June 17, 2011 IMPORTANT YOUR IMMEDIATE ACTION REQUESTED STATE BUDGET CONFERENCE COMMITTEE ISSUES

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1 June 17, 2011 IMPORTANT YOUR IMMEDIATE ACTION REQUESTED STATE BUDGET CONFERENCE COMMITTEE ISSUES Click here to view a copy of a cover memo and chart from CCAO President David Dhume and Executive Director Larry Long that shows issues of importance to the Joint Conference Committee that is now working to resolve differences between the House and Senate versions of the state budget bill, HB 153. The time to act with members of the conference committee and with your members of the House and Senate is now. POSSIBLE COMMENTS TO INCLUDE IN COMMUNICATING WITH CONFERENCE COMMITTEE AND MEMBERS OF THE GENERAL ASSEMBLY Local Government Fund (LGF) Appropriation Support the Senate Version that provides for an additional $100 Million than in the House version. LGF Local Distribution Formula and Process Urge removal of the provisions in the Senate version that changes the statutory formula and changes the approval process for approval of an alternative LGF formula. 78 counties would lose funds under this proposal and it should be removed from the budget. TPP & Public Utility Reimbursement Dollars Both versions of the budget provide for an extreme acceleration of the phase out of current reimbursements, and freeze the acceleration at the end of the biennium. PERS Employer/Employee Share Urge the Conference Committee to adopt the proposal of the Governor to reduce the county share of PERS by 2% and increase the employee share by 2%. This provision was not included in either the House or the Senate version of the budget and we urge it be included in the final bill as it is the only 1

2 substantive tool to local governments that would immediately reduce costs for the upcoming biennium. Data Board Alternative This provision gives authority for the commissioners to establish a new board to combine the function of the Data Board, Microfilm Board and Records Commission and allows all elected officials to elect the administrator of the new board. This provision in the Senate version, however, makes the county auditor the statutory administrator of the board. Urge the removal of the county auditor as the statutory administrator so all elected officials can select the administrator. If this is not done, remove the entire provision from the budget. Mandatory Training for County Recorders Remove the Senate version of the bill that includes mandatory training for County Recorders and requires the commissioners to appropriate funds for this purpose. Appropriation of Court Filing Fees Urge the retention of language in the Senate version that makes certain court filing fees for court funds, including the court computerization fund, legal research fund and court special project funds subject to appropriation by the commissioners. This provides for more transparency and checks and balances but does not allow funds to be used for non court purposes and does not eliminate courts order by judges. Phase Out the General Health Department Office Space Mandate Support the proposal by the Governor and in the House version to phase out the county general fund obligation to pay for county health department office space. This provision was removed in the Senate version County Central Services Suggest amendments to the Senate passed version that allows for certain county centralized services. Please see chart for more details. Provide that any state health care purchasing program is permissive. County Home Exemption from Medicaid Franchise Fee Oppose the insertion into the final budget of the Medicaid Franchise Fee to apply to County Homes. We understand that such an effort may be made in conference committee even though it is not included in either version of the budget. This provision would negatively impact Ashtabula, Auglaize, Butler, Erie, Greene, Hardin, Lorain, Monroe, Portage, Putnam, Ottawa, Shelby, Wayne and Wood counties, who all have Medicaid certified county homes. NEW LOCAL FORMULA FOR DISTRIBUTION OF LGF MONEY WITHIN COUNTY TO REDUCE COUNTY SHARE, CCAO ASKS FOR REMOVAL OF AMENDMENT The Senate passed version of the state budget (HB 153) includes a new statutory formula for distribution of Local Government Funds (LGF) within each county that has the practical effect of reducing the county share of such funds in 78 of Ohio s counties. The new formula includes the following major provisions: Establishes a new default or statutory formula, and provides that the fixed county share is 30% of the county undivided LGF, unless an alternative formula is adopted. Eliminates the existing statutory or alternative formula in each county in the state. 2

