous years regarding Ohio's tax policies, tax structure, and state budget. These reports include information about the Commercial Activity Tax, tax expenditures, the consequences of eliminating the income tax, Ohio's income tax structure, the 2005 overhaul of Ohio's tax structure, and more.

Read the report.

The analysis of the CCS report and information about the Policy Matters compendium were provided by Joan Platz, education specialist for the League of Women Voters of Ohio, as part of her weekly Education Update. Subscribe to the update.