Ohio’s FY2018-19 Main Operating Budget Moves to Next Stage; GOPC Offers Recommendations

May 18th, 2017

By Jason Warner, GOPC Manager of Government Affairs

Recently, the Ohio House of Representatives approved a drastically different two-year state budget from the one proposed by Governor John Kasich in January. The House budget included roughly $632 million in reductions due to decreased state revenue collections, and so far for the fiscal year FY2016-17, receipts are $773.7 million, or 4.2 percent, below projections. This followed an announcement in April by state leaders that the budget would need to be revised downward by roughly $800 million for the next biennium (FY2018-19).

With passage of the House version, the budget now moves to the Ohio Senate, where additional reductions will be needed to meet the $800 million in cuts. The deadline to approve the budget is June 30, when the current state fiscal year (FY2017) ends. Greater Ohio Policy Center (GOPC) continues to testify on several changes to be made in HB49, including the following provisions. 

GOPC-Supported Provisions:

- The budget bill provides $4.8 million in annual funding over the biennium for lead remediation and associated testing services for homes under lead hazard orders, ensuring that more properties are made safe for families. This will be done through the use of federal funding available to the state.  GOPC is pleased by the state’s commitment on this important issue and encourages the Legislature to ensure local lead abatement programs are empowered to utilize the funding.

GOPC-Opposed Provisions:

- A House amendment would mandate stickers be affixed to retail service station pumps displaying the rates of federal and state taxes applicable to gasoline and diesel fuel. The stickers would be produced and distributed by the Department of Agriculture at an unknown cost. All pumps would be required to have the stickers affixed within 14 months of the bills effective date and would need to be replaced if damaged or if the state or federal tax rates change. 

- The House reduced funding for public transportation by more than 11% per year for both FY2018 and 2019. This line item provides funding for the Public Transportation Grant Program and the Elderly and Disabled Fare Assistance Program. This line item has been reduced by more than 68% or $17,969,134, since FY2000. 

GOPC’s Proposed Amendments to the Bill:

- GOPC proposes an amendment to make it easier for cities to clean up contaminated brownfield sites.  The proposal would modify Ohio law to make it clear that urban renewal projects can recover the costs of environmental remediation. In an urban renewal project, a municipality and a developer create a development agreement to mitigate a blighted area.  After development begins, the property owner makes service payments in lieu of taxes, based on the increased valuation of the property.  Service payments support bonds that have been issued to support redevelopment costs.

- The federal Center for Medicare and Medicaid Services has issued a directive that Ohio cannot continue applying state and local sales taxes on the premiums of Medicaid Managed Care Organizations. HB49 provides for a new service fee to be charged to make-up for lost state revenue, while only providing partial, temporary financial relief to counties and transit agencies. GOPC supports the inclusion of a provision in HB49 that will extend greater financial relief to counties and transit agencies. 

For more complete coverage of the Main Operating Budget, please visit here.

Infrastructure Week Highlights Urgent Need to Invest in our Declining Transportation and Water and Sewer Systems

May 15th, 2017

By Jon Honeck, GOPC Senior Policy Fellow

Infrastructure Week is May 15 – 19, 2017.  GOPC considers infrastructure, especially transportation and water infrastructure, to be vital components of Ohio’s economic revitalization agenda.  During Infrastructure Week, groups across the nation are holding events and doing everything they can to draw attention to the unacceptable condition of the nation’s infrastructure.  Overall, the American Society of Civil Engineers (ASCE) gives U.S. infrastructure a grade of “D+”.  Although the term “infrastructure” usually brings to mind surface transportation – roads, bridges, and railways – the ASCE’s concerns extend to many forms of infrastructure that make a modern economy work, including drinking water and wastewater systems, air travel, ports, and the electrical transmission grid.   The ASCE estimates that underinvestment will cause the average family to lose $3,400 each year as a result of infrastructure deficiencies. 

As seen in the chart below, public sector spending on infrastructure declined from nearly 3.5% of gross domestic product (GDP) in the late 1950s to just above 2.5% today.  Although federal policy definitely shapes overall societal policy choices (e.g., the interstate highway system), the chart also makes it clear that states and local governments have been doing the heavy lifting when it comes to infrastructure spending, and probably will continue to do so in the future.  Federal outlays in recent years been about 0.6% of GDP, about one-fourth the state and local government total.

 Infrastructure Spending as a Percentage of U.S. GDP

infrastructure chart

Source: GOPC analysis of BEA and CBO data.

Across the country, states are doing what they can to take charge of their own destiny, including finding ways to pay for what they need to improve transportation.  Most states, and the federal government, rely on gasoline excise taxes to pay for surface transportation.  For many years, discussions about raising the gasoline tax were off the table at both the state and federal levels.  The federal gasoline tax has not been raised since 1993; Ohio’s has been the same since 2005.  This inaction meant that state transportation budgets have failed to keep pace with inflation, putting more pressure on their ability to perform basic maintenance.  As the economy has improved, however, state leaders have put together coalitions to support improved funding.  Since 2012, nearly half the states have adjusted their approaches to taxing gasoline.  Some of the most recent to move in this direction in 2017, including Indiana, South Carolina, and Tennessee, are generally considered to be fiscally conservative states.  These changes at the state level may build momentum for a reexamination of transportation funding at the federal level. 

The country’s focus on infrastructure is not only an opportunity to rebuild, but also to improve and rethink what we need to be successful in the 21st Century, as GOPC outlined in a Cincinnati Enquirer op-ed.  Proceeds from the state gasoline tax in Ohio are constitutionally required to be spent on highways, and do not address the needs of Ohio’s residents for public transit or alternative modes of travel such as biking or walking.  Despite an increased transfer of federal funds to public transit in the Ohio Department of Transportation budget, Ohio’s overall state level of support for public transit is minimal compared to that of other states.  GOPC believes that future state transportation reform should include a dedicated revenue source for public transit that will help local transit authorities design the kind of flexible and affordable systems that Ohioans deserve. 

 

Driverless cars could be the attractive future but public transportation is the vital present

May 8th, 2017

By Alex Highley, GOPC Project Associate

Many states across the country, including Ohio, have begun to embrace the idea that driverless cars will soon represent an exciting, safe, and more efficient alternative to human-controlled vehicles. Last year, Columbus was awarded the federal Smart Cities grant, which pledges millions of federal dollars to be invested in new technologies for driverless cars. While autonomous vehicles may eventually solve some of the transportation challenges Ohio faces once their usage is proven to be safe and effective, leaders in the state should focus their efforts today on expanding and strengthening public transit. Greater Ohio Policy Center (GOPC) believes that Ohio must prioritize investment in the existing transportation system, where the technology already exists to safely and efficiently transport people to jobs, doctors, and grocery stores.

While autonomous vehicles may one day rule the road, it is imperative that Ohio develops transportation solutions for residents who seek a means of mobility in the short-term. Public transit is a proven form of transportation that if invested in properly, can produce a number of economic development benefits for residents and businesses within communities of all types. Ohio’s population is aging and many residents, especially those living in rural areas, do not have reliable access to a car to get to job opportunities, medical appointments, family, and the grocery store. Because Ohio’s land usage pattern is defined by sprawling communities, residential areas are often located far from job sites and thus qualified individuals are unable to fill positions at companies seeking their talents. Improving transit service through, for instance, regionalization, will ameliorate these difficulties by connecting workers with key destinations and allow them to participate in Ohio’s economy.

Cota on high st

However, there is a glaring shortage of good-working public transportation buses and vans in Ohio. As the Ohio Department of Transportation Transit Needs Study notes, 27 counties in Ohio do not even operate a public transit network, which means that many people rely on health and human service transportation functions to get to important destinations. Even within the transit agencies that do offer service, over a third of the 3,240 vehicles are beyond their useful life, yet they are still on the roads. As demand grows among all age groups, investment in the system is even more crucial. By 2025, the Transit Needs Study estimates that an additional $562 million in annual funding will be needed to meet the future demand for public transit statewide.

Given the general level of uncertainty surrounding driverless cars, leaders at all level of government and business should concentrate efforts on existing transportation systems. At the moment, 74 percent of Americans simply do not believe driverless cars will be safe to use. Until the public has demonstrated it trusts the new technology, it would be premature to pool resources into a system with so many lingering questions. Even if Ohioans do at some point accept autonomous vehicles as a viable alternative to driver-operated cars, it is unlikely that their costs, at least initially, will make them accessible to a wide cohort of citizens. Thus, the proliferation of the technology would likely do little to help residents who struggle to find a way to get to doctor’s appointments. By supporting a robust, modernized public transportation system, Ohio’s leaders can build a successful, fluid network of travel for workers and residents throughout the state.

For more resources on transportation policy affecting Ohio’s cities and regions, please visit GOPC’s Transportation Modernization webpage

 

Urban Expert Richard Florida Warns of Deepening Crisis of Cities But Believes Mayors Can Help Reverse Course

April 25th, 2017

By Alex Highley, GOPC Project Associate

Last week, University of Toronto professor and urban theorist Richard Florida delivered a series of lectures in Columbus. In front of a large crowd at Ohio State’s Mershon Auditorium, he spoke about his new book, The New Urban Crisis, which describes the worrying decline of the middle class in cities throughout America. After highlighting the major points of the book, Florida asked questions about solving the new urban crisis to Columbus Mayor Andy Ginther, Findlay Mayor Lydia Mihalik, and former Youngstown Mayor Jay Williams.

