Great step – Our report last week drew attention to the 20,000 Ohioans set to lose unemployment benefits when a joint federal-state program ends January 28. Ohio’s program was set to end sooner than federal support would last. Ohio state senators shared our concern and on Tuesday passed a bill extending the initiative. The House is expected to act before the deadline. It would be a great first step to support Ohio’s unemployed and boost the state’s economy.

Meet the Prez – When the president came to town, our intrepid and resourceful David Rothstein, project director for asset building, was part of a group working to make sure President Obama heard some unvarnished truth about Ohio’s foreclosure crisis. David ended up meeting the president briefly along with our ally Lou Tisler, of Neighborhood Housing Services of Greater Cleveland. In advance of the POTUS visit, we released this summary brief that shows just how much foreclosures continue to impact our communities.

Wage boost – On January 1, Ohio’s minimum wage went up thanks to a state constitutional amendment approved by voters in 2006 that provides for annual adjustments to keep pace with the rising cost of living. An estimated 347,000 Ohioans get a raise, and it helps the state’s economy too, by putting more money in the pockets of workers who tend to spend quickly on goods and services, according to an analysis by the Economic Policy Institute that we released in Ohio.

A shout-out – Thanks to our supporters who voted in the Pepsi Refresh contest, Policy Matters and four other members of the Progressive Slate won $50,000 each. This cash infusion will support our work to help families avoid bad loans, save money and start building toward a better future. A big shout-out to all of you who voted for us – working together, we can make Ohio more prosperous, equitable, sustainable and inclusive!

In the media – Some great recent press includes a Toledo Blade editorial on the “fuzzy math” the state is using to justify prison privatization, a piece in the State Journal of West Virginia on new fees and taxes on Ohio shale gas extraction under consideration and another story in the Blade about free tax preparation services.

Welcome aboard! – Policy Matters has brought on new board members Kamla Lewis, who works revitalizing neighborhoods for the city of Shaker Heights, and Renuka Mayadev, executive director of the Children’s Defense Fund-Ohio. We’ve filled two new staff positions as well: Tracy Moavero is development and communications coordinator in Cleveland and Kalitha Williams is a Columbus-based policy liaison for our asset building project. David Rothstein, Wendy Patton and Piet van Lier also got well-earned promotions. For the scoop, click here.

Thanks from Amy Hanauer and the Policy Matters Team.

Joanna Smith-Ramani of the Doorways to Dreams Fund facilitated a webinar for the Ohio CASH Coalition focused on savings options for clients receiving tax refunds. The hour-long training focused on the best ways to help tax-site clients save for the future with savings bonds. The webinar was recorded and can be accessed here.
 

By Mary Kuhlman

The oil and gas industry is anticipating a boom in natural gas and possibly oil production in Ohio, but a new report finds the state could lose out on a half-billion tax dollars that could help offset drilling-related costs. According to research by Policy Matters Ohio, if the state levied a severance tax of 5 percent, it could generate up to $538 million in new revenue between now and 2015.

Report author Wendy Patton, senior project director for Policy Matters Ohio, thinks Ohio should be compensated by the companies that are depleting its natural resources.

“We could use severance taxes to help local communities pay that upfront cost associated with drilling; that could help schools and local governments, which have been cut badly; and to help prepare for a future after the minerals are gone.”

Patton says the drilling boom also brings concerns about environmental and health risks. Just last week, an earthquake in eastern Ohio was reported to be the result of fracking wastewater wells in Youngstown, and there are reports of water contamination from using the process in Pennsylvania. Patton says such risks are exactly the reasons Ohio should consider raising its severance tax.

Ohio’s severance tax is one of the lowest among states with shale oil and gas potential. Patton says it’s important to create what she calls a more level playing field.

“Recommending that Ohio have a severance tax rate of five percent is really a very sort of middle-of-the-road level, and it’s also similar to that of our neighboring states of West Virginia and Michigan that also have some of the shale and gas resources.”

