Information Pertinent to Legislative and State Department Activities Since 1906

Volume #77, Report #25, Article #02 --Wednesday, February 6, 2008

SPEECH REACTION: GOVERNOR'S BOND PLAN RAISES QUESTIONS, CONCERNS FOR GOP; DEMOCRATS PRAISE OVERALL GOALS, EDUCATION AIMS

Taking a cue from prior governors, most of whom also faced a budget crunch at some point in their tenures, Gov. Ted Strickland on Wednesday proposed that the state go further into debt in an effort to stimulate the stagnant economy and create thousands of Ohio jobs.

The Democrat one-upped his predecessors, however, in terms of the sheer scope of the $1.7 billion plan (see separate story), in the process raising eyebrows among Republicans who control both chambers of the General Assembly.

While hesitant to pass judgment pending further details, GOP leaders expressed reservations with the bid to tap the state's "credit card," especially following the $5 billion sale of the Ohio's future tobacco settlement payments.

Under that Strickland administration initiative, debt service savings realized from using the tobacco cash for K-12 school facilities were used to expand the homestead property tax exemption. Republicans were sold on that deal in part because it lowered the state's debt load.

Senate President Bill Harris (R-Ashland) and House Speaker Jon Husted (R-Kettering) had several questions about the governor's State of the State proposals, saying they had seen very few concrete details.

Both Republican leaders expressed an interest in passing a jobs bill of some sort, but Mr. Husted said the administration had advised previously that bonded revenues would not be an option for funding.

"We thought that financing with debt was off limits," he said. "This is a departure from what we were told nine months ago."

As a result, the speaker noted his proposals that seek to drive growth the alternative energy and bioscience industries were based on tax increment financing deals that wouldn't increase debt levels. He also said other industry sectors would be under consideration for support.

"We will pass an economic package that we believe is responsible," Mr. Husted said.

For their part, Democrats in the legislature and other supporters lauded the bonding plan as a visionary approach to the state's economic woes that doesn't entail a tax hike.

Lt. Governor and Department of Development Director Lee Fisher said the tobacco securitization reduced the amount of state debt, giving the governor the opportunity to issue more bonds to stimulate job creation. "We're still well below the state's debt limit, even after this bond issue will pass," he said.

Strickland spokesman Keith Dailey added later, "The governor believes that this is a relatively small investment for a big payoff of 80,000 new jobs in Ohio."

"It's not an either-or choice" in terms of paying for the homestead exemption expansion and the debt service for the proposed bond package, Mr. Dailey said.

The homestead program broadening is estimated to cost some $257 million a year. Mr. Dailey said the bond package would cost the state $152 million in the next biennium and would add debt service payments over 20 years.

"The homestead will still be paid in the same way we said originally," Mr. Dailey said. Other GRF money would be earmarked to cover the additional debt service. "If the governor demonstrated anything in the last year, he is willing to make tough choices and prioritize," he said.

In general, Republican reaction to the speech was somewhat subdued in the short term; the administration did not provide advance copies of the speech to legislative leaders. Predictably, Democratic statewide officeholders and other members of the governor's party had only positive things to say.

Legislative Democrats: House Minority Leader Joyce Beatty (D-Columbus) said the governor touched on several key policy points during his speech, including his focus on economic stimulation, education reform, energy policy, veterans issues and addressing the foreclosure problem.

"He talked about the need for change, He talked about the future. He talked about the challenges, but then he put a plan for what we need to do," she said.

"He didn't just talk about creating jobs. He specifically outlined how we would bring major players and major corporations to this state to create hundreds and hundreds of jobs."

Rep. Beatty said the governor did well in articulating a strategic response to economic challenges that have grown over more than a decade of Republican domination in the state. "How long have we heard about the number of jobs lost over the last 16 years of one party in charge," she said. "This is something he inherited. This is something we have been dealing with for the last decade-and-a-half."

Rep. Steve Driehaus (D-Cincinnati), a member of the Foreclosure Prevention Task Force, said, "I was very pleased to hear the governor mention that we will continue to move forward beyond the recommendations of the task force."

"The governor has made it crystal clear that he is not willing to stop" with the request for a voluntary compact with subprime lenders, he said, adding Mr. Strickland wants to move forward with related legislation or his rulemaking authority.

Rep. Fred Strahorn (D-Dayton) said ht the Seniors to Sophomores initiative, "One of the problems we've had is, students leave high school unprepared to do college work, then colleges have to spend money to reeducate those kids for stuff that they should have gotten in high school. So by this blending, what you'll find is that collaboration should begin to (address) some of the problem there."

Reps. Beatty and Vernon Sykes (D-Akron) endorsed the K-12 leadership change addressed in the speech. Regarding the impact on the partially elected state board, Mr. Sykes noted the legislature and executive branch leaders are accountable as elected officials.

Senate Minority Leader Ray Miller (D-Columbus) welcomed the governor's economic development proposal, saying it represented a "substantial, forward-looking" investment in Ohio's future.

The minority leader said he expected broad support for the bond issue. "Nobody's going to turn down 80,000 new jobs that are so critically needed in this economic situation," he predicted.

Sen. Miller also said he is supportive of the plan to move the Department of Education under the direct control of the governor, saying the current system of oversight doesn't produce the kind of accountability that is needed.

On the other hand, he said the education-related proposals would face greater scrutiny by the legislature. Although Sen. Miller said he's been advocating for the creation of a cabinet-level department of education for years, he added: "You've got some entrenched institutional constituencies that will have very legitimate concerns about that."

The "seniors to sophomores program" is also commendable, he said, but lawmakers have questions as to how it would be funded.

Sen. Dale Miller (D-Cleveland) said Mr. Strickland "took control" of the Statehouse agenda on Wednesday, offering concrete plans for revitalization. He said he particularly liked provisions that underscored the need for the state to offer a multi-modal transportation system that doesn't only focus on highway transport.

Sen. John Boccieri (D-N. Middletown) was pleased to hear Mr. Strickland call on the House to finish action on the energy proposal (SB 221*) that cleared the Senate last year. He said the plan would protect consumers from "raging energy prices" while also allowing Ohio to become a net exporter of energy.

Sen. Sue Morano (D-Lorain) said the state's economic resurgence would be helped by an increased focus on education, and the re-education of laid off workers. "We as Ohioans have pulled ourselves up by our bootstraps time and time again," she said.

GOP Legislative Leaders: Sen. Harris said lawmakers would have to be careful in reviewing the proposal for a restructuring of the Department of Education. He said giving control of the agency to a politically appointed official could threaten the future existence of "school choice" programs such as charter schools and vouchers.

He said, however, that if students were the central focus of the K-12 education system, choice would be preserved.

Mr. Husted recalled that last year, Mr. Strickland proposed a virtual elimination of the state's charter school and voucher programs. He said Mr. Strickland would have to provide some assurances that choice will be preserved if the legislature is to transfer control of the agency to the governor.

The speaker also pointed out that he gave a speech detailing a similar plan to boost post-secondary enrollment programs when he was sworn in as speaker last January, noting that he also pointed out that the expansion would probably help keep Ohio's brightest students in the state.

To that end, Mr. Husted said lawmakers have been working on PSEO expansion and transfer of credits within higher education. He raised concerns about the governor's suggestion that the college tuition would be free. "As we know in life, we know that nothing is exactly free," he said.

President Harris also said he supported the creation of a veterans department, saying the action could be done "without spending a penny" because all programs are already funded through various sