HungerNetOhio #6.7:
Overcoming the “B” Crisis and “T” Stigma

The Ohio Department of Job and Family Services reported yesterday that unemployment rose from 9.7 percent in March to 10.2 percent in April, putting Ohio's rate into the double digits and forecasting continued economic decline in the State.

More evidence of pain came earlier this week when the State Office of Budget and Management announced that the shortfall for the current budget period that ends June 30th will reach $912 million.  Cost-saving measures and debt restructuring will cover about $150 million of that but the rest probably will come from the same rainy-day fund that legislators had hoped to tap to balance the next two-year budget. But every dollar used to repair the current budget is being taken away from the plan for the 2010 and 2011 fiscal years.

That's why current Ohio Senate Finance Committee budget hearings are so critical. At a time without relief in sight from ever widening economic collapse, public officials feel forced--contradictorily--into a formula for triage among those essential human service programs which are designed to help those in greatest need.
 
Facing a shortfall that could reach $3 billion, the Committee is expected by next Wednesday to announce amendments for slashing $1 billion from the two-year, $54 billion budget bill passed by a prematurely optimistic Substitute House Bill 1 received from the House. The rest of the cuts will be left to a joint House-Senate conference committee which will convene in early June.  They will have just a few weeks left to reconcile their differences in time for the Governor's signature and start of the next fiscal year in July.

Alarmed by the hyper-partisan clash, chasm in vision, and air of despair currently hovering over the Statehouse, The Campaign to Protect Ohio's Future has jumped into the fray. This coalition of health, human services, primary and secondary education and higher education organizations is seeking to protect Ohio's most vulnerable citizens.  It is committed to adequately funding vital services through a responsible budget with a primary priority of meeting basic human needs and providing sufficient funds to invest in Ohio's future.
 
The board of the Hunger Network in Ohio last week joined forces with a growing list of over 50 groups to support the Campaign's basic principles and encourage broader consideration for addressing this crisis.  We invite others to endorse these values and unite in common witness for bringing greater sanity to the outcome of these discussions.

SHORT CUT:
For those who insist, "JUST TELL ME WHAT TO DO!"

LONG SUIT:
For those who plead, "GIVE ME MORE DETAILS"

Decline in jobs, increase in poverty

The budget debate has paralleled a steady decline in stability within families across the State.  Many once self-sufficient Ohioans are struggling to just to survive.

For instance, those unemployment percentages equal an additional 25,200 decline in numbers of people working in March.  After losing 146,900 jobs in 2008, the State is now down 138,300 workers during the first four months of 2009.  The new April employment figure for Ohio extended Ohio's horrible lengthy sup-par job growth streak of 158 consecutive months when Ohio's job growth has been slower than the USA national average.  This is an all-time record in the history of Ohio. The state has now gone 13 years and two months with its job growth continuously below the USA national average, accentuating this most serious chronic problem that Ohio faces today.

These figures illustrate the need of State to provide a broader and stronger human service safety net immediately while generating greater opportunities for future employment. Responding to the desperation of an increasing number of our citizens, we must begin by passing a biennial budget that provides short-term remedies while recognizing long-term challenges.

How we got to this Point

Ohio has not fully recovered from previous recessions.  The last Ohio Budget (2008-2009, $52 billion in General Revenue Funds) was the lowest growth budget in 42 years.  With the exception of the Rainy Day Fund, the last budget also utilized all possible state funds, including using the TANF surplus and securitizing the tobacco settlement funds.
Since being enacted, the last budget has been revised three times to reduce spending a total of $1.9 billion.  The Office of Budget Management reported that income tax receipts for the general revenue fund for the month of April '09 fell $322 million short of projections, with total tax receipts $397 million below FY09 targets.
Estimated General Revenue Fund appropriations for the upcoming 2010-2011 budget currently under consideration in the legislature are $54 billion, of which $6.9 billion are one-time funds (all but $1.7 billion of the one-time funds are federal).  The tentative budget also includes $1.5 billion in new fees or fee increases which may not make it through the legislative budget process.

Ohio's budget shortfall is due to two things: a similar reduction in revenues that the entire country is experiencing AND changes made in the Ohio tax system in 2005 designed to remove over $2 billion dollars in tax revenue upon full implementation. These changes include moving from a Corporate Franchise Tax to a Corporate Activity Tax and reducing the rate of business taxes. It also includes a 21% reduction in personal income taxes implemented over the past five years.

The SFY 2010-11 Budget as submitted includes significant cuts in human services.  There is also a total reduction of $162 million per year in funding for county jobs and family services resulting in staff reductions which reduce all county services for low-income families at a time when their numbers are increasing dramatically.  Caseloads for cash assistance climbed 14% in 18 months and 1 in 3 families seeking assistance are new to the public assistance system.

Thus, additional cuts in FY 09 are imminent.  At a time when the downturn in the economy is forcing more families to ask for help from the state and private agencies, funding for those services is not available.

Consideration for Increasing Revenues

Faced with these heart-wrenching decisions, legislators are being asked to save critical programs especially designed to assist those most vulnerable. The Campaign to Protect Ohio's Future recognizes the difficult decisions and choices Ohio's leaders and policymakers face when crafting the state's 2010-2011 budget. However, the only response to budget shortfalls cannot be to further cut services to Ohio's most vulnerable children, families, seniors, and those struggling to make ends meet during this downturn in the economy.

