Ohio House Democratic lawmakers announced a new proposal today to help offset the impacts of last year’s historically deep state budget cuts to schools and local communities. The Kids & Communities First Fund uses surplus revenue to make up to $400 million available to schools and communities this year, and another $500 million once Gov. John Kasich’s proposed severance tax increase takes effect.
“The Kids and Communities First Fund will help keep teachers in the classroom, and cops and firefighters on the streets in communities all across Ohio,” said House Minority Leader Armond Budish (D–Beachwood). “Additionally, this fund will help curb the growing need for local tax levies due to state budget cuts and provide relief for local property taxpayers.”
The Kids and Communities First Fund will be offered as an amendment to Gov. Kasich’s Mid-Biennium Review (HB 487). The fund will make up to $400 million available this year from surplus revenue (currently $265 million), a portion of the Budget Stabilization Fund ($120 million), and $15 million from Gov. Kasich’s proposed severance tax increase. The fund would be replenished after fiscal year 2013 by increased severance tax revenue.
“It’s been 15 years since the Ohio Supreme Court ruled that our school funding system is unconstitutional because it relies too heavily on local property taxes,” said State Rep. Debbie Phillips (D-Albany). “Today, instead of finding ways to reduce this over-reliance, the state of Ohio is walking away from that responsibility and leaving the burden of educating our children squarely on the backs of local property taxpayers.”
Lawmakers calculated that districts are facing a combined school-funding deficit of over $1.79 billion in fiscal year 2014. This is based on a calculation of each school district’s five-year projection of finances, which is required to be submitted to the Ohio Department of Education. Policy Matters Ohio also estimates that school districts in “Fiscal Watch” or “Fiscal Emergency” could spike by 300 percent this year, from 14 to 43.
“Stories of communities cutting or privatizing critical safety services and in some cases even considering dissolving all together are pouring in from across the state,” said State Rep. Alicia Reece (D-Cincinnati). “If we don’t protect our communities, we undercut our economic recovery and hurt working and middle class families.”
Compared to fiscal year 2011, the state budget (HB 153) cut nearly $1.1 billion from communities last year. Specifically, the Local Government Fund was cut by $463 million; state funding provided to offset previously eliminated business property taxes were cut by $492 million; and state funding provided to offset previously reduced utility property taxes were cut by $135 million.
“Failing to address last year’s deep budget cuts will hurt our schools and make Ohio less economically competitive.” said Rep. John P. Carney (D- Columbus). “Doing nothing will keep forcing local taxes to go up and put more pressure on middle class Ohioans.”
According to Matt Mayer, the former head of the conservative think-tank the Buckeye Institute, local property taxes have gone up in Ohio under Gov. Kasich because of state budget cuts. In a recently published column, Mayer states, “net taxes on Ohioans have gone up under Governor Kasich, making our state even less competitive.”
“Our state is only as strong as our schools and our local communities,” State Rep. Matt Lundy (D- Elyria). “If we do nothing we will hurt our children’s education, weaken safety services in our communities and create even more pressure on local property taxpayers.”
The Kids & Communities First Fund would be available as early as July 2012, when the current fiscal year ends. It would make up to $400 million available for schools and communities to apply for an emergency relief grant. After fiscal year 2013, the fund would be supported by the severance tax increase as proposed by Gov. Kasich and a portion of that funding would be available to protect local communities that are most affected by hydraulic fracturing though a local impact grant.