Florida argues that whereas the urban crises of past decades manifested in the outward movement of people and wealth from city centers into the suburbs, today’s urban crisis is marked by a growing wealth and opportunity gap throughout neighborhoods in cities, including Columbus. While the vestiges of the old urban crisis continue to live on, Florida sees a startling inequality both between various cities and even within cities. Today, a “winner-take-all urbanism” has emerged that sharpens the contrast between “winner” and “loser” cities. As young, talented, and educated, people seek to work together on innovative ideas, they cram themselves together in those areas of concentrated resources and wealth. Even within “winner” cities, suburban areas, along with some traditional urban areas, have experience marked decline and poverty while economic cleavages between neighborhoods have become more pronounced.

Check out Greater Ohio Policy Center’s (GOPC) new blog series on shrinking cities

To combat this modern crisis, Florida believes that mayors must be given the political and fiscal tools to develop local solutions, instead of following a one-size-fits-all federal urban policy, which Florida admits he previously championed. Devolving more responsibility to mayors recognizes the reality of deep social and political differences in America, which were conspicuous during the last presidential election, and allows mayors and community leaders to promote urban policies unique to their cities. In alignment with this idea, Williams believes that Youngstown should take the unconventional step of embracing its “shrinkage,” rather than expending energy on attempts to attract new residents. To do this, the city must develop policies that accept the nature of population decline while seeking to capitalize on the great ideas and creativity already flourishing in Youngstown.

Richard Florida lecture OSU

 Seated Left to Right: Williams, Mihalik, Ginther, and Florida

Ginther, Mihalik, and Florida expressed that improving and expanding local public transportation systems will help boost economic opportunity for struggling families. For residents in many neighborhoods in Columbus, a lack of reliable transportation imposes a barrier to employers and the potential employees seeking work. In Findlay, Mihalik notes that over half of the city’s workforce actually commutes from outside Hancock County; as a result, many people are pushing for bolstering public transportation. Greater Ohio Policy Center (GOPC) supports efforts to connect Ohioans to job opportunities by improving public transportation networks throughout the state.

While many people are encumbered by today’s often divisive national politics, Florida sees less partisanship and more willingness among stakeholders to work together to achieve results at the local level. Florida notes that when he meets mayors, he usually has little idea or concern about whether they are Republican or Democrat, because party identity is less defining of the policies mayors pursue. Mihalik emphasizes the idea that mayors can elevate important public policy discussions, and should do more to promote civil dialogue among citizens. She also believes that leaders need to offer more potential solutions to problems, rather than simply criticizing what they think needs to be fixed. In sum, combining mayoral action with citizen input will help expand economic opportunity for more Ohioans.

 

Pending Congressional Approval, Federal Budget Will Cut Important Transportation Grant Program

April 13th, 2017

By Alex Highley, GOPC Project Associate

Under the Trump administration’s recent budget proposal, a crucial grant program supporting capital investment for transportation projects across Ohio and the country is slated to be abolished. The federal program known as the Transportation Investment Generating Economic Recovery (TIGER) grants are earmarked to be eliminated, unless the House and Senate budget bills reverse the provision doing away with the program. Funding for TIGER, a program that was developed in 2009 as part of the federal Recovery Act, is allocated to state Departments of Transportation (DOT) and local jurisdictions by Congress following a merit-based award process. Should Congress decide to scrap the program, some planned transit, rail, and bike and pedestrian projects in Ohio could fail to produce the funds necessary for completion.

Since 2009, TIGER grants have funneled over $4 billion to a variety of innovative transportation projects around the country, including transit, rail, port, road, and bike and pedestrian. Since the program’s inception, the annual program budget has declined over time, reducing the number of awarded projects, while applications have ramped up. The US Department of Transportation’s (USDOT) latest round of TIGER grant awards, known as TIGER VII, are set to deliver $500 million to various projects nationwide. In total, this amount will support 39 capital projects in 33 states. However, award amounts have been slowly declining since the initial TIGER I, which funded 51 separate capital projects in the form of $1.5 billion in award money.

Downtown overhead

Akron’s downtown promenade was awarded a $5 million TIGER capital grant in 2016. Photo credit: AkronStock 

TIGER grants are immensely important in Ohio, where they offer needed funding assistance to multi-modal projects that would struggle to generate the necessary funding otherwise. For example, in 2015 $6.8 million was awarded to Ohio to divide among sparsely-funded public transit agencies in rural areas of the state such as Athens, Wilmington, Chillicothe, Knox, Lancaster, Marion, Logan, and others. Moreover, the Opportunity Corridor project, which is a path designed for transit, bikes, and pedestrians in northeast Ohio, along with the downtown promenade in Akron, have enjoyed the fruits of grant awards in recent years. In total, Ohio has received over $79 million from the TIGER program for transportation projects (see the table below for a year-by-year breakdown).

The success of the program is manifested by the substantial local investment it has spurred. USDOT calculates that TIGER’s initial investment has leveraged $1.74 billion in matching funds by state and local actors, including the private and public sectors contributing to the completion of the project. However, due to the program’s widespread appeal, acquiring TIGER grants have become increasingly more difficult. As local transportation projects face a dwindling supply of resources, the TIGER program has become more competitive given the increasing demand. Subsequently, many advocates have called for an expansion of the program to aid local governments in finishing important projects.