3 Eliminates the requirement that each board of county commissioners and the legislative authority of the largest city in the county approve any alternative formula. This also may reduce the share to the largest city within each county. Eliminates guidelines in the law that permit counties to receive as much as 60% of the total county LGF allocation if the municipal population is less than 41%, and up to 50% of the LGF allocation if the municipal population in the county is 41% or more but less than 81%. If the municipal population exceeds 81% of the county population, current law sets the maximum county share at 30%. Requires any alternative formula, including any existing statutory or alternative formula, to be approved by 75% of the subdivisions in the county without regard to population or any other factor. CCAO believes that under the LGF formula amendment (SC-2479) included in the Senate version of the budget every county that currently receives more than 30% of the county undivided LGF within the county will have the county share of the county undivided LGF reduced to a maximum of 30%. With a 75% approval requirement for any alternative formula, CCAO believes that subdivisions in many counties will resort to the new default statutory formula because the majority of the subdivisions will receive a larger share of the revenue under the default statutory formula than they would under any previously adopted statutory or alternative formula. In addition, the county share possibly could drop below 30% if other subdivisions can muster the 75% approval necessary to adopt an alternative formula that sets the county share at less than 30%. Attached to this article is a spreadsheet entitled Estimated LGF Loss to Counties Proposed New Default Statutory Formula HB 153. The spread sheet provides detailed information on County LGF share as of 2009, projected county undivided LGF in 2011, 2012 and the first six months of 2013 under the administration-proposed budget, and the proposed county share if the 30% county share amendment is adopted by the legislature for 2012 and the first six months of CY The table is based on the executive budget and does not include $100 million added by the Senate to total state distributions, LGF money distributed directly to certain municipal corporations that levy an income tax, and a $750,000 guarantee added by the Senate for jurisdictions in certain small counties. Commissioners, Executives, and Council Members are encouraged to contact their state representative(s) and state senator(s) as well as members of the conference committee to ask that these provisions be removed from the state budget. An amendment of this magnitude that will cost counties tens of millions of dollars over just the next two years should not be included in the final days of the budget process without an opportunity for interested parties thoroughly to evaluate the implications of this major policy change to counties and other political subdivisions. CCAO notes that the losses resulting from the new formula will be in addition to the revenue losses that counties will experience due to the 25% and 50% overall reduction in state revenues included in the budget. The Conference Committee began meeting the week of June 11 and is expected to wrap up by June 28. Therefore, your calls, s, and letters are needed ASAP. If you have any questions, feel free to contact me or any member of the CCAO Policy Staff. 3

4 Contact info for members of Conference Committee: Representative Ron Amstutz Senator Chris Widener Representative John Carey Senator Shannon Jones Representative Vernon Sykes Senator Mike Skindell Ohio House of Representatives Ohio Senate 77 South High Street Statehouse Columbus, Ohio Columbus, Ohio BUDGET CONFERENCE COMMITTEE UPDATE: REVENUES UP, BUT IS THERE ANY MONEY AVAILABLE? Wednesday afternoon marked the first meeting of the Budget Conference Committee as Office of Budget and Management (OBM) Director Tim Keen and Legislative Service Commission (LSC) Director Mark Flanders presented revenue projections before the House and Senate conferees. While both Keen s and Flander s projections reflected increased revenues, Keen s more conservative numbers suggested there is little to no additional money for conferees. The hearing took place in the House Finance Hearing Room as House Finance Chairman Ron Amstutz (R-Wooster) gaveled the meeting to order. Also serving on the panel include Representatives John Carey (R- Wellston) and Vernon Sykes (D- Akron), and representing the Senate, Senators Chris Widener (R- Springfield), Shannon Jones (R- Springboro), and Michael Skindell (D-Lakewood). OBM Director Keen offered the Administration s revenue projections first. The Administration expects excess revenues of approximately $837 million from FY 11 due to unexpected revenue growth. However, the director told conferees that only $187 million would be available because the Kasich Administration plans to pay a variety of outstanding bills they contend the prior administration planned to let lapse into the upcoming fiscal year. Keen testified that the Administration s position is that this money should be directed to the Budget Stabilization Fund (BSF) which currently sits with a miniscule balance of just $1.78. The director said that while the Administration projects continued slow growth, a number of variables such as high energy costs could shake the economy and subsequent revenues. Thus, placing the FY 11 overage in the BSF would be the prudent course of action given potential economic volatility, argued Keen. When looking at revised revenue estimates for SFY 12 and 13, the director said his department did forecast continued revenue growth, albeit a very conservative projection of slow growth. OBM expects an additional $49.5 million in FY 12 and $374.6 million in FY 13 revenues over earlier projections. In fact, given current Senate appropriation levels, Keen testified that the conference committee would need to make $15 million in cuts for FY12, while only $33 million in 4

