Bad News Budget

State Republicans lower taxes for the rich, defund Planned Parenthood and try to block health care for the poor in Kasich-signed budget

Jul 3, 2013 9 AM

W ith Gov. John Kasich’s signature, Republican state officials on June 30 passed a budget that alters taxes, schools, Medicaid and abortion services in Ohio, putting the state in a controversial and politically charged path for the next two years. For Republican officials, this was their first big opportunity in years to show where they see Ohio going. The $62 billion budget for fiscal years 2014 and 2015 was awash with surpluses and momentum, largely driven by the state’s surprising economic sprint out of the Great Recession — although that sprint has slowed down to a limp in the past year. Given that, it’s no wonder that there are conservative, Republican marks all over the state budget. Despite big electoral losses in 2012, Ohio Republicans seem undeterred from pushing their conservative agenda — not just in terms of fiscal issues, but social issues as well.

All told, the state budget cuts taxes in a way that disproportionately favors the wealthy, fails to restore education funding slashed in previous budgets, rejects increased health care access for low-income Ohioans and limits access to abortion and contraceptive care across the state.

At the same time, supporters claim the state budget puts Ohio on a sound fiscal path that will spur economic and job growth.

Although the budget contains much more in its 5,300 pages, four areas are particularly notable and controversial: taxes, school funding, Medicaid and abortion. CityBeat analyzed each of those sections to determine how they could impact Ohio in the future.

Taxes

Under the final version of the budget, all Ohioans will pay lower income taxes, but they’ll also pay higher sales taxes now and more property taxes in the future.

The budget cuts income taxes for all Ohioans by 10 percent over three years, gives business owners a 50-percent tax break on up to $250,000 of annual net income and creates a small tax credit for low- and middle-income working Ohioans. The plan also has low-income protections: Anyone making $10,000 or less a year won’t have to pay income taxes, and those making $30,000 or less a year get a $20 credit for themselves and each person dependent on their income.

To balance the cuts, the plan raises the sales tax from 5.5 percent to 5.75 percent, hikes future property taxes and graduates the homestead tax exemption to be based on need, meaning low-income senior, disabled and widowed Ohioans will get the most from the exemption in the future.

On balance, the plan favors the wealthy and actually raises taxes for the poorest, according to a study conducted by the Institute on Taxation and Economic Policy for left-leaning think tank Policy Matters Ohio.

The analysis, which didn’t account for the property tax changes, found those in the top 1 percent would see their taxes reduced on average by $6,083, or 0.7 percent. The next 4 percent would pay $983, or 0.5 percent, less in taxes. Individuals in the bottom 20 percent would pay about $12, or 0.1 percent, more in taxes after the increased sales tax overtakes their slight reduction in income taxes. The middle 20 percent would see a tax cut of $9, rounded to 0 percent.

“Rather than approving a tax plan that will further shift Ohio’s tax load from the most affluent to low- and middle-income residents, we should direct those dollars into needed public services,” said Zach Schiller, Policy Matters Ohio research director, in a statement.

Michael Dittoe, spokesperson for Ohio House Republicans, says the tax plan is supposed to provide a boost for almost everyone, not any specific group. That boost, Republicans claim, will drive further job growth.

Policy Matters disputes even that claim, pointing to the state’s history with tax cuts: In 2005, Ohio passed a 21-percent across-the-board income tax cut. In the resulting years, Ohio’s job market continued to underperform the nation — evidence, perhaps, that vague tax cuts aren’t the key to job creation.

School funding

Compared to the previous budget, the state budget increases school funding by $700 million. But the funding is still $515 million less than Ohio schools received in 2009. The result: Cincinnati Public Schools will receive $15 million less in state funding than it did in 2009, joining three in four Ohio school districts with a net loss during Kasich’s time in office.

Still, Republicans are calling the funding boost the largest increase to state education spending in more than 10 years.

Stephen Dyer, former Democratic state representative and education policy fellow at left-leaning think tank Innovation Ohio, says the claim is dishonest because it ignores longer-term trends in funding. “It’s like they cut off both of your legs, give you back one of them and say, ‘You should thank us,’ ” he says.

Republicans defend the cuts by citing an $8 billion deficit in 2011, which had to be eliminated under state law. The resulting cuts directly impacted school funding, but the decreases also eliminated subsidies that previously benefited schools, such as tangible personal property reimbursements.

Dyer says the state budget situation has changed since then. Instead of focusing on tax cuts, he argues state legislators should have prioritized education funding.

He also criticizes how the funding is distributed, citing state data to show some of the worst-off school districts, particularly the poor and rural, get the smallest increases.