Scrapping the program entirely would represent a big blow to public transportation systems in Ohio in particular, given many local systems are insufficiently supported. The Ohio Department of Transportation’s (ODOT) 2015 Transit Needs Study estimates that Ohio’s public transportation systems suffer from a $192.5 million dollar funding shortfall in combined capital and operations needs. Moreover, the study finds that the state of Ohio spends just 63 cents per capita on public transportation over the course of each year, ranking Ohio 38th in the nation in its investment in this crucial policy area.

Greater Ohio Policy Center (GOPC) believes that Ohio’s recently-passed transportation budget, which includes a $10 million increase in flex funding for public transportation, is a positive step to modernizing the state’s transportation system. However, local systems will continue to struggle to meet the demands of riders, and the possible federal elimination of the TIGER program will increase the financial strain on cash-strapped agencies that are seeking the funds to ensure they can properly invest in their capital systems as well as operate sufficiently.

For more resources on transportation policy affecting Ohio’s cities and regions, please visit GOPC’s Transportation Modernization webpage.

 

TIGER Grants Total Award Amounts in Ohio

2009: $20 million

2010: $10.5 million

2011: $12.5 million

2012: $16 million

2013: no award

2014: $400,000

2015: $6.8 million

2016: $12.9 million

Grand Total: $79.1 million

 

Budget Update No. 4: Transportation Budget in the books; Main Operating inches along

April 3rd, 2017

By Jason Warner, GOPC Manager of Government Affairs

This is the fourth in a series of articles taking a closer look as specific items contained in the Governor’s proposed budget for FY2018-19, which the legislature must pass by June 30, 2017The third article is available here

The Ohio House of Representatives and Ohio Senate sent the final version of the State Transportation Budget (HB26) to Governor John Kasich on March 29, which he then approved on March 31.  The transportation budget will take effect on July 1 and will fund transportation operations and other transportation-related functions through June 30, 2019.

Highlights of the final budget include an increase in federal flex funding for purposes of replacing Ohio’s aging public transportation fleet. Flexing federal highway dollars reallocates funding Ohio already receives. At present, the state flexes around $23 million per year for public transportation purposes. House Bill 26 increases this amount by $10 million per year, to $33 million annually. This is a significant increase in funding which will help support the purchase of new rural transit vans and full sized buses.

The conference report removed Senate provisions adding $48 million to the Ohio Public Works Commission’s Local Transportation Improvement Program (LTIP) and requiring $30 million of the forthcoming Volkswagen Emissions Mitigation Trust Fund to be sent to public transit authorities for rolling stock. Conferees also agreed to allow county commissioners to approve a $5 motor vehicle license (MVL) fee increase by resolution, but specifies that any increase must take effect after 30 days. This will allow local voters an opportunity to subject the increase to a referendum. If a referendum is approved, the increase would only take effect if it is approved by voters.

The removal of the $30 million in funding from the Volkswagen settlement came at the request of the Ohio EPA and Ohio Attorney General Mike DeWine. They indicated to the conference committee there were still issues around the settlement which needed to be worked out and cautioned that allocating money from the settlement was premature. The chair of the Senate Transportation, Commerce and Workforce Committee, Frank LaRose (R-Copley), has indicated that he wants to see the settlement money appropriated for this purpose and will work to do so either through an amendment to the main operating budget (HB49) or through stand-alone legislation. GOPC will work with the senator to ensure that this does happen.

Other highlights from HB26 include:

  • Requires the Registrar of Motor Vehicles, within 9 months after the effective date of the bill, to establish by rule the service fee that is paid to a deputy registrar, a limited authority deputy registrar, or the Registrar, as applicable, for specified services at a rate that is not more than $5.25.  The current rate is $3.75. 
  • Requires the Registrar or Motor Vehicles to conduct a study of the benefits and detriments of lowering the permanent registration fee for commercial trailers and semitrailers and streamlining the registration process. A pilot program will be conducted between January 1, 2018 and December 31, 2019 with the fees being reduced from $30 to $15 for vehicle registrations in Clinton, Franklin, Lucas, Mahoning, Montgomery and Stark counties.
  • Limits the proposal to permit the ODOT director to establish variable speed limits to a pilot program to be limited to all or part of I-670 (Franklin County), all or part of I-275 (Hamilton County) and the portion of I-90 between I-71 and the Pennsylvania border.

At the same time, the Ohio House continues its work on the Main Operating Budget (HB49). This week, the bill resumed hearings in the full House Finance Committee following a month of hearings in five subcommittees and the House Ways and Means Committee. Various interest groups and members of the public shared their views on the budget in multiple hearings during the past week, and will continue sharing their thoughts this week before the legislature goes on recess for the next two weeks to observe Easter. Also last week, the Ohio Senate Finance Committee began holding informal hearings receiving background testimony from state agencies in advance of beginning formal hearings after the House approves their version of the state budget. That is expected to occur sometime in early May.

