Friday, June 19, 2009

A semi-responsible attempt at filling Ohio's budget hole

Sorry for the length of this post, but we didn't know how to make it any shorter. If you like the content (but not the length), I hope you'll check out other posts at:
I solemnly swear to screw as many Ohio taxpayers as possible...
I promise I was only lying this much...

Earlier this week I was asked this question by one of our smartest commenters after he read this post and it is an excellent question: What is the responsible thing to do?

After the fear mongering story by the Dispatch I figured it was about time someone actually put out some…gasp…concrete ideas to either get laughed at, shot down, cried over or implemented.

As a disclaimer on the front end of this blog post: I was in politics for 11.5 yrs NOT policy so please keep that in mind as you read the post. We don’t have anyone involved with last names like Keen, Hershey, Perera, etc so don’t expect anything earth-shattering. That said, now that I think about it a little bit more screw that disclaimer. Please don't pay attention to that disclaimer. If some other guy can go from being a community organizer to a State Senator for 4 years to being a US Senator for just 2 years and then his ideas (which are mostly worse than mine) actually get implemented and made into law then I must in good conscience retract the aforementioned disclaimer ;-)

PREFACE: On a national level Obama is using this economic crisis to take bold initiatives forward. On a state level NONE of our leaders are thinking BIG in realistic terms (i.e. sure Ted came up with a fairy tale State of the State Speech 142 days ago about some education blah blah blah that would be really cool in 2018, but it wasn't based in was fantasyland stuff) for now and the future.

I 100% realize that some of these ideas will not help fill the $3.2 billion budget right now, but they will help for the future. Just as Obama, Pelosi & Reid are using this economic crisis as an excuse to tackle all kinds of issues I think Ohio needs to do the same (i.e. not only tackle the $3.2 billion hole right now, but also use this crisis as an excuse to tackle some other issues/problems that have been around for awhile that need fixing).

$3.2 billion

*As much as it might suck for the funding of your campaigns in 2010 I think this crisis has finally given all three of you the excuse to take a whack at the nursing homes portion of the budget. Politically/financially for your campaigns this is not something you want to EVER have to do again so rip the band-aid off fast and hard and really grab a big chunk of change. The fallout will be that the industry will hate you for a couple of years, but here are the facts of the situation on the back end:

Bergdoll and co. are very smart and they know that, at the end of the day, they need the Legislature more than the Legislature needs them. Budish & Harris should both tell Todd & co. that this is a one-time thing as long as the Nursing Home operators behave and don't do anything rash.

Todd will begrudgingly accept the hit knowing that his operators won't have to face this kind of thing again in the future and Armond & Bill (along with Ted) will have to figure out how to fill the campaign funding hole for 2010.

Amount this creates now: $100-500 million Amount created later: $0

*Bridget & company wont like this, but the hospitals should feel a little bit of pain along with everyone else:

The budget increases inpatient and outpatient hospital payment rates by 5% beginning July 1, 2009. It also

establishes a new hospital assessment at 1.61% of total facility costs for FY 2010 and at 1.61% for FY 2011.

State-share revenue generated from the assessment is estimated at $357.0 million for FY 2010 and

$354.0 million for FY 2011. These funds will be used to support hospitals. " LSC figures

We advocate for keeping a portion of this money

Amount this creates now: $100-700 million Amount created later: $0

*Medicaid/Counties. My huge apologies to Larry, Cheryl & Cheryl (I know there is only one Cheryl…she is one of a kind & I love the woman, but it was more fun to repeat her name a la which sitcom from way back when???) , but we could require all local levy dollars for human services i.e. MRDD, drug and alcohol, certain children levies, and mental health to be pooled at the state level.... this is politically tough for many reasons, but would free up state GRF currently being used for State Medicaid Match and potentially draw down more federal dollars. Conservatively would free up $200 mil or more in state GRF and draw down additional Medicaid.

Amount this creates now: $200 million Amount created later: $0

*State facilities i.e. Mental Health hospitals (hospital operating expenses about $60m), developmental centers ($200m)......... Either close them or turn them over to private management. You will automatically save 20% percent conservatively because the private sector is just that much cheaper... i.e. salary, benefits, efficiencies, etc. .

Amount this creates now: $50 million Amount created later: $0

*Corrections: Medical costs for inmates are nearly $200m to 300m annually, managed care can save or should save 10% of that. Add a 10% staff reduction in non-guard administrative types at DRC... that's likely 700+ bureaucrats.

Amount this creates now: $30 million Amount created later: $0

*Higher education... Of this like $3.2 to $3.5 billion or so of the budget is in State Share of Instruction. Don’t cut scholarships at all and just lop off 7-10% of this State Share of Instruction and that gets us somewhere in the $225 mil to $350 mil range. Split the difference for argument’s sake and call it $288 million.