5 excess revenue would be available in FY 13. Keen suggested various policy decisions from both chambers added to the bill, in particular Senate amendments concerning Medicaid, would increase costs, eating up much of OBM s overall projected revenue increases for the biennium. However, LSC Director Flanders offered testimony that his agency sees increased revenues of $271.5 million in FY 12 and $218.4 million for FY 2013 compared to projections made in March. Flanders was quick to point out, however, that the agency slightly lowered Medicaid spending projections for the biennium, and its current revenue calculations are based on current law and do not include the policy revisions in the current Senate budget sub-bill. While Flanders could not opine as to the net available revenues available to conferees given the current policy revisions in the sub-bill, the LSC estimates would suggest a couple hundred million dollars in additional resources. Despite the difference in opinion as to available resources, it was clear that Republican conferees were leaning toward OBM s more conservative numbers. What you re hearing from various people is we re going to be conservative. It remains to be seen whether that means its OBM numbers, but obviously they are a little more conservative, said Chairman Amstutz. Senator Widener underscored his preference for the conservative estimates telling stakeholders, We re talking about miniscule percentage (in terms of an overage). We re basically there. Representative Amstutz cancelled Thursday s as needed hearing and was unable to issue a definitive timeline for amendments but suggested the committee would need to finish its deliberations next week to allow the following week for consideration by both chambers. House and Senate leadership has targeted June 28 th as the deadline date for the conference report for adoption by the General Assembly. To review Director Keen s testimony, please use the following link: For a copy of Director Flanders testimony, please use this link: NEW BILLS SB 188 HB 257 HB 260 HB 261 TAX CREDIT (Patton, T.) To allow a credit against the personal income tax or commercial activity tax for the installation of an alternative fuel facility. LAKE ERIE WATER (Murray, D.) To establish a program for the regulation of withdrawals and consumptive uses of waters from the Lake Erie basin. Am , , , , , , , and and to enact sections to and COCKFIGHTING (Derickson, T.) To revise the law governing cockfighting. Am and and to enact section ENERGY TAX CREDIT (McGregor, R.) To allow a credit against the personal income tax or commercial activity tax for the installation of an alternative fuel facility. Am and and to enact sections and