Visit GOPC’s Transportation Modernization page to learn more about this important issue area

 

GOPC’s Recommendation to Boost Public Transit Included in 2018-19 Ohio Senate Transportation Budget

March 27th, 2017

By Jason Warner, GOPC Manager of Government Affairs

This is the third in a series of articles taking a closer look as specific items contained in the Governor’s proposed budget for FY2018-19, which the legislature must pass by June 30, 2017. The second article is available here.

Greater Ohio Policy Center (GOPC) would like to thank the Ohio Senate for approving a transportation budget that would allocate an additional $15 million over two years to public transportation. In alignment with GOPC’s recommendations that Ohio repower its ailing bus fleet, the Senate’s budget would support a new grant program using funds from the Volkswagen Mitigation Trust Fund to support public transit.

In a strong bipartisan effort, the Ohio Senate unanimously approved Am. Sub. HB 26, the state transportation budget for fiscal years 2018 and 2019 on March 22nd. All 24 Republican members and the 9 Democratic members of the chamber voted to support passage of the budget. Over the course of eight hearings, Senators heard testimony from a number of organizations, including GOPC, who advocated for an increase in funding for public transportation.

As GOPC noted in testimony before the Transportation, Commerce and Workforce Committee last week, Ohio appropriates only 2% of the state transportation budget to public transportation, while peer states spend between 10-20% of their transportation funds on transit-related needs and services. Governor Kasich’s proposed budget recommended spending an additional roughly $33 million annually in federal highway “flex” funds for public transit capital appropriations (purchasing new “rolling stock”, or buses), which was an increase of $10 million per year over the current budget.

GOPC thanks the members of the Ohio Senate for recognizing the need for additional support for public transit in the state and encourages the Ohio House of Representatives to support this Senate-backed provision in the budget.

In testimony, GOPC encouraged the legislature to spend an additional $17 million per year, boosting overall funding in public transportation to $50 million annually. The Senate-approved budget plan to strengthen public transportation using Volkswagen Mitigation Trust Funds would support a grant program that assists local transit agencies in purchasing new buses and transit vans across the state.

Later that same day, the Ohio House, which was the first to pass the transportation budget on March 1, voted to reject the full slate of Senate-approved changes 88-0. The bill now moves to a conference committee which will settle the differences between the two bills. Final passage of the budget bill will occur later this week, as state law requires Governor Kasich to sign the transportation budget by April 1.  

Learn more about GOPC’s policy research and advocacy to modernize Ohio’s transportation system

 

Cota on high st

2018-19 Transportation Budget Passes Ohio House and Advances to Senate

March 10th, 2017

By Jason Warner, GOPC Manager of Government Affairs

This is the second in a series of articles taking a closer look as specific items contained in the Governor’s proposed budget for FY2018-19, which the legislature must pass by June 30, 2017. The first article is available here.

It has been a busy couple of weeks at the Ohio Statehouse as work continues on the drafting of the state Transportation Budget for Fiscal Years 2018 and 2019.  The House Finance Committee passed the transportation budget on February 24, while the full House approved the bill on March 1. The Senate Transportation, Commerce and Workforce Committee held its initial hearing on the bill with testimony from ODOT Director Wray and other administration officials a day before, on February 28. Hearings have been ongoing during the week of March 6th as well.

The House-passed budget maintained the as-introduced budget proposal to increase the amount of federal flex-funding dedicated towards public transportation by $10 million annually, up from $23 million currently. A portion of this funding ($10 million per year), will be distributed by formula to transit agencies, while the remaining funds will be competitively awarded through grants to replace the state’s aging fleet of vans and buses with more modern equipment that is more fuel efficient and requires less maintenance. Greater Ohio Policy Center (GOPC) continues to advocate for additional funding for this program, asking the legislature to appropriate a total of $50 million annually (this would require an additional $17 million per year above what is in the current budget proposal).

Visit GOPC’s Transportation Modernization page to learn more about this important issue area

Among the other highlights of the House version of the ODOT budget:

  • Maintains exemption from the motor fuel tax (MFT) for aviation fuel, K-1 kerosene and compressed natural gas (CNG);
  • Eliminates the change from collecting the MFT from the point when it is ‘received’ in Ohio to the terminal refinery rack;
  • Increases the service fee paid to a deputy registrar from $3.50 to $5.25 and increases the multi-year registration fee by a similar percentage;
  • Permits a county commission to levy a $5 motor vehicle license fee for transportation purposes. Under current law, cities, townships and counties may establish a combination of local motor vehicle registration taxes totaling up-to $20. This new fee (which is optional for counties) increases the total amount of local motor vehicle registration taxes totaling up-to $25;
  • Requires the Registrar or Motor Vehicles to conduct a study of the benefits and detriments of lowering the permanent registration fee for commercial trailers and semitrailers and streamlining the registration process. A pilot program will be conducted between January 1, 2018 and December 31, 2019 with the fees being reduced from $30 to $15 for vehicle registrations in Clinton, Lucas, Montgomery and Stark counties;
  • Increases the earmark for Transportation Improvement Districts (TID’s) to $4.5 million in each fiscal year. A TID is a special-purpose district created by an Ohio county for the purpose of coordinating and financing road construction projects among local governments and private partnerships in that county. At present, there are 30 TID’s across Ohio;
  • Limits the proposal to permit the ODOT director to establish variable speed limits to a pilot program on highways that are a part of ODOT’s Smart Mobility Initiative, specifically I-670 (Franklin County), I-90 (Cuyahoga County) and U.S. Route 33 (Franklin, Union Counties); pilot program expires December 31, 2018.

GOPC continues to advocate for the increase in federal flex funding for public transportation, as well as advocate for establishment of dedicated funding for public transit, adoption of a statewide active transportation policy, and comprehensive reform of the ODOT budget. This is happening in one-on-one meetings with members of the Ohio Senate, as well as testimony before the Transportation, Commerce and Workforce committee, which is planned to occur next week.

Visit GOPC’s Transportation Modernization page to learn more about this important issue area

 

 

2018-19 Budget Review: Replacing the Medicare Managed Care Organization (MCO) Tax

February 23rd, 2017

By Jason Warner, GOPC Manager of Government Affairs

This is the first in a series of articles taking a closer look as specific items contained in the Governor’s proposed budget for FY2018-19, which the legislature must pass by June 30, 2017.

Last year, the Center for Medicare and Medicaid Services (CMS) issued a ruling that stated that after July 1, 2017, Ohio’s sales tax on Medicaid Managed Care Organizations (MCO’s) would no longer be a permissible source for state funds to draw down federal matching dollars for Medicaid. This represents a significant challenge for both the state, but also local governments and transit authorities which rely on sales tax receipts to support a wide range of services.

The Governor’s proposed budget would replace the MCO sales tax with a new Health Insuring Corporation (HIC) assessment which is similar to a plan that was instituted in California and was approved by CMS last year.

While this new assessment will assist the state in continuing to draw down federal Medicaid matching funds, it is not a sales tax. As a result, local governments and transit authorities will not have any local revenue generated as a result of the new HIC assessment.

House Bill 49 proposes a transitional aid fund for local governments and transit authorities to be paid out in a single lump sum in October of 2017. All 88 counties and eight transit authorities will receive a calculated 4th Quarter 2017 replacement aid amount based on what they would have received in revenue for that three month period. In addition, the transit authorities and 80 counties are to receive an amount based on the size of their sales tax revenue the Medicaid tax collections were, and how their overall sales tax collections compare to the state average. The remaining eight counties will not receive a payment from this calculation because the receipts from the tax represented too small a proportion of the overall revenue derived from the sales tax. (Those eight counties are Delaware, Erie, Geauga, Hancock, Holmes, Medina, Union and Warren counties.)

In total, the state will appropriate nearly $207 million to these local government entities as a part of the transition away from the MCO sales tax. However, in testimony to the House Finance Committee, Office of Budget and Management Director Tim Keen stated that the administration did not believe that long-term or permanent replacement of the revenue was in order as the MCO sales tax had only existed since 2010.

The full list of proposed transitional aid amounts can be found here.

Visit GOPC’s Transportation Modernization page to learn more about this important issue area

GOPC Testifies on Transportation Budget in House Subcommittee

February 16th, 2017

Recently, Greater Ohio’s Manager of Government Affairs, Jason Warner, had the opportunity to testify before the House Finance Subcommittee on Transportation regarding House Bill 26, the state transportation budget for FY2018-2019. The subcommittee held hearings throughout the week on the proposed budget, which provides appropriations for programs funded with motor vehicle fuel taxes and registration fees (primarily in the Departments of Transportation and Public Safety.

GOPC full testimony is below and can also be found in PDF format here. You may also review all the testimony which the subcommittee heard on the committee’s website.

 

House Finance – Transportation Subcommittee
House Bill 26: State Transportation Budget | Interested Party Testimony
Jason Warner, Greater Ohio Policy Center
February 9, 2017

Chairman McColley, Ranking Member Reece and members of the Transportation Subcommittee, I want to thank you for providing me this opportunity to speak to you today about transportation in Ohio and the state’s transportation budget for FY2018-19.

My name is Jason Warner and I am the Manager of Government Affairs at the Greater Ohio Policy Center. Greater Ohio is a nonprofit nonpartisan organization that is valued for its data-driven research. Our mission is to champion revitalization in Ohio to create economically competitive communities.