Amount this creates now: $288 million out of SSI Amount created later: $0

*Batchelder & co. suggested to the PD on 1/27 that Strickland’s 24 cabinet-level agencies blend into just 10 and the staffs of hundreds of state boards, commissions and councils be consolidated. By their calculation, Ohio could eliminate 11,000 of its 60,000 employees through attrition over the next two to four years and eventually save $1 billion a year. Bravo to Batch (with a nod to Jim Petro who first proposed the idea during his ill-fated gubernatorial campaign)! We like this idea a lot wish it created more dollars right now, but it gets us moving in the right direction. Hard for Ted to argue this one since his Cabinet has been operating from the shallow end of the gene pool over the last couple of years.

Amount this creates now: $Not a lot right now$ Amount created later: $350-700 million

*Auditor of State Mary Taylor (not always a big fan of her campaigning efforts, but when it comes to good ideas and smart government she usually hits triples and home runs) has some very good ideas on the Medicaid front.

Place dual eligibles (folks on Medicaid and Medicare) among the other 500,000 Medicaid recipients currently exempt from Medicaid managed care and you easily get to $400mil or more. Politically many advocacy groups are opposed to this, like Bergdoll, but again…if you are going to pull the band-aid off ONLY ONCE and you are believable the Nursing Homes will cry bloody murder, but it is not like they are going to take their ball and run home.

Think about it. They have to be scared to death of a Kasich (devil you know vs the devil you don’t know), they know Budish will do right by them if given the chance in the future {right now there is about a 4% chance Budish loses the majority in 2010 so if he is going to go it a cycle without the Nursing Home $$$ (other than what he has hauled in thus far) this is the cycle to do it in, Harris & the Senate have no fears of losing the majority to the Cheerleader the only thing the Senate majority should be worried about in 2010 are John Kasich, Mary Taylor and Jon Husted…I hope they all get that…any Senator (or State Rep who is going to be a Senator) who is going to be in the Senate come 2016 better do everything in their power to make sure the Apportionment Board is GOP controlled when the dust settles or they are going to find out the hard way how much better technology has gotten since the last census when it comes to computer generated map analysis}. If ever you are going to take a ONE TIME ONLY bite out of the Nursing Homes it is in THIS budget. You will have ZERO need to take any bites out of any of your friends in the next budget because EVERYONE on the planet knows the NEXT budget will be the TAX INCREASE budget. I hope everyone is paying attention…fill the budget with targeted cuts this time and do a TAX INCREASE next go-around. Doing a tax increase both cycles would be just about the dumbest thing imaginable.

Amount this creates now: $400 million Amount created later: $___ million

*Three of our Guest Columnists and I have some changes in mind and we think this would be a good time to use this crisis to make some needed changes:

Reinventing Ohio’s Local Governments:

  • When I think reinventing government, I don’t mean Al Gore inventing the internet sort of thing. I mean its time for the Governor and Legislature to use the intellectual capital and anti-government sentiment to get serious about regionalization and elimination of duplication by all the taxing political subdivisions in Ohio.
  • We have 88 counties, about 48 too many. We have 612 school districts about 300 too many, (120 have less than 1,000 students). We have 1,308 townships, about 1,000 too many (seriously there should not be one township within any of the Three Cs city limits). With those government subdivisions, we have a number of officeholders, police and fire, water and sewer, etc., and all their collective bureaucratic functions, assets, buildings and lots and lots of duplicity and extra taxes. We need to reform for the future versus living in 1985 when computers were the size of my first house. If we don’t do this, Ohio will never, I repeat NEVER be tax competitive again.

Amount these moves will create now: $Very little$

Amount created later: $ BILLIONS in LOWER TAXES

To the Governor:

Serious Civil Service Reform! First, kudos to Strickland for cutting 3,000 state worker positions. I will be more impressed if he can cut another 3,000, but he did about 3,000 better than Taft and Voinovich.

Really I have no issue with our state workers, 90 percent of them do a great job and deserve their hard earned pay. It’s the 10 percent that the unions protect that pisses me off. You know the ones I am talking about that don’t answer the phone, talk back to supervisors, have sex in the stairways of the Rhodes, and generally have an attitude. Anyhow note to the Governor, stop worrying about the base or paying back the unions for their help in electing you. As a democrat, you have the best ability to rein in the states civil service unions. It can’t be done without you.

Go back to the first reported collective bargaining plan leaked to the media in early March that reduced their salary and benefits to look more like the private sectors. And DON’T give them a guaranteed raise in 2012. Who gets guaranteed raises in a recession? While you’re at it give your Cabinet Directors and Agency Heads 30 days once a year to fire any documented deadwood without repercussion, appeals, etc. from the union. And finally, eliminate state worker positions where the private sector is cheaper and more efficient i.e. health care staff or running workers compensation. least make them compete or bid on some contracts.

