The Ohio House is looking to rewrite parts of Gov. John Kasich’s budget proposal after dissent has focused on the governor’s tax plan. The chamber’s leaders are looking to set aside the tax plan from the bill so they can better focus on other complicated parts of the budget, including the Medicaid expansion and school funding. Even without the governor’s controversial sales tax expansion plan, Kasich’s budget proposal contains enough leftover money to pass some income tax cuts, with about $280.4 million in general revenue available for fiscal year 2014 and $690.2 million available in fiscal year 2015, according to an analysis in the Bluebook. CityBeat covered Kasich’s budget proposal in further detail here. State Auditor Dave Yost says he expects to get the subpoenaed financial records from JobsOhio today by the noon deadline, even though the audit has come under criticism from Gov. Kasich and other state officials. Yost says he should be allowed to look into JobsOhio’s full financial records, which include private funds, but Kasich and other Republicans argue only public funds are open to audit. JobsOhio is a publicly funded nonprofit, privatized development agency that was set up by Kasich and Republican legislators to eventually replace the Ohio Department of Development, which is susceptible to a full audit. Workers for the $78 million U Square project near the University of Cincinnati allege they are being underpaid. In a lawsuit, union workers are claiming they should be paid prevailing wage established in state law because the project is using public funds and 50 percent owned by a public authority. With the support of City Manager Milton Dohoney Jr., Cincinnati is now looking to cash into its innovative water technology with the formation of the Global Water Technology Hub, which will use expert advice to identify market needs and sell the technology. The city promises the hub will also help keep water rates low for users and find new revenue sources. Councilman P.G. Sittenfeld will hold a press conference today to introduce his Restoring Our Communities Initiative, which will seek to fight blight and improve child safety in Cincinnati. The initiative will include a push for the passage of Ohio Senate Bill 16, which would make it so individuals are not liable for trespassing convictions if the person is remediating blight on abandoned personal property. In a statement, Sittenfeld explained the purpose of the initiative: “Blight is a complicated issue that impacts many aspects of life, and I think this plan helps attack the problem from several angles.” Cincinnati Council’s Budget and Finance Committee unanimously approved $10,000 for the Westwood Square project, which will involve a larger facility for the Madcap Theater, green space and changes to the neighborhood’s entryways to better encourage community pride and economic development. A new $20 million, seven-story apartment tower with 110 high-end apartments is being planned for Downtown, above the Seventh and Broadway Garage. Two weeks in, Horseshoe Casino’s executive says the casino is doing well and turnout has been good. A report found auto insurance rates in Ohio are “a bargain,” with the state having the fourth lowest costs among other states and Washington, D.C. A machine keeps human livers alive outside a body for 24 hours, which could double the amount of livers available for transplant and save thousands of lives.

A new Policy Matters Ohio report found local government funding has been reduced by $1.4 billion since Gov. John Kasich took office, leading to a nearly 50-percent reduction in state funding. The report found local government funding dropped from nearly $3 billion in the 2010 and 2011 fiscal years — the years budgeted by former Gov. Ted Strickland — to about $2.2 billion in the 2012 and 2013 fiscal years — the first two years budgeted by Kasich. The governor’s most recent budget proposal would ensure the continuation of the downward slide, with local government funding dropping down to slightly more than $1.5 billion in the 2014 and 2015 fiscal years, according to the report. Policy Matters concluded new revenue from the state’s casinos and an expanded sales tax would not be enough to outweigh cuts in the Local Government Fund, utility tax reimbursements, tangible personal property reimbursements and the termination of the estate tax. By itself, the estate tax, which was phased out at the beginning of 2013, would have provided $625.3 million to local governments in the 2014-2015 budget, but it was repealed in 2011 by the Republican-controlled Ohio legislature and Kasich. The governor’s office has repeatedly argued that the cuts in Kasich’s first budget were necessary to help balance an $8 billion budget deficit, but the Policy Matters report says improving economic conditions have removed a need for further local government funding cuts: “To encourage growth we need good schools, reliable public safety and emergency services and strong communities. During hard times, state and local policy led to cuts. But further cuts in appropriations for local government are not helping communities. Curtailing local control of local revenues will complicate recovery – as the economy improves, it is time to restore the fiscal partnership between state and community.” When presenting his 2013 budget proposal, City Manager Milton Dohoney Jr. said the state funding reductions cost Cincinnati $22.2 million in revenues for the year. CityBeat previously covered Kasich’s 2014-2015 budget proposal and how it affects taxpayers, schools and Medicaid recipients (“Smoke and Mirrors,” issue of Feb. 20).