6 HB 265 HB 268 JURY TRIALS (Slaby, L., O'Brien, S.) To authorize prosecuting attorneys to demand a jury trial in a criminal case, notwithstanding a defendant's waiver of trial by jury and over a defendant's objection. Am , , , , , , , and JURY SERVICE (Szollosi, M., Butler, J.) To modernize the language of, to reorganize, and to remove obsolete provisions from the jury service law. Am. 3.08, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , and , to amend, for the purpose of adopting new section numbers as indicated in parentheses, sections ( ), ( ), ( ), ( ), ( ), ( ), ( ), ( ), ( ), ( ), ( ), ( ), ( ), ( ), and ( ), to enact new sections , , , , and , and to repeal sections , , , , , , , , , , , , , , , , , , , , , , , and COMMITTEE SCHEDULE Tuesday, June 21 House Agriculture & Natural Resources, (Chr. Hall, D., ), Rm. 121, 9:00 am The committee may reconvene at 5 p.m. if necessary HB 231 LAKE ERIE WATERS (Wachtmann, L.) To establish a program for the issuance of permits for the withdrawal and consumptive use of waters from the Lake Erie basin. --5th Hearing-Possible amendment & vote Senate Agriculture, Environment & Natural Resources, (Chr. Hite, C., ), North Hearing Rm., 10:45 am HB 229 AGRICULTURE LAWS (Buchy, J.) To revise the laws governing agriculture. --1st Hearing- Sponsor HB 185 AGGREGATES AWARENESS (Carey, J.) To designate the third week of July as Ohio Aggregates and Industrial Minerals Awareness Week. --2nd Hearing-All testimony-possible vote HB 163 COAL MINING (Balderson, T.) To revise the coal mining laws regarding permit application and set-back requirements. --2nd Hearing-All testimony-possible vote SB 170 LAKE ERIE WATER (Grendell, T.) To establish a program for the issuance of permits for the withdrawal and consumptive use of waters from the Lake Erie basin. --2nd Hearing-Opponent & interested party panel House Session, (Chr. Batchelder, B., ), House Chamber, 11:00 am Senate Session, (Chr. Niehaus, T., ), Senate Chamber, 1:30 pm House Local Government, (Chr. Blair, T., ), Rm. 121, 1:30 pm HB 232 COUNTY FACILITIES REVIEWS (Letson, T., O'Brien, S.) To expand the authority of a county facilities review board to include any facility where an adult ward of the probate court resides or receives services among the institutions subject to its review. --4th Hearing-All testimony HB 225 COUNTY AUDITOR REVIEWS (Peterson, B.) To vest in county auditors responsibility for reviewing and approving property tax exemption applications for some publicly owned property, to authorize county auditors and boards of township trustees to adopt a direct deposit payroll policy, and to authorize counties to increase the amount credited to "rainy day" reserve balance accounts to one-sixth of the expenditures made in the preceding fiscal year from the fund in which the reserve balance account is established. --4th Hearing-All testimony-possible amendments & vote 6

7 HB 50 ANNEXATION PETITIONS (Snitchler) To require that a political subdivision owner be included in determining the number of owners needed to sign a petition for an expedited type-ii annexation. --4th Hearing-All testimony-possible amendments Ohio Retirement Study Council (Committee Record), (Chr. Faber, K., ), Rm. 114, 4:30 pm This is a subcommittee to discuss an RFP for policy and actuarial services Wednesday, June 22 Senate Financial Institutions, (Chr. Hughes, J., ), North Hearing Rm., 10:00 am SB 173 PUBLIC DEPOSITS (Hughes, J.) To permit a political subdivision, upon the deposit of public moneys with an eligible public depository, to arrange for the public depository to redeposit those moneys with other federally insured banks and savings and loan associations in accordance with specified conditions. --2nd Hearing-Proponent House Session, (Chr. Batchelder, B., ), House Chamber, 1:30 pm Senate Session, (Chr. Niehaus, T., ), Senate Chamber, 1:30 pm Senate Judiciary-Civil Justice, (Chr. Wagoner, M., ), North Hearing Rm, 3:30 pm HJR 1 JUDICIAL ELECTIONS (Huffman, M.) To change the age at and after which a person may not be elected or appointed to a judicial office and to eliminate the authority of the General Assembly to establish courts of conciliation and to reappoint a Supreme Court commission. --2nd Hearing- All testimony-possible amendments & vote Thursday, June 23 Senate Session, (Chr. Niehaus, T., ), Senate Chamber, 11:00 am House Session, (Chr. Batchelder, B., ), House Chamber, 1:00 pm 7