Some in the industry argue that higher taxation, at levels closer to other states, could ruin Ohio’s chances to attracting oil and gas business. But Patton says industry will drill where the resources are best, not where taxes are lowest.

Taxing the fracking in Ohio

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Think tank increases capacity, brings in new voices

Policy Matters Ohio, a nonprofit, nonpartisan research center, today announced the appointment of two new directors to its board, Kamla Lewis of Shaker Heights and Renuka Mayadev of Columbus. The think tank also filled two newly created staff positions, bringing its staff to a total of 13, promoted three veteran staffers, and elected a new board chair.

 Kamla Lewis has worked for the city of Shaker Heights since 2001, and brings to the Policy Matters board a deep understanding of the issues facing Ohio cities. Policy Matters will draw on her experience in neighborhood revitalization and economic development, as well as her work on housing and vacant properties with the First Suburbs Consortium. Lewis has degrees from Cambridge University and Princeton.

Renuka Mayadev is the executive director of the Children’s Defense Fund-Ohio. She previously served in the administration of former Ohio Gov. Ted Strickland, focusing on juvenile justice, public safety, and rehabilitation and corrections policy. Mayadev has a J.D. from Georgetown University and a B.A. from Northwestern.

Kalitha Williams has joined Policy Matters as a Columbus-based policy liaison for our asset building project. She has worked for the Ohio Legislative Service Commission, the Ohio House of Representatives, the Columbus Urban League and the Ohio Domestic Violence Network. Williams has a B.A from Denison University and an M.P.A. from Central Michigan University.

Tracy Moavero is now development and communications coordinator in our Cleveland office. She has 20 years experience working on campaigns relating to peace, disarmament and human rights in Geneva, Switzerland, New York City, and Washington D.C. A Cleveland-area native, Moavero graduated from John Carroll University.

Policy Matters also promoted David Rothstein to project director of its asset building project, Wendy Patton to senior project director of the state fiscal project, and Piet van Lier to communications director. In addition, the organization gave its thanks to board members David Bergholz and Blaine Griffin, who left the board, and to Joyce Goldstein who stepped down as board chair. Seth Rosen, vice president of the Communications Workers of America, District 4, was elected the new board chair.

“It’s a privilege to work with such smart, dedicated, insightful colleagues and board members,” said Amy Hanauer, Policy Matters executive director. “Every one of these leaders brings knowledge of communities, passion for economic justice, and ideas on using research to promote a more prosperous, equitable, sustainable and inclusive Ohio,” said Hanauer. “We’re incredibly grateful for their commitment to our work.” 

Commentary

As Ohio seeks to cash in on expanded oil and natural-gas exploration and production, it needs stronger rules governing drilling procedures to protect Ohioans’ health and safety.

Gov. John Kasich’s administration cannot dismiss new seismic evidence that draws potential links between the controversial process of hydraulic fracturing, or fracking, and earthquakes. Nor can the governor ignore the costs of better roads and other improvements that the anticipated drilling frenzy will demand. He needs to be willing to raise the revenue to meet those demands and enforce environmental rules by appropriately taxing those who are so eager to extract Ohio’s mineral wealth.

Fracking uses toxic chemicals, sand, and lots of water, under high pressure, to fracture underground rock to get at trapped oil and natural gas. Although the technology has been around for decades, a new technique shows promise in getting to vast reserves in the Marcellus and Utica shale regions of northeastern and central Ohio. Mr. Kasich says he sees great job-creation potential in fracking.

The governor’s new director of the Ohio Department of Natural Resources, Jim Zehringer, deserves credit for temporarily banning injection of waste products from fracking within five miles of a Youngstown well that has been linked to 11 earthquakes in nine months, including one last Saturday. That decision will give local residents some peace of mind as state officials study seismic evidence.

But Governor Kasich’s commitment to public and environmental health can’t stop there. He must keep his promise to do fracking right, economically as well as environmentally, despite the pleas of industry lobbyists.

Ohio’s severance tax on oil and natural-gas drillers is less than 1 percent of the value of what they extract; that rate is near the bottom of 35 states that levy such a tax. Ohio could collect as much as $538 million in new tax revenue between now and 2015 if it matched Michigan and West Virginia, which have a 5 percent severance tax, according to the nonpartisan think tank Policy Matters Ohio.

The Kasich administration seems receptive to at least a modest increase in the tax, although it is reluctant to state how much. But Ohio’s oil and gas industry is hot because of the reserves that have become available; a 5 percent severance tax would not dissuade producers. If Ohio fails to increase its severance tax on drillers, taxpayers will bear the burden of drilling’s higher costs.

Eighty years ago, Ohio’s first drilling frenzy went from boom to bust. Bad drilling techniques wrecked northwest Ohio wells so much that a mass industry exodus to Texas and Oklahoma ensued.

Officials no longer can use the industry’s growing pains as an excuse. They must use the best available science to establish pollution safeguards to govern fracking that are strong enough to protect the state’s drinking water.

They need to develop and enforce effective rules for proper disposal of toxic materials. They must create a trust fund into which oil and gas companies will pay their fair share of tax revenue to cover production costs.

Ohio’s potential oil and gas drilling boom presents exciting opportunities, but also myriad challenges. Governor Kasich must appropriately balance both sets of prospects.

Fracking’s challenges

It’s part of a combined effort with Lucas County Commissioner Tina Skeldon Wozniak, Lucas County Treasurer Wade Kapszukiewicz and a number of social service agencies to help low to moderate income working people keep more of their refund.

“This is money that is owed to the working class and middle class citizens of our community,” said Mr. Kapszukiewicz. “They just need to know about it to take advantage of it.”

Many low-income people are owed a significant refund because of the Earned Income Tax Credit, or EITC, a federal income tax credit for low to moderate income working people.

But the IRS estimates anywhere from 10 percent to 20 percent of eligible families do not claim the credit, either because they don’t realize they are eligible or because their income is so low they believe they don’t have to file a tax return, said David Rothstein, project director of asset building for Policy Matters Ohio.

United Way officials are hoping to capture more local residents who are eligible by offering the free service.

“The idea is — you earned it, you keep it … It’s about stabilizing families and keeping the money in the household,” said Michelle Davis, United Way’s vice president, community outreach services. She emphasized tax clients will get their refund just as quickly as if they visit a paid tax preparer, and will get to keep all of it.

In the 2010 tax year, in Ohio, 942,000 families claimed the EITC for $2 billion, an average credit of $2,178 per family. Ohio ranks as the 7th largest EITC claiming state. In Lucas County, 40,750 families claimed the EITC for $92 million, an average credit of $2,263 per family, according to Internal Revenue Service statistics calculated by Policy Matters Ohio, a nonpartisan policy research organization.

There is no state-level EITC in Ohio, though 23 other states — including Michigan — have a state EITC, said Mr. Rothstein. Policy Matters has advocated for such a credit in Ohio.

In Michigan last year 809,560 people claimed the federal EITC, bringing $1.77 billion into Michigan, or an average of $2,191 per family, said Ross Yednock, director, asset building policy project for the Community Economic Development Association of Michigan, citing IRS statistics.

Elizabeth Kneebone, a senior research associate at the Brookings Institution, said the EITC, which began in 1975, has typically had broad bipartisan political support because it is an incentive for people to join the work force and an effective program for reducing poverty.

Those who qualify for the program — eligibility is based on income, marital status and number of children — could receive a federal credit of up to $5,751 for a family with three children.

“This can play a really important role for families, particularly in a difficult economy,” Ms. Kneebone said.

This is the seventh year the United Way and Lucas County has partnered to offer free tax service, said Mr. Kapszukiewicz. For the 2010 tax year, United Way’s IRS-trained volunteers prepared 1,758 tax returns, resulting in $831,375 in EITC for Lucas County residents.

Ms. Davis said United Way is pushing this year to make sure residents from more neighborhoods are included. Thousands of residents from the 43611, 43612, 43615 and 43620 zip codes were eligible for free tax filing last year and didn’t take advantage of it.