Even if there was full equity, Dyer claims there’s not enough money going into education as a result of years of cuts.

The budget’s tax changes could also impact future local funding to schools. The state will not subsidize 12.5 percent of future property tax levies, which the state does for current levies. For local taxpayers, that means new school levies will be more expensive and likely more difficult to pass in the future.

Medicaid

Right before signing the budget into law, Kasich vetoed a provision that banned Ohio from taking up the federally funded Medicaid expansion. The move was largely symbolic — Republican legislators still rejected the Medicaid expansion by excluding it from the budget — but Kasich’s veto was a principled end to the budget debate.

Under the Affordable Care Act (“Obamacare”), the federal government is asking states to expand their Medicaid programs. States are given a powerful financial incentive for doing so: For the first three years, the expansion is entirely paid for by the federal government. Afterward, the federal commitment is dropped to 90 percent, where it will indefinitely remain. The federal government on average pays about 57 percent of Medicaid costs, while states pay for the rest. So the 90-percent match for the expansion is a uniquely lucrative deal.

Earlier this year, the Health Policy Institute of Ohio released an analysis that found the Medicaid expansion would insure nearly half a million Ohioans and save the state about $1.8 billion in the next decade.

But Republican legislators say they’re skeptical the federal government can afford such a commitment to Medicaid, often calling the expansion unprecedented.

Col Owens, co-convener of the Southwest Ohio Medicaid Expansion Coalition, claims there is a precedent for the Medicaid expansion: Medicaid itself. He says the federal government has historically upheld its commitment to Medicaid, which insures 2.2 million Ohioans. There’s no sign that commitment will stop any time soon. Instead of being concerned about fiscal problems, Owens says opponents of the Medicaid expansion simply dislike the president, Obamacare and Medicaid.

Dittoe rejects that notion. He points out the budget increases Medicaid funding by $1 billion, allowing 231,000 more Ohioans to enroll.

But the federal government already expects Ohio to pay for those Medicaid enrollees, who are eligible under current rules but have yet to enter the system for whatever reason. Failing to do so would have likely violated the state’s Medicaid agreement with the federal government and, as Dittoe acknowledges when asked by CityBeat, resulted in penalties.

Although the Medicaid expansion didn’t make it into the state budget, a bill currently sitting in the House would take up the expansion. It could be considered in the early fall.

Abortion

The state budget takes a slew of anti-abortion measures, placing Ohio among states like Texas and North Dakota that have taken a renewed interest in limiting access to abortions.

The state budget forces doctors to perform an external ultrasound on a woman seeking an abortion and inform the patient whether a heartbeat is detected and the statistical probability of the fetus making it to birth.

That provision is in addition to a slew of other anti-abortion measures: regulations that allow the state health director to shut down abortion clinics by blocking mandated patient transfer agreements, less funding for Planned Parenthood and other clinics — even some that offer contraceptive services but no abortion services — through reprioritized family planning grants, a ban that stops publicly funded rape crisis programs from discussing abortion as a viable medical option for rape victims and shifted federal funding for anti-abortion, pro-abstinence crisis pregnancy centers.

In short, the budget makes it harder to access contraceptive care that prevents pregnancies, then it makes it harder to terminate an unwanted pregnancy.

For Republicans, the goal is “to maintain the sanctity of human life,” says Dittoe.

Abortion-rights advocates have criticized the measures as an attack on women. “If the governor and members of the Ohio General Assembly want to practice medicine, they should go to medical school,” says Kellie Copeland, executive director of NARAL Pro-Choice Ohio.

Throughout the budget process, NARAL repeatedly called on Kasich to line-item veto the measures — a move that would have kept the rest of the budget in place but nullified the anti-abortion provisions.

But Kasich, who describes himself as “pro-life,” ultimately ignored the pleas.

For both sides, much of the debate has centered around Planned Parenthood, which provides abortion services, sexually transmitted infection and cancer screening, pregnancy tests, birth control and various other health care services for men and women.

Supporters point out no public funds go to abortion services, which are entirely funded through private donations. Public funds are instead spent on other services. But Dittoe says Republicans still take issue with the abortion services, and it’s the sole reason Planned Parenthood is losing funding.

“Members of the House who have issues with Planned Parenthood have only issues with the abortion services,” he says. “The rest of what Planned Parenthood provides, I imagine they have no issue with whatsoever.”

In effect, Republican officials are defunding the services no one has a problem with to send a message to Planned Parenthood about abortions — an example of how far they’re willing to take their opposition to abortion rights. ©