House, Senate send budget corrective bill to Governor

After several months of acrimonious debate, House and Senate leaders passed a budget corrective item on largely partisan lines, relying primarily on Democrat votes in both the House and Senate (although the republicans hold a majority in the Ohio Senate, the bill was passed with only five republican votes).  The compromise budget legislation components include the following:-    Postpones until 2012 the last part of a scheduled 4.2 percent income tax reduction, which was scheduled to be the last leg of an overall 21% cut in personal income taxes-    Establishes a pilot project for state construction management reform, such as those recommended by a task force earlier this year. –     Allows school districts a waver for mandatory all-day kindergarten programs, if certain conditions are met by the school district.

Budget Background that Led to the Corrective Bill:

State Budget – the most difficult budget process in decades finally came to a close on July 13, 2009, but not before legislative leaders and the Governor had to acquiesce to three one-week interim budgets.  At the center of the difficulty was a budget gap of more than 3.2 billion dollars caused by the state’s economic climate.  After months of declining state revenues and increasing state unemployment, state leaders found themselves caught in the budget dilemma of needing a creative solution to increase funds, identifying further cuts or calling for a tax increase.   Governor Ted Strickland proposed additional budget cuts and the expansion of the state lottery via VLT’s at Ohio’s seven racetracks to help bring the budget into alignment.  After several weeks of wrangling, the budget was passed and the governor issued an executive order calling for the expansion of the state lottery to include VLTs at Ohio’s racetracks.  Overall, most of the Farm Bureau’s priority issues in the state budget were resolved in a positive way.  OARDC and Extension were spared from the draconian cuts first called for.  OSUE will be funded at $23.5 million and $22.4 million in 2010 and 2011.  OARDC will be funded at $34 million in each fiscal year.   The budget also retained funding for career technical education, including agricultural education, and the 5th Quarter program.  Important dollars were restored to the Ohio Department of Agriculture, especially in food safety programs.  Less fortunate were Ohio’s Soil and Water Conservation Districts which received a cut of 21% in FY ’10 and 50% in FY ’11.  Ohio Farm Bureau staff has been working with Soil and Water Conservation Districts and their association to identify ways to restore the funding, and will be working to support legislation (SB 155) that will do so.

VLT decision throws budget back to an impasse – Although the VLT proposal was ultimately implemented via executive order of the Governor and an estimated $933 million was budgeted in the final version of HB 1 as proceeds from the VLTs, opponents of the proposal attempted to file a referendum on the VLT implementation.  The State of Ohio responded to the lawsuit by claiming that budget actions are not subject to a referendum. In mid September the Ohio Supreme Court ruled that while budget actions are not subject to the referendum process, the VLT implementation was not a budget proposal and that opponents of the VLT proposal may seek a referendum vote in the general election of 2010.   As a result, the VLT proposal was been put on a hold, creating a roughly $850 million hole for the remainder of the biennium and requiring the General Assembly to pass a corrective budget measure.