As I am sure you are aware, Ohio is a cornerstone of our nation’s transportation infrastructure. I would like to focus my testimony today on what Greater Ohio sees as a policy platform to support a robust, competitive transportation system that will continue to keep Ohio at the forefront of meeting the increasing demands for a 21st Century transportation system for a 21st Century economy. We do not consider these to be aspirational goals, but rather a blueprint and effective strategic plan.

I would like to begin my remarks today with an overview of public transportation in Ohio. Ohio boasts a strong and productive public transportation network, which includes 28 urban and 33 rural systems. ODOT data shows that over 115.1 million passenger trips were provided by the state’s transit systems in 2013, the most recent year statistics are available.

Yet, 27 counties in Ohio feature no form of public transportation (either fixed route or on-demand service) and the state spends only 63 cents per capita for public transit. That is why Ohio ranked 38th in the nation in terms of state investment in public transportation, below North Dakota. It’s worth noting, that among Ohio’s neighboring states, the state ranks ahead of only Kentucky:

  • Pennsylvania – 9th ($85.55 per capita) 
  • Michigan – 15th ($24.33 per capita) 
  • Indiana – 19th ($8.57 per capita) 
  • West Virginia – 32nd ($1.50 per capita) 
  • Ohio – 38th ($0.63 per capita) 
  • Kentucky – 42nd ($0.34 per capita) 

Only 2% of ODOT’s budget is dedicated to public transportation, which is why the department’s own 2014 Transit Needs Study found that current service does not meet demand. Ohio’s peer states dedicate between 10-20% of their state transportation budgets to transit and the state needs to do much to make up for this deficiency. Public transportation is critical to a number of sectors in Ohio, including the elderly, disabled, and is a key component in successfully supporting the state’s priority of job creation, job growth, and workforce development.

We thank Director Wray for his leadership on this issue. Through his efforts and those of the team at the Ohio Department of Transportation, the governor’s budget proposed a substantial increase in funding for public transportation over the next two years. However, as the ODOT Transit Needs Study acknowledged, the backlog of capital needs is great and will require substantial support. There are several ways to address that gap.

Increase Federal Highway Administration Funding for Public Transportation

One option, which involves a simple reprioritization of goals and projects at the Department of Transportation is the idea of flexing Federal Highway Administration (FHWA) dollars.

Flexing FHWA dollars reallocated federal funding Ohio already receives. At present, the state flexes around $23 million per year for public transportation purposes. House Bill 26 proposes to increase this amount by $10 million per year, to $33 million annually. This is a significant increase in funding and we applaud the move by the administration to increase this support, which will help support the purchase of new rural transit vans and full sized buses.

Greater Ohio Policy Center believes that this support would be greatly enhanced with a commitment by the legislature and Department of Transportation to flex an additional $17 million annually, boosting the total amount of flexed FHWA dollars to $50 million per year of the biennium. Doing so will not adversely impact ODOT and its primary mission, as outlined recently by Director Wray in his testimony to the House Finance Committee, which is to “to take care of what we have.”

Setting aside a total of $50 million in FHWA funding to public transit will result in 7.5 fewer miles of highway expansion, or 24 miles of highway repaired per year. For perspective, ODOT paved 5,564 lane miles in 2015.

Allocating $50 million per year of FHWA fund to transit-related capital investments will have negligible impact on Ohio’s crucial highway maintenance and construction programs, while significantly improving safety, performance, and use of Ohio’s public transportation systems.

Create a Dedicated Funding Stream for Public Transportation

Flexing FHWA funding is just one option Ohio has to support Ohio’s public transportation network. Another option, which will require action on the part of the legislature, is to create a dedicated funding stream for public transportation.

Nationwide, 25 states along with the District of Columbia dedicate fees and taxes for the exclusive use of public transit. This, in turn, provides a relatively reliable source of assured funding for these systems. While local transit systems can seek support for dedicated sales tax funding from local voters, it is still not sufficient to meet all needs, and thus most systems rely on funding from the state.

There are several possible sources Ohio could dedicate to support transit-related equipment and vehicle investments; examples of potential funding sources include. At Greater Ohio, we believe Ohio should consider dedicated funding derived from the sales tax collected on rental vehicles, a revenue source that is largely paid by out-of-state visitors to Ohio. By dispersing the equivalent amount of sales tax collected on rental vehicles to fund public transportation, Ohio would take a major step forward in assisting Ohio’s existing transit systems modernize and expand to meet the growing demands for service statewide.

There are other options available beyond the rental vehicle sales tax, including a tax on motor vehicle sales or a fee on the sale of new tires, among others. Regardless of the source, dedicated funding is an important and necessary step forward if Ohio is to have a modern, competitive system.

Dedicated funding for capital improvements will increase the safety and reach of Ohio’s transit agencies. In addition, dedicated funding will help to expand Ohio’s existing transit services, including helping to reach residents in the 27 mostly rural counties that lack access to any form of public transportation.

