FY 18-19 Biennial Budget Analysis

FY 18-19 Biennial Budget Analysis

Governor’s Blue Book Recommendations

*The Blue Books contain primarily fiscal and funding recommendations for state agencies. The bulk of the policy recommendations will be revealed in the coming days and weeks.*

 

Local Government

  • .4% Increase in FY18, 3.1% increase between FY18-19; no apparent supplements or additional streams of relief for local governments
  • Income Tax Changes: Local Government Fund Distribution expected to be $11.9 million less in FY18 and $14.6 million less in FY19
  • CAT distribution to LGF decreases from 5%-2%
  • Centralized municipal income tax proposal-state will administer “net profit” taxes through the Ohio Business Gateway with the Dept. of Taxation collecting payments and distributing the revenue back to cities

 

Public Library Fund

  • 2% Decrease in FY18, 3.1% increase in FY19
  • Libraries as “Continuous Learning Center”: Blue Book boasts leveraging Ohio’s public library system to help students access online programs to acquire additional skills, yet essentially flat-funds the Public Library Fund

 

Rainy Day Fund

  • No proposed rainy day fund increases. Note: current balance is $2,034.1b or approx. 6% of GRF. It will remain at approx. 6% of GRF through proposed budget.
    • At this point, it is unclear how the $200m in excess of the required “end of year carry-over balance” (0.5% of GRF or $175m) will be used.

 

K-12 Education

  • Increases base support for K-12 education by $200 million
  • Schools will see a guarantee for 100 percent of their FY17 funding, unless their student population has dropped by more than 5 percent over 5 years
  • Urges school districts to issue credit for work experience through College Credit Plus

 

Higher Education

  • Freezes tuition, general fees and special fees at Ohio’s public colleges and universities for two years and requires them to cover student textbook costs at a cost of $300

 

Taxes

  • TOTAL: $1.24b loss in FY18, $1.882b loss in FY 19= $3.1 billion total tax cut
  • State sales tax increased by a half a cent to 6.25% from 5.75%, and be broadened to include more services and garner an additional $1.85 billion over the biennium
    • Sales tax expansion to include services such as television subscriptions, elective cosmetic surgery, lobbying, landscape design, interior design and decorating, travel package and tours, and repossession services
      • Other Sales Tax Changes:
        • Raising the cigarette tax by 65 cents a pack up to $2.25 a pack;
        • Increasing other tobacco products tax from 17% to 69% of the wholesale price, equalizing it with the cigarette rate;
        • Increases tax rates on most alcohol, other than liquor, by 70%
        • Decreases rate of tax for sparkling and carbonated wine and champagne from $1.48/gallon to $.51/gallon
      • Cuts the number of income brackets from nine to five. The new brackets will be:
        • Up to $10,000 with a 0.50% tax rate in 2017 and 0.456% rate in 2018;
        • $10,000 to $25,000 with a 1.5% rate in 2017 and 1.367% in 2018;
        • $25,000 to $100,000 with a rate of 3.25% in 2017 and 2.963% in 2018;
        • $100,000 to $200,000 with a rate of 4.25% in 2017 and 3.874% in 2018; and
        • More than $200,000 with a rate of 4.75% in 2017 and 4.33% in 2018.
      • If implemented, the Kasich administration said it and other proposed income tax changes would result in a $3.1 billion, 17% income tax cut over FY18-19
      • Overall net effect of the tax changes would equate to a $39 million cut over two years
      • Increases the income tax personal exemption for those with incomes up to $80,000 per year

 

Medicaid

  • 3% decrease in GRF funding in FY18, 6% increase in FY19
  • 1% increase in All Funds in FY18, 2.8% increase in FY19
  • Maintains current coverage levels for children, parents, childless adults, ABD.
  • Directs the Ohio Department of Medicaid to seek federal approval to require childless, non-pregnant adults earning from 100% to 138% of the federal poverty level to pay a monthly premium at about $20 per month, capped at 2% of household income
  • Reduces hospital reimbursement 2.2% in FY18 and 5.7% in FY19; Rate cut will impact hospitals most dependent on Medicaid dollars
  • Moving PASSPORT waiver program to managed care
  • Increases personal care aide services rates and different payments based on skill level, mostly in FY19 ($23.1 million overall, $8.6 million state share)

 

Medicaid Sales Tax Issue

  • Medicaid is replacing the sales tax on Medicaid health insuring corporations (HIC) (managed care plans) with a broad-based franchise fee (provider assessment/loss assistance program) on all health insuring corporations as approved by CMS. Creates new HIC Class Franchise Fee Fund (not GRF, anticipated $158 million) No longer a sales tax, which means counties and transit agencies cannot collect on it
    • For counties facing loss of revenue from elimination of the managed care sales tax, the administration offers a two-part answer:
      • First, from October through year-end, the state will pay all 88 counties and the eight transit authorities in Ohio the estimated revenue they’ll lose from the sales tax elimination ($49 million).
      • Starting next January, the state will pay 80 counties and the eight transit authorities on a sliding scale based on their local tax base and the proportion of revenues the managed care tax amounted to in their total sales tax collections.