Amount this creates now: $200 million would be generated by concessions alone

Amount created later: $?

K-12 Education:

  • Casinos, but with REAL licensing fees upfront. Seriously. This crap about only charging $200 million in licensing fees is ludicrous. Wake up people!!! Make no mistake about this...are you paying attention...please hear me on this: Multiply that licensing fee by a multiple of FIVE. You read that right. Make the licensing fees bring in $1 billion instead of $200 million. Think I'm crazy? If you do then you don't know much about the industry or gambling in general. Sure the Casinos will bitch up a storm that the fee is outrageous, but if Ted, Armond & Bill do not blink and they let the Casino interests know that this is a one-time offer that will never come again I guarantee that greed will win out and they will pony up.
  • Casinos For Education. I know Ohioans have NIMBY (Not In My Back Yard) issues with casinos but other states are laughing all the way to the bank as we send them millions of what could be Ohios education dollars. Cincinnati, Cleveland and Toledo should get Ohios only 3 casino locations. The Governor and the Department of Development should award the strongest casino projects that include an adjacent convention center and or a stadium/arena. Why Toledo and why not Columbus? Columbus doesnt need one. Its the most economically thriving city in the state, it has The Ohio State University, state government, and a young population... Toledo? Like Cincinnati its a border city near gambling locations that pretty much suck. If you do it right in Toledo, Michigan will come, as there is no reason to go to the terrible casinos in Detroit. And what about the racetracksscrew the racetracks. After three to five terribly run ballot campaigns and legislative attempts at a money grab, track owners and their consultants havent proved they could do anything right.

Amount this creates now: $1 billion

Amount this creates later: $Hundreds of millions

Higher Education:

  • Finding a Niche. Senator Eric Fingerhut, turned Chancellor, began much needed higher ed reform when the Governor made him a member of his Cabinet and granted him authority to better regulate public universities. The Chancellor has since organized the colleges and universities under a University System structure. Now comes the tough part, political courage. The Chancellor should narrow college and university curriculums based on...gasp...what they were actually good at. The university system in PA for example went from a shotgun approach to a laser approach. If a college was good at business, but not engineering, then the engineering curriculum was dropped and more resources were allocated to the business school. It’s time to take names and eliminate some programs, you know like Farm Sciences at Cleveland State.
  • University Administrative/Bureaucratic costs. In addition to making public universities more outcome-based for education purposes, the Chancellor should be given authority to set caps and funding incentives to eliminate wasteful spending on university administration. Love Gordon Gee, but his salary alone could pay for about 200 kids to attend OSU. If you are ever out of town and you run into OSU faculty where do you see them? You don't see them at the Days Inn and Olive Garden. You see them arrive in a very nice Hertz or Avis rental car at some of the nicest hotels and restaurants in the city. Want to run into OSU faculty in Columbus during the week? Try Lindey's or Rigsby's. I guarantee those folks are not paying those tabs out of their own pocket. Ever been inside ANY building at OSU? Everything is new. It is time for higher ed to quit feeding at the trough and live the way everyday Ohioans live. We stay at the Red Roof. We rent the compact car from Thrifty. We eat at Olive Garden. Higher ed better make these changes internally or my guess/hope is that the Legislature makes these changes for them.
  • Capital Costs. The Chancellor should be given more control over the construction of new buildings on public university campuses (Have you seen Ohio State’s new castle, I mean student union?). I am all for renovation but new construction on our public campuses is out of control. Place a five-year moratorium on public funding of new campus buildings. If they need something bad enough, get private funding. This would save millions of bond dollars for other publicly funded projects. All projects should be Single Prime instead of the current Multiple Prime contracting that exists today. I would absolutely LOVE to see a study that factually lists the HUNDREDS of MILLIONS of dollars this state has wasted on Multiple Prime contracting alone.

Amount created now: $??? million

Amount created later: $ Not quite sure, but a minimum of $50 mil annually in GRF debt service payments for general obligation bond debt

More on Corrections:

  • Administrative Costs. Ohio’s Department of Rehabilitation and Corrections consumes about $2 billion annually. DRC houses about 51k offenders and the Department of Youth Services another 2k. There are 13,500 staff positions at DRC, about 7,000 prison guards. I would say nearly 7,000 bureaucrats to watch 7,000 prison guards who watch 51,000 offenders equals too many bureaucrats. Seriously think about it; the ratio of bureaucrats to prison guards is nearly1:1, the ratio of prison guards to prisoners is 7:1?
  • Just Say No. Release all non-violent drug offenders, legalize marijuana for adults 21 and over & TAX the hell out of it. The economies of scale and distribution will probably create a handful of big players who are able to make a hefty profit even with the gigantic tax due to the fact they have a high quality product being made readily available at Speedway, Krogers, Wal-Mart, etc. Legalize it and tax it!!!
  • Life vs. Death. I’m a pro-capital punishment kind of guy, an eye for an eye. Actually firing squads and torture for rapists and murderers after trial, some onsite when it’s obvious they’re guilty. But recent studies show capital punishment has become more expensive than sentencing someone to life in prison. The costs of housing an offender on death row in order to eventually execute them costs about $2m to $3.2m until their dead according to a United Church of Christ Study. A California study states it’s about $90k a year to house an offender on death row (or about $3.6m over 40 years). This calculation takes into account exhausting appeals, public defenders, prosecution, court costs, transportation and the electricity (hey electricity is high, just ask PD Reporter Tom Suddes whom is fixated on writing about Ohio’s powerful utilities). The same Church of Christ study says housing an offender for life, lets again say 40 years, cost on average $600-$700k. Don’t trust the parishioner’s numbers, okay. An offender not on death row in Ohio costs approximately $25k a year, or about $1m for 40 years. There are about 175 of Ohio death row inmates. We can spend $175m keeping them alive or $350m to $500m frying them. I realize there’s more to offing people for their bad deeds than costs, but maybe it’s something to consider.
  • Healthcare/Aging Prisoners. The Department of Corrections and Department of Youth Services should contract with a health insurance corporation to place Ohios 53k inmates on managed care; require generics versus brand-name drugs for prisoners; and release aging prisoners or turn them over to a private nursing home.

Amount created now: $ ??? Amount created later: $100-250 mil annually


  • Mandatory physical education (yes gym class!) participation for all students in schools and colleges not participating in a sport. Don’t like it, tough! Ohio will spend close to $14 billion in Medicaid next year. If you receive any state aid for anything, your fat ass is getting in shape. Not enough teachers or funds to teach phys ed? Temporarily extend TANF (Temporary Assistance for Needy Families) benefits for adults on public assistance who volunteer their time to schools or use college credits and grants to incentivize athletic students to volunteer their time in getting Ohio healthy.
  • Prohibit vending machines in our schools that sell soda, coffee, caffeine beverages, candy bars, etc. In addition to their Statehouse visit, require all 4th graders to visit a farm and learn how to make a frigging salad.
  • Urban Farming Initiatives Statewide. If Will Allen ("feeds the masses cheaply" one not "the football" one

    ) can do what he is doing in Chicago and Milwaukee then why can't we be doing the same types of things in Cleveland, Lorain, Youngstown, Toledo, Akron, Canton, Dayton, Columbus, Cincinnati & Lima???
  • Information Technology. Provide financial incentives for physicians and other medical providers to convert to electronic health records and E-prescribing. This would reduce duplication, errors and fraud in the Medicaid system. It also would allow the state to pay claims electronically and manage a decision support system to better understand the Medicaid population’s health.

Amount created now: $??? Amount created later: $???

Sin Taxes and Gas:

Make Ohio a destination state by allowing border counties to have lower sin taxes on beer, wine, liquor, cigarettes and other tobacco products. Reduce the states portion of the gas tax as well. This would be a bit complicated constitutionally but it’s possible. Ohio is surrounded by other states and is home to some of the country’s most traveled highways. It would be a boon for Ohio’s border counties and for the state’s tax revenues, particularly on the sales tax when West Virginias buy the extra bag of Doritos and Mountain Dew.

Amount created now: $lose some$ Amount created later: $make some back on gas & other items due to increased traffic from lower sin taxes on sins


*Do all of these things while not raising some of the taxes that have been bandied about lately and without making cuts to R & D, economic development and innovation.

*And, as promised in the blog post from yesterday, a little morsel for the Columbus Dispatch for Page B5 of the Metro & State page: Ohio Taxpayers (not Strickland’s campaign…Ohio Taxpayers) have picked up the tab for what amounts to over $100,000 and growing for what you ask??? …drumroll please… the cost of overtime, travel, accommodations & meals for the Ohio Highway Patrol that accompanies Ted Strickland when he travels out of the state of Ohio to FUNDRAISE for his re-election campaign vs John Kasich. This is a bunch of barnacles and needs to stop immediately. Cut that line item out of the frigging budget. If Ted wants to go on fundraising jaunts out of state I am all for it more power to him, but the taxpayers of Ohio should not be floating the bill for it. This expense should be paid for out of his campaign fund. There you go, Ben. You and I both know that should be in the paper. Your move.

Those are our concrete ideas to help fill the $3.2 billion budget hole. Would love to hear what some of you think are ways to help fill the hole without raising taxes. Thanks!