Adopt and Implement a Statewide Active Transportation Policy

Public transportation is just one aspect of a robust transportation network which Ohioans have come to expect and rely upon. But as we near the beginning of the third decade of the 21st Century, we must look beyond four wheeled transportation as being the sole aspect of the transportation network.
Every day in Ohio, 2 pedestrians and 1 bicyclist dies or is seriously injured in roadway accidents.

Nationally, elderly people and children are at greater risk of pedestrian fatalities than other age groups. A 2015 analysis of 37 active transportation projects across the country determined the projects avoided a total of $18.1 million in collision and injury costs in one year alone. An active transportation policy that ensures state roadways and municipal streets that receive ODOT investment can be safely traveled by all users’ needs to be implemented.

Active transportation, by definition any human-powered transportation system such as walking or bicycling, is increasing in frequency across the state for a variety of reasons. Adoption of a policy that would be sensitive to context (rural vs. suburban vs. urban) and that would facilitate the safe and efficient movement of people and goods is key. At present, 33 states have an active transportation policy. Agencies such as ODOT and the Ohio Department of Health have been working on a policy for some time. I recently had the opportunity to share this plea with both the Joint Task Force on Transportation Issues and the Joint Education Oversight Committee, as part of its review of school transportation issues, and share it with you now in the hope that this committee will urge the department to pursue this policy on a statewide basis and ensure safe travel for all Ohioans.

Comprehensive Funding Reform of the ODOT Budget

As I have previously mentioned, Ohio is a key component in our national transportation network. Ohio’s interstate highway system is the 12th largest in the nation, and ranks 5th in overall traffic volume and 4th in truck traffic volume. Ohio boasts the 2nd largest inventory of bridges in the nation. Beyond roadways, Ohio also ranks 4th nationally in freight rail mileage, hosting 35 freight railroads and 5,305 miles of rail. Ohio’s maritime ports saw 48,267,276 short tons of cargo traded in 2013, and features 7 ports ranked in the top 100 nationally that year.

Yet, in spite of these impressive statistics, the American Society of Civil Engineers has graded Ohio’s 125,000 plus miles of roads a ‘D’, finding that 43% of the state’s roadways are in critical, poor, or fair condition. Of greater concern is a finding that 2,242 of the state’s 27,015 bridges (8% of total bridges), are ‘structurally deficient.’ The overall cost to motorists in the state, the personal cost of driving on roads in need of repair, is $3.3 billion per year, which amounts to $413 per motorist.

Adequately maintaining and upgrading all modes of transportation in Ohio is becoming a challenge, as there are not enough resources available to ensure this is done effectively. The cost of transportation materials and equipment has increased substantially in the last decade, while local, state and federal funds have flat-lined. This is not a problem that is unique to Ohio, and ODOT should be lauded for the work it has been able to accomplish in light of these challenges.

That said, Ohio needs to take a serious look at these challenges going forward, and can look close by to see an effective model that is meeting the needs of the public and private sector in a strategic manner.

In 2012, Pennsylvania had been found to have the most dire of infrastructure systems in the nation; the bridges were rated as the most structurally deficient, roadways were crumbling and there was a growing, unmet demand for public transportation. Through a comprehensive 5-year transportation budget package enacted in 2013, Pennsylvania is now producing $2.1 billion in additional funds and recalibrating resources to better support all modes of transportation. The state has now adopted a Fix-It-First Policy that focuses on funding repairs and maintenance programs on existing infrastructure, doing more to improve asset management and limiting capital expansions.

Like Ohio, Pennsylvania restricts its motor fuels tax to highways and bridges, so in order to provide for the needs of additional transportation modes like transit, rail, aviation, and maritime ports, the state instituted new fees and aggregates small increases on existing taxes and fees to provide additional funding to expand transit services, modernize ports and airports and generate additional revenue for traditional maintenance programs. Among these revenue generators were:

  • A new $1 fee on all new tires sold 
  • A higher fine for lapsed vehicle insurance in lieu of license suspension 
  • A flat $150 fine for disobeying traffic control devices 
  • A $2 per day vehicle rental fee 
  • A 3% vehicle lease tax 
  • A clear formula for assessing the gas tax on alternative fuel vehicles 
  • A switch from taxing at the pump to taxing “at the rack”

One of these elements is already included in House Bill 26. A provision in the bill moves the point at which the motor fuel tax is applied from the point when the fuel is received to, generally, the terminal or refinery rack, affecting who is required to report and pay the tax.

GOPC believes that other elements of the Pennsylvania reform package can and should be considered in Ohio, in order to ensure the state’s economic stability in the years ahead.

Conclusion

In conclusion, it is crucial that Ohio support and maintain a system supporting all modes of transportation. Such a robust, competitive system as outlined here today can serve as a blueprint for addressing our state’s critical infrastructure needs while simultaneously enhancing Ohio as a place where businesses can thrive and where people want to live.

Chairman McColley and members of the Transportation Subcommittee, thank you for your time and thoughtful consideration. I am happy to answer any questions you may have.