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Ohio chambers urge state legislature to consider additional budget efficiency measures

Chambers to testify on Wednesday, May 1, about strategic state budget reforms they say would yield $716 million for Ohio

MEDIA AVAILABILITY: Representatives of Ohio’s Metro Chambers and the Ohio Chamber of Commerce will be present on Wednesday, May 1, during testimony before the Senate Finance Subcommittee on General Government. Ellen van der Horst, president and CEO of the Cincinnati USA Regional Chamber and current chairman of our Metro Chambers/Ohio Chamber group, will present testimony. Chamber representatives will be available to talk to the media following the hearing in the Senate Finance Committee room, which begins at 10 a.m.

Greater Cleveland Partnership Contact: Carol Caruso, Senior Vice President, 216.262.4588

Columbus, Ohio –– Ohio’s government would become much more efficient under a carefully researched fiscal reform plan that is supported by business leaders from across the state.

Representatives of Ohio’s metropolitan chambers of commerce and the Ohio Chamber of Commerce will attend a hearing of the Senate Finance Subcommittee on General Government on Wednesday, May 1 at 10 a.m. to encourage Ohio lawmakers to consider specific recommendations that would substantially reduce government expenses and help to pay for further tax reform. Ellen van der Horst, president and CEO of the Cincinnati USA Regional Chamber and current chair of the group, will present testimony.

“We applaud government efficiencies that have been made under the Kasich Administration and the General Assembly” said Ms. van der Horst. “But we encourage our lawmakers to stay the course and implement additional efficiency measures to help meet the challenges of the FY 2014-2015 budget. The recommendations we will present to the Senate Subcommittee could provide an additional $716 million in savings over the biennium.”

The specific reforms result from the groups’ report: Redesigning Ohio: Transforming Government into a 21st Century Institution. That study – the result of an in-depth examination of the state government’s expenditures, revenues and fiscal policies – was initially released in 2010. The well-received, oft-cited study has since been updated. The current recommendations are based on current fiscal data and are intended – as was the original Redesigning Ohio study – to help make our state government more efficient and provide greater value for Ohioans.

“These recommendations are strategic and measureable. They can help increase resources needed to enact additional tax reforms recommended in the FY 2014-2015 operating budget,” said Ms. van der Horst.

The recommended reforms revolve around five areas. Estimated savings are for the 2014-2015 state operating budget:

  • Charter agency/Regulatory Reform. Ohio has 24 cabinet departments and more than 150 agencies and boards. Charter agencies are government departments or agencies that receive less funding in exchange for more flexibility and freedom to manage. Under the leadership of Director Testa, the Department of Taxation has adopted innovative programs and improved efficiency; thus, we recommend making the Ohio Department of Taxation the first charter agency. Iowa and Minnesota have implemented similar reforms with great success. We estimate this would result in $100 million in new revenue in fiscal year 2015 and set the stage for other Departments to follow suit in the future.

  • Criminal Justice Reform. It costs an average of $24,870 to incarcerate a person in an Ohio prison for a year. We must continue the process of moving non-violent offenders to less expensive and more effective forms of rehabilitation. By following this strategy, we believe there is an opportunity to close at least one correctional institution. We estimate a savings of $24 million in fiscal year 2015.

  • Public employee pension reform. Between 1999 and 2007, Ohio’s pension liabilities grew by 55 percent. The recent pension reform legislation that was enacted was a step in the right direction, but there is more work to be done. We suggest a shift in employee contributions to their pensions. Estimated savings in fiscal year 2015: $44 million.

  • Property tax rollbacks and Homestead Exemptions. Most property owners in Ohio are unaware that the state currently pays 12 ½ percent of their property taxes to their local government. Adjustments need to be made to these programs. They have become costly tax expenditures and should be shifted back to property owners. One step would involve capping the existing entitlement at current levels, disengaging it from new real estate levies. The Homestead Exemption should return to its original intent as a device to help low and moderate-income senior citizens and qualifying individuals with disabilities pay their increasing property taxes when they are on fixed incomes. Estimated savings in fiscal year 2014: $258 million. In fiscal year 2015: $258 million.

  • State employee health insurance. The statewide average monthly health insurance premium cost in 2011 was $506 per month for individuals and $1,339 per month for families. State employees generally pay 15 percent of that cost. Our suggestions in this area include phasing in increased employee contributions to more closely match national averages. Estimated savings in fiscal year 2015: $32 million.