Ohio – State Budget Update

The Senates Select Committee on Video Lottery Terminals heard testimony from Michael Dolan, the Ohio Lottery director, and David Ellis, deputy director of the Office of Budget and Management. Dolan told the committee that installing the video lottery terminals (VLTS) would not be too complicated and could be completed in enough time to meet Gov. Ted Stricklands forecast of $933 million in state revenue. Ellis said that projection was based primarily on a Department of Taxation analysis, but with a faster installation schedule based on the assumption that the industry would begin operations … in some form of temporary structure.

A second day of Senate hearing on video slot machines led Sen. Jon Husted (R-Kettering) to declare Gov. Ted Stricklands plan to add video lottery terminals at seven Ohio racetracks had fatal flaws. Meanwhile, a witness from the Ohio Roundtable vowed a lawsuit to block any law authorizing video slots, not only to express opposition to the notion such devices are covered under the constitutional amendment authorizing the lottery, but also to address concerns about residual education funding.

A third meeting of the select committee heard dueling legal opinions on the ramifications of implementing VLTs via executive order, legislative action or constitutional amendment. For Senate Republicans, the answer was a foregone conclusion: midway through the hearing a draft of a proposed resolution calling for a constitutional amendment was distributed.

At House Finance hearings called to explore what further cuts to state government might be needed should a video slot machine plan fall through, state Superintendent Deborah Delisle said the most devastating effect of such cuts would be that Ohio might not be able to comply with No Child Left Behind, jeopardizing over $1 billion in federal funding per year. Terry Collins, state prisons director, and Douglas Lumpkin, head of the Department of Job and Family Services, also outlined how deep cuts could affect their operations.

Gov. Ted Strickland called on lawmakers to work over the July 4 holiday weekend to balance the budget and defended his administrations assertion that lack of legislative approval of a video slots plan would violate state law calling for any new forms of gambling to be expressly permitted. He also again pushed the Senate to bring forth its own plan if his was unacceptable to them.

After the holiday weekend, the House cancelled sessions for the week, and House Speaker Armond Budish (D-Beachwood) announced intentions to meet with Senate President Bill Harris (R-Ashland) in the hopes of resolving the budget impasse. However, further hearings and press briefings continued to bring forth accusatory statements on who was to blame for interim budgets. Gov. Ted Strickland challenged Senate Republicans to come up with their own proposals, claiming deafening silence was emanating from that caucus. Discussions of closing down state government grew as Strickland reiterated his opposition to a third interim budget. Senate hearings on the video slots proposal and House hearings on potential further cuts to state government also continued while Senate President Bill Harris (R-Ashland) indicated he was moving toward a plan to take video slots to the November ballot. However, toward the middle of the week, the public rhetoric ended, with leaders moving to closed door discussions, which Sen. Jon Husted (R-Kettering) called a more constructive course of action.

Rep. Lou Blessing (R-Cincinnati) issued a letter outlining what he said could constitute a gambling compromise. He said the Legislature should pass a law allowing video lottery terminals (VLTs) at racetracks and moving regulation of the lottery and the racetracks into one Gaming Control Commission, followed by the placement of a comprehensive ballot issue on racetracks and a four-city casino plan. He said a competing casino plan from the Ohio Jobs and Growth Committee has tax loopholes and would be a disaster for many reasons. The casino backers retorted by saying Blessings claim that they could avoid taxes by using cash only wagering were false because the General Assembly and gambling regulators would have the authority to require only cashless wagering which allows greater regulatory scrutiny, among other pluses.

As Ohio entered its second, week-long interim budget, the governors office determined that the state is losing $13.7 million each week there is not a permanent budget due to increased fees in HB1 that are not being collected, federal dollars that are not being drawn down and cuts provided for in the budget bill and his framework that are not being implemented. The interim budget also resulted in a weeks delay in the mailing of the states cash assistance payments, inability to pay for genetic testing in child support cases, and complications in child welfare and child care services.

As state leaders continued negotiating provisions in FY10-11 budget, it was learned at the Ohio Retirement Study Council meeting this week that the governors proposed use of $256 million in unremitted contributions to the Ohio Public Employees Retirement System (OPERS) was off the table. Labor unions and retired state workers had decried the move, saying it jeopardized their health coverage while the pension system said it would exacerbate its ability to address the 30-year funding window.

The Office of Budget and Management (OBM) announced that tax revenues for FY09, which ended June 30, were $950.9 million below the revised estimates issued in December, necessitating the transfer of a little over $1 billion from the Budget Stabilization Fund (BSF) into the operating budget. This left the BSF balance at 89 cents. The year totals also showed the state received $2.3 billion, or 12 percent, less in tax revenue in FY09 than it did in FY08.