 

Department of Health

  • Increasing drug overdose funding by $1.3 million per FY

 

 

Jobs and Family Services

  • .5% increase in GRF funding in FY18, 6% decrease in FY19
  • Accept online applications for food and cash assistance through expansion of benefits.ohio.gov, Ohio’s new integrated eligibility system
  • Expand online career center services through enhancements to OhioMeansJobs.com
  • Ensure 60% of publically funded childcare providers are rated, and 40% of centers and large child care homes are highly rated in the Step Up to Quality program by the end of FY19 in order to meet statutory requirements

 

Office of Collective Bargaining

  • 12% increase in funds in FY18 with another .5% increase in FY19

 

State Employment Relations Board

  • .6% decrease in GRF Funding in FY18, .6% increase in FY19
  • 1% increase in All Funds in FY18, .4% increase in FY19
  • Executive Recommendations
    • Present cases to SERB board members for action within 150 days of filing with Investigations
    • Place representation cases on the SERB board meeting agenda within 180 days of filing

 

DRC

  • 4% GRF increase in FY18, 1.7% increase in FY19
  • Institutional Medical Services: decrease 2.6% FY18 increase 3.9% FY19
  • Mental Health and Addiction Services-16% cut to addictions services partnerships with corrections for treatment and recovery in correctional facilities and after release
  • Will invest in community options such as diversion programs, halfway houses, and community based correctional facilities
  • “Adhere to staffing ratios that ensure safe, humane and secure incarceration”
  • “Support a healthcare team of professional clinicians that provide inmate medical and mental health services within each institution

Parole Authority

  • 8% GRF increase in FY18, 2.4% increase in FY19

 

DYS

  • .2% GRF decrease in FY18, 1.7% increase in FY19
  • Operate 2 regional parole offices for the supervision of juvenile offenders

 

Department of Aging

  • Moves nursing facility reimbursement into managed care; overall spending increase

 

Mental Health and Addiction Services

  • Community Innovations cut by 65% almost $3 million in FY 18 then increased by almost 2 million in FY 19 from FY 17 levels. These funds are for targeted investments in programs, projects, or systems operated by or under the authority of other state agencies, governmental entities, or private nonprofits. Used for things like naloxone access, crisis intervention for families, and collaboration with jails and treatment providers
  • 16% cut to addictions services partnerships with corrections for treatment and recovery in correctional facilities and after release

 

DODD

  • Increase wages for homemaker personal care direct support staff
  • $122 million increase in the developmental disabilities system over the biennium, with support for increased waiver slots to allow more people to be served in the community, while proposing a 2.5 percent increase in intermediate care facilities (ICF) rates in FY19
  • County Board Waiver Match-Increases each FY due to projected increase in local waiver enrollment-local boards are required to fund the day services portion of new state waivers
  • DD increases IO and SELF waiver slots, increases rates in several categories, encourages departure from institutions
  • DODD is merging Medicaid-related line items to reflect Medicaid line item restructuring. DODD line items related to developmental centers and ICF/IID programs have been zeroed-out in DODD and enveloped in an overall Medicaid Services line item

*Will be more difficult to determine specific funding for these programs/services

 

Department of Veterans Services

  • 4% GRF decrease in FY18, 4.8% decrease in FY19
    • Possibly due to FY17 $16 million payment on debt issues to fund Veterans Bonus Program

 

Board Mergers

  • State Medical Board will absorb functions and duties of the Ohio Board of Dietetics and the Respiratory Care Board-Effective January 21, 2018
  • NEW: State Behavioral Health and Social Work Board-Effective January 21, 2018
    • Merges Chemical Dependency Professional’s Board, Social Worker, and Marriage & Family Therapist Board, and Board of Psychology. Each Board funded through Jan. 21, 2018, then merged board funding kicks in
    • Will be licensing and regulatory body for 16 license types
    • 9 members: 2 social workers, 1 marriage and family therapist, 1 professional counselor, 1 non-school psychologist, 1 school psychologist, 1 chemical dependency counselor, 1 chemical prevention specialist, 1 public member

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