In news that will surprise almost no one, John Boehner was re-elected to the U.S. House of Representative’s top spot today. Boehner, a Republican from West Chester, will now act as U.S. House speaker for the 113th Congress. Just moments after his re-election, Boehner pledged to tackle the U.S. debt and deficit. The line is nothing new. When President Barack Obama stepped into the Oval Office, the debt and deficit became top concerns for Republicans after eight years of binge spending and tax cutting under former president George W. Bush. But focusing on the debt could hurt an already slow economy. In recent years, many economists, including Nobel laureate Paul Krugman, have criticized budget austerity measures for dampening economic growth.In fact, Republicans recently embraced the economic fact by joining the rest of the country in freaking out about the fiscal cliff. The primary concern with the fiscal cliff was that it would have cut spending and raised taxes so much and so quickly that it would have thrown the country back into recession. The Congressional Budget Office estimated the wave of austerity would have spiked the U.S. unemployment rate to 9.1 percent by the end of 2013, up from November’s rate of 7.7 percent. In Europe, governments have learned the lessons of austerity all too well. Last year, the International Monetary Fund (IMF) was pushing Europe to balance its books. Now, top IMF economists are releasing papers admitting the IMF greatly underestimated the negative impact austerity has on the economy. In other words, if Republicans continue focusing on austerity measures to fix the immediate deficit, the economy could get worse. Boehner regained the top seat in the U.S. House largely thanks to redistricting. As CityBeat covered in this week’s issue, redistricting helped Republicans win the House despite losing the popular vote to Democrats.

City Manager Milton Dohoney Jr. unveiled his 2013 budget plan at a press conference today. The proposal, which must be approved by City Council and the mayor, seeks to close a $34 million deficit while avoiding major cuts and layoffs. The proposed budget will only set the city’s course until mid-June, when the city will transition into establishing budgets based on fiscal years. The biggest deficit plug will come from privatizing parking services, which the city manager’s office says will bring in $40 million in one-time revenue and additional revenue over 30 years as part of a long-term contract. About $21 million of the initial lump-sum payment will be used to close the 2013 budget deficit. In the past, Councilman P.G. Sittenfeld voiced concerns about privatizing parking: “I’ll await more details, but it seems penny-wise and pound-foolish to forgo a steady revenue stream for a lump-sum payment. Cincinnati needs a structurally balanced budget and can’t keep relying on one-time sources. Places like Chicago and Indianapolis have seen their parking rates more than double following privatization — that’s a bad deal for citizens, and something we don’t need while we’re experiencing an urban renaissance.” Another concern is whether the city’s current parking employees will be laid off if parking services are sold. Dohoney said the deal for privatization will require the winning bidder to interview all American Federation of State, County and Municipal Employees (AFSCME) workers. Full-time workers who do not join the winning bidder will be hired in other parts of the city government. “No AFSCME employee will be placed on the street if they are full-time as a result of this effort,” Dohoney claimed. The rest of the deficit plug will come in cuts, cost shifting, savings, revenue, embedded growth and one-time sources. Among these, notable items include the elimination of the Mounted Patrol for the Cincinnati Police Department (CPD) and a $610,770 reduction in Human Services Funding. A few departments and programs, including the CPD, will face further minor cuts. The city manager’s office claims the changes in the budget are necessary mostly due to changes at the state level. Specifically, the state government cut the Local Government Fund by 50 percent and eliminated the tangible personal property tax reimbursement and estate tax; altogether, losing these sources of revenue cost Cincinnati $22.2 million in the 2013 budget. Facing the large deficit, Dohoney said he wanted to avoid across-the-board cuts and other major cuts to growth and investment programs: “You’re not competitive if that’s your approach.” The budget also includes some spending increases. The Focus 52 Program will focus on redevelopment projects in Cincinnati’s 52 neighborhoods. If it’s successful, the new program will “grow the city’s revenue base, create new jobs and/or increase the population of the city,” according to the city manager’s office. In other budget news, the city manager will also send out the Tentative Tax Budget proposal, which sets the millage rate for the operating property tax. That proposal seeks to raise the millage rate from 5.9 mills to 6.1 mills, which will provide an estimated $31 million in revenue, up from $23.5 million. For a $100,000 residential property, that means a tax hike of $46.