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Research & Policy
Policy Matters Ohio

A budget that works

January 31, 2013

A budget that works

January 31, 2013

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.

Table of contents
Press release
Executive summary
Download full report
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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 129th 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 (42nd),[5] need-based college aid (37th),[6] state funding for public children’s services (50th),[7] per-recipient spending for child care and development (37th),[8] and state support for public transit (40th):[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.

Other sections:
Executive summary
Budget baseline
Local government
K-12 education
Higher education
Health and human services
Workforce and training
Tax policy
Summary and recommendations

[1] Schiller, Zach, “New Tax Breaks in the Ohio State Budget,” Policy Matters Ohio, July 2012 at; also, “Ohio needs taxes that are fair and adequate,” Policy Matters Ohio Factsheet at

[2] Over the 4 calendar years between 2007 and 2010, estate taxes received by Ohio’s local governments averaged $226 million annually. See Zach Schiller, “No Windfall: Casino taxes won’t make up cuts to local governments,” (p.6), Policy Matters Ohio, October 2012 at In fiscal year 2011, they received $302.1 million.

[3] “Health department immunization funds cut,” Sidney Daily News, 1/11/2013 at

[4] Bureau of Economic Analysis, Gross Domestic Product by State (Table 1. Real GDP by State, 2008-2011) at

[5] Ohio ranked 42nd among the states in the indicators for “healthy Lives” on the Commonwealth scorecard for state health in 2009 ( ).  It ranked 33d on the American Health Ranking overall scale in 2009, but dropped to 35th by 2012 (

[6] Ohio ranks 37 out of 50 in terms of need-based aid for low-income students, down from 17th in FY 2000 and from 13th in FY 1996. From Postsecondary Education Opportunity spreadsheet, “State need-based grant coverage of Pell Recipients in 1978-79 through 2010-11,” updated 8/23/2012 at

[7] The state of Ohio invests the least of all states in children’s services, according to PCSAO, the Public Children’s Services Association of Ohio: “….as a state, Ohio provides the lowest investment in child welfare in the nation, with only 8-10% of the total cost of child welfare services; local funds and federal funds provide the rest in nearly equal proportions.”  PCSAO Fact Book 2011-12 at Given the importance of local funds to children’s services in Ohio, it is important to point out that just over half (45) of Ohio’s 88 counties have local levies financing such services, and that those levies lost $39.2 million in the last biennial budget as the state reclaimed tax reimbursements promised as local taxes were eliminated by state tax changes.

[8] National Center for Children in Poverty State Policy Data Wizard at

[9] “Survey of State Funding for Public Transportation, “Final Report 2011, Table 1-10. “Reported Per Capita Investment for 50 States and DC.”


2013Budget PolicyPiet van LierRevenue & BudgetWendy PattonZach Schiller

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