Mr. Kapszukiewicz, Ms. Wozniak and United Way officials hosted a press conference Thursday at the Toledo-Lucas County Public Library Reynolds Corners branch, in the 43615 zip code. More than 12,000 taxpayers are eligible in this area for free tax filing from United Way, yet last year none used it.

“It’s their money. And we need to help folks understand it is there for them to use,” said Bill Kitson, United Way president and chief executive officer.

“Congress should extend federal benefits to help struggling families, but also to help Ohio emerge from the weak economy more quickly.”    Zach Schiller, research director

Many more to lose benefits without Congressional action

Some 20,000 Ohioans will lose their unemployment compensation benefits after January 28 when a program supporting the long-term unemployed ends. These are just the first of a bigger wave that will lose their benefits over coming months if Congress does not act to extend federal support before the end of February.

“Congress should extend federal benefits to help struggling families, but also to help Ohio emerge from the weak economy more quickly,” said Zach Schiller, research director at Policy Matters Ohio.

Congress voted in December to continue for two months the Emergency Unemployment Compensation (EUC) program, which currently covers 2.9 million unemployed workers across the country and more than 80,000 Ohioans.

The 20,000 Ohio workers affected by the January 28 cut-off have been receiving benefits under a different program. They have been laid off even longer – at least a year and a half – and have been receiving benefits through the Extended Benefits (EB) program, a joint federal-state effort dating back to the 1970s. Separate from EUC, it provides 13 to 20 weeks of additional benefits if a state has a high unemployment rate and that rate over a three-month period is 10 percent higher than it was in the same period over any of the past three years. Since Ohio’s unemployment rate is over 8 percent, workers here have qualified for 20 additional weeks of benefits. This program has been fully paid by the federal government for all private-sector workers since the American Recovery and Reinvestment Act in 2009, and is currently funded through February.

The Ohio General Assembly acted last year to make sure that unemployed Ohioans would continue to qualify by extending the “lookback” period to three years from two, as allowed under federal law (that means the unemployment rate over a three-month period has to be 10 percent higher than it was over the comparable period in one of the last three years). However, that state law was effective through December 31, not as long as federal funding lasts, so benefits will end, as the program prescribes, a few weeks later. Even if federal support were extended and the state changed its law, Ohio likely would no longer qualify for this program in March, and benefits likely would end in early April, according to the National Employment Law Project. That’s because, at its current level, Ohio’s unemployment rate – though very high, at 8.5 percent – soon won’t be 10 percent above its rate three years ago.

“While the prospects for helping the workers in the Extended Benefits program are more limited, Congress can and should still act to help the larger group of workers in the Emergency Unemployment Compensation program,” Schiller said.

It is good news that unemployment is slightly lower than it has been, but it still leaves nearly half a million Ohioans unemployed. Ohio, like most of the nation, continues to be gripped by an unemployment crisis. Congress has approved additional benefits in each downturn since the 1950s, and at no time did it end such benefits when the national unemployment rate was above 7.2 percent. In November, the U.S. unemployment rate was 8.6 percent. Nationally, there is only one job for each 4.3 openings, according to the most recent survey by the U.S. Bureau of Labor Statistics.

Long-term unemployment remains especially severe, with 5.7 million workers – 43 percent of those without jobs – unemployed for 27 weeks or more. And some of the progress in reducing unemployment, both in Ohio and nationally, has come because workers are dropping out of the labor force, so they are no longer counted as unemployed (See www.policymattersohio.org/job-watch-dec2011). Overall, despite an increase in employment over the past two years, Ohio has lost more than 307,000 jobs since the recession started in December 2007.

“The end of these benefits underscores the need for Congress to keep EUC benefits flowing to long-term jobless,” said Schiller. The EUC program offers up to 53 weeks of additional benefits beyond the 26 weeks of regular state benefits. The amount paid to unemployed Ohioans through the first 10 months of 2011 under the EUC program amounted to $1.38 billion. On an annual basis, that is the equivalent of more than four and a half times the payroll of the General Motors Lordstown Complex. Thus, quite apart from the benefit to individuals and their families of these benefits, they are also an important contributor to the state economy.

Recently, the share of unemployed Ohioans receiving regular state benefits, which last up to 26 weeks, has sunk to at least a 35-year low. During the third quarter of 2011, less than 19 percent of unemployed Ohioans received regular state UC benefits. According to recent claims figures from the Ohio Department of Job & Family Services, the end of federally-supported benefits would mean that almost half of those Ohioans currently receiving benefits would be cut off.

Both state and federal UC benefits average less than $300 a week in Ohio, a modest sum. Yet according to the U.S. Census Bureau, in 2010 unemployment compensation kept 3.2 million people out of poverty in the country. This crucial part of the safety net must be maintained.

-30-

New housing foreclosures remain at historically high levels in Ohio, and seem to be stabilizing at peak levels of about 80,000. In short, Ohio homeowners are drenched, with one in three “under water,” owing more on their homes than current market value.

Cuyahoga County, with 12,285, remains highest

by David Rothstein                                                                                                         Download PDF

Housing foreclosures remain at historically high levels in Ohio. Urban counties continue to lead the state in foreclosure filings, even as smaller and less urban counties are experiencing larger growth rates. In 2010, the number of new filings grew in 30 of Ohio’s 88 counties; 24 of those counties had populations below 100,000.

Foreclosures stabilizing at peak levels

Statewide, foreclosure filings slightly declined in 2010 with 85,483 new filings, a 4 percent decrease from 2009. Compared to 2000, when Ohio had 31,229 new foreclosures, this is a 142 percent increase. The latest numbers indicate that there was one foreclosure filing for every 59 housing units in the state last year. 

Figure 1 shows that since 1995, the number of filings has at least quadrupled in 81 of Ohio’s 88 counties and has more than quintupled statewide. While new foreclosures have slowed in the past few years, new filings are stabilizing around a peak of 80,000 or more each year.

The result is that Ohioans are drenched, with nearly one in three owing more on their homes than current market value. This adds up to more than 630,000 Ohio mortgages “under water” and ranks Ohio fourth in the total number of home mortgages with negative or near-negative equity. As a share of all Ohio mortgages, more than 28 percent are in this situation, ranking Ohio 9^th in the country. The loan-to-value ratio in Ohio is more than 76 percent, meaning that Ohio mortgage holders, in total, have less than 25 percent ownership in their home mortgages.

Foreclosures continue to plague urban areas

• Cuyahoga County remains at the epicenter of the foreclosure crisis. For the fifth year in a row Cuyahoga County topped the list of foreclosures per 1,000 people (10.05) and overall new foreclosure filings (12,825).
• While rural counties are facing more foreclosures than past years, urban counties still carry the brunt of new filings. The 10 biggest urban counties accounted for 60 percent of filings in Ohio last year but represented only 53 percent of the population.
• Court mediation, housing counseling, and outreach by community groups have slowed foreclosure filings. Working with a HUD counseling group or the court system dramatically increases the likelihood of a successful mortgage workout.

The huge number of homeowners with mortgages in delinquency and default is likely to trigger new foreclosures for years to come. In Ohio, 9.1 percent of all mortgages are delinquent or in default but not yet in foreclosure. Additionally, homeowners who are under water make up an increasingly large portion of Ohio’s mortgage market and are more likely to be hit by foreclosure. Figure 2 shows that Ohio’s high percentage of mortgages under water put Ohio in 4^th  place among all states.

Normally, coming in tenth is not something to be happy about, but when it’s the Pepsi Refresh contest, it means we made the cut for $50,000! The tally won’t be final until January 23, but THANKS to everyone who voted to keep us in the running; special thanks to Brandon Silverman and all involved with the Progressive Slate, which put several great groups in the top 10. This award will make a huge difference for our work in 2012 and will help us start the new year with a big boost! You know we’ll use the grant money to support the important work we do. Happy New Year to all!