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The Buckeye Institute: Ohio’s Budget Should Fund Priorities in a Time of Pandemic Recovery
Apr 15, 2021
Columbus, OH – On Thursday, The Buckeye Institute testified (see full text below or download a PDF) before the Ohio House Finance Committee on the policies in House Bill 110, Ohio’s biennial operating budget, which accounts for a little less than half of state spending.
In his testimony, Greg R. Lawson, research fellow at The Buckeye Institute, noted that the COVID-19 pandemic has “created new challenges and new opportunities” for policymakers in crafting an operating budget that balances the “public’s health and safety, the economic needs of struggling small businesses, and maintain[s] a sustainable long-term budget that does not hinder growth…”
As outlined in Buckeye’s Piglet Book, Lawson urged lawmakers to “[a]dher[e] to fundamental economic principles, re-prioritiz[e] spending, curb spending growth rates, and trim government waste during this biennial budget process.” He also warned lawmakers to “resist the temptation to create long-term programs with one-time federal funding,” saying, “As The Buckeye Institute recently explained in How to Spend Federal Stimulus Money Wisely, there are wise ways and wrong ways to spend excess federal funding.”
Beyond prudent spending and cutting wasteful and unnecessary spending, Lawson also outlined how policymakers can address long-term policy issues in the budget. These areas include:
- Adopting education savings accounts to create educational funding flexibility for families to meet the individual needs of their students, many of whom are still studying at home;
- Implementing further tax reforms by closing more than $9 billion in tax loopholes to facilitate an across-the-board personal income tax rate reduction;
- Expanding access to broadband service—which has become all-but essential for 21st century life—to unserved areas of Ohio;
- Reforming higher education funding to help students get the skills they need to secure gainful employment quickly and pay down student loans; and
- Expanding Ohio’s successful Targeted Community Alternatives to Prison program to all 88 counties, which will reduce prison overcrowding, save taxpayer dollars on incarceration, and help low-level, non-violent offenders get the treatment and rehabilitation they need to re-enter society successfully.
In closing, Lawson pointed out that the biennial budget process can “ensure that Ohio makes a solid economic recovery from the COVID-19 pandemic without jeopardizing its future growth prospects,” noting that “The current House version of the budget makes progress…but more can and should be done to improve the bill and help Ohio recover from the pandemic.”
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Funding Ohio’s Priorities in a Time of Pandemic Recovery
Interested Party Testimony
Ohio House Finance Committee
House Bill 110
Greg R. Lawson, Research Fellow
The Buckeye Institute
April 15, 2021
As Prepared for Delivery
Chair Oelslager, Vice Chair Plummer, Ranking Member Crawley, and members of the Committee, thank you for the opportunity to testify today regarding House Bill 110 and Ohio’s operating budget.
My name is Greg R. Lawson. I am the research fellow at The Buckeye Institute, an independent research and educational institution—a think tank—whose mission is to advance free-market public policy in the states.
The COVID-19 pandemic has created new challenges and new opportunities for you in drafting the state’s biennial operating budget. Balancing the public’s health and safety, the economic needs of struggling small businesses, and maintaining a sustainable long-term budget that does not hinder growth will be no small feat. But this difficult task can be accomplished even while adequately funding critical priorities such as vaccine distribution and maintaining a sound public infrastructure. Adhering to fundamental economic principles, re-prioritizing spending, curbing spending growth rates, and trimming government waste during this biennial budget process, will help fight the urge to turn one-time pandemic-recovery spending and money from Washington into ongoing, unsustainable spending obligations.
A well-drafted, sustainable budget can also address some important long-standing issues, including empowering families to get the individualized educational resources they need with flexible K-12 funding; making Ohio’s tax code more competitive; investing in 21st century infrastructure; aligning higher education funding with educational, employment, and workforce needs; and targeting criminal justice resources to better deal with low-level offenders.
Budget Overview
Governor Mike DeWine deserves credit for proposing a budget that protects taxpayers, makes strategic use of one-time spending on public infrastructure, and helps small businesses struggling to survive the economic fallout of the pandemic. The Ohio House of Representatives has built on the governor’s budget by proposing a small but positive tax cut, trimming some wasteful spending, and expanding the successful Targeted Community Alternatives to Prison (T-CAP) program. But more can be done, including more stringent spending and enhanced school choice initiatives.
The current version of House Bill 110 includes appropriations of $162.6 billion in all funds over the biennium and $74.7 billion in general revenue funds (GRF). Approximately half of the proposed GRF increase stems from the state picking up a larger share of Medicaid costs in Fiscal Year 2023 as the temporary federal Medicaid resources made available during the COVID-19 pandemic wind down. But as Medicaid Director Maureen Corcoran has indicated, eligibility redeterminations won’t really happen until next year and the overall caseload will likely remain above the pre-pandemic number through the biennium. And as with other recent Ohio budgets, more than two-thirds of state-only spending will pay for K-12 education, Medicaid, and criminal justice.
State tax revenues have remained relatively strong despite the pandemic, providing adequate resources for ongoing, regular and non-COVID-19 related expenses. Ohio can also anticipate receiving around $17 billion in federal funds under the latest COVID-19 relief package, which will tempt the General Assembly to create unsustainable spending programs that will outlast the initial federal funding. That temptation must be resisted and the federal dollars strategically spent.
The Buckeye Institute’s most recent Piglet Book urges state policymakers to follow sound spending principles, remain focused on providing core government services, and supporting businesses recovering from the pandemic without establishing an unsustainable baseline for future spending that will inevitably require tax increases.
How to Spend in a Pandemic Recovery
Prioritize Government Spending
During the pandemic, policymakers should prioritize government spending to provide core government services and enhance public health and safety. Such priorities include procuring and distributing COVID-19 vaccines, and maintaining sound public infrastructures. Spending on programs and projects that fall beyond these immediate priorities, such as the expensive and unnecessary $50 million Ohio promotional campaign, should be eliminated or delayed.
Until the pandemic subsides, Ohio does not need the $50 million Promoting Ohio marketing campaign to attract people from California and New York. Opening businesses and promoting safe, healthy environments, while maintaining an affordable, high standard of living will attract those looking to escape high-tax states. This program’s funding can be redirected to enhance public health and safety programs.
Similarly, with so many businesses struggling to survive the pandemic, the House has taken some positive steps by placing additional guardrails on H2Ohio. Governor Mike DeWine and the General Assembly rightly seek to ensure clean water in Lake Erie and protect against toxic algae blooms, but in difficult times like these when Ohio families have sacrificed and postponed even worthwhile objectives—their government should, too. As critical as H2Ohio may be, the initiative should be scaled-back temporarily. Although the House took a partial step in this direction by compelling the administration to seek Controlling Board authorization before transferring unencumbered GRF into H2Ohio, the better solution would scale-back the program until Ohio has fully emerged from the pandemic.
Maintain a Sustainable Budget
With federal financial aid flowing from Washington, state policymakers must resist the temptation to create long-term programs with one-time federal funding. As The Buckeye Institute recently explained in How to Spend Federal Stimulus Money Wisely, there are…
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