Recognizing that addition resources are needed to address the big "B" challenge. Sensing the possibility of a shift in the public's usual aversion to taxation, some legislators are willing to use the "T" word as they consider the need for additional revenues, including rolling back some of the tax cuts of the last five years.  Health and human services organizations are organizing to ensure that the Governor and Legislators know how important and needed these services are and showing their support for increased revenues.
 
Although not recommending specific sources, the Campaign has catalogued some potential revenue increases being considered in our state and others. Here is a sampling of possibilities:

o     Cuts in the personal income tax could be restored in several ways. (a) Restoring the last across-the-board rate cut in the personal income tax, currently being implemented would save more than $400 million a year. (b) Restoring the top personal-income tax rate of 7.5% -- the level in 2005 -- for incomes over $200,000 a year would yield estimated annual revenue of $470 million. (c) A rolling back of the personal income tax rates across the board to 2007 levels would generate roughly $800 million, (double the amount for the final year rollback)

o     Restricting tax breaks could generate up to $150 million a year.  Up for consideration are on to levy sales tax on lobbying and debt collection or eliminating the tax on dealers in intangibles and require such companies to pay the corporate franchise tax for financial institutions

o     Eliminating the $20 personal exemption credit for the personal income tax would generate about $152 million.

o     Raising the cigarette tax 1 cent per cigarette would generate $130 million and doubling the current tax on other tobacco products would generate $20 million.  Other consideration on such non-essential would be to increase revenues through liquor taxes, and taxes on soda and bottled water.

o     A temporary increase in the sales tax would yield about $675 million for each _ percentage point increase.

o     House Bill 66, the 2005 tax reform, reduced business taxes by $1 billion or more a year by replacing the corporate franchise tax and the tangible personal property tax with the new Commercial Activity Tax (CAT).  There are a number of ways to restore some of the lost revenue including increasing the rate of the Commercial Activity Tax. Each 0.01 percent increase in the CAT would generate about $50 million or more in annual revenue (currently, the CAT was due to reach its full rate of 0.26 percent last month). Or the final cut in the corporate franchise tax could be halted. This would leave the tax at 20% of its rate when the tax cuts began. Estimated GRF revenue in FY09: $305 million. This tax should also be strengthened so companies can't easily shift Ohio income out of state (would produce tens of millions of dollars annually).

It's Time For Leadership!

Making smart choices in this two-year budget plan can help Ohio to both strengthen our economy for the future and support families struggling immediately. NOW IS THE TIME to solve the state's fiscal crisis using a balanced approach that includes increasing revenues to fully fund health and human services that support precarious individuals and the overall Ohio economy.

JOIN US IN PROTECTING OHIO'S FUTURE!


PRIMARY REFERENCES AND LINKS

The Campaign to Protect Ohio's Future: http://www.protectohio.org/

“[haho] Ohio Loses 285,200 Jobs in 16 Months; Sets All-Time Record with 158 Consecutive Months of Sub-Par Growth.” May 22, 2009; George Zeller, Economic Research Analyst:

“Children's Health Coverage for Families at 200-300% FPL Could be at RISK!” Cathy Levine: UHCAN Ohio: clevine@uhcanohio.org

“Red Alert...Rally for Health & Human Services.” June 4 @Statehouse 5.21.09; Coalition on Homelessness and Housing:
actionalert@cohhio.org

“Before the Finance & Financial Institutions Committee.” Ohio Senate May 19, 2009; Jon Honeck; Center for Community Solutions:


Rally for Leadership; June 4th Support Ohio Association of Second Harvest Foodbanks May 20, 2009: Erin erin@oashf.org

“OHIO POISED TO SECURE $38 MILLION IN FEDERAL FUNDS:
Children's Child Health Coverage Can Turn $14 Million into $52 Million…” by Rebecca Wilson; rebeccaswilson@sbcglobal.net

“[haho] NEWS RELEASE:  Voices for Ohio's Children Endorses Raise the Revenue:Advocates Urge Balanced Approach to State Budget Crisis Campaign.” May 18,2009: rswilson@raex.com

“[haho] State Short $912.1 Million for FY09.” 5.18.09 by Greg Kapcar; PCSAO: greg@pcsao.org

[haho] Health and Human Services Budget Chart [1 Attachment]; May 14,2009 by Greg Kapcar, 5.18.09; PCSAO: greg@pcsao.org

“Re: [haho] Ohio tax reform: Year 2 in review.” 5.13.09; Zach Schiller; Policy Matters Ohio:
http://www.policymattersohio.org/2005TaxOverhaul.htm
http://www.policymattersohio.org/BusinessTaxRevamp2009.htm

“URGENT -- Contact Your Ohio Senator TUESDAY to Protect Health Coverage.” May 18, 2009; Kathleen Gmeiner; Ohio Consumers for Health Coverage: kgmeiner@uhcanohio.org

"Food aid touted as economic tonic: Skeptics warn of costs down the road" by Rita Price; May 23, 2009; THE COLUMBUS DISPATCH:
http://ee.dispatch.com/Repository/ml.asp?Ref=VENELzIwMDkvMDUvMjMjQXIwMDEwMg==&Mode=HTML&Locale=english-skin-custom

Hunger Network in Ohio
82 East 16th Avenue Columbus, Ohio 43201
Phone: 614-424-6203
E-mail: info@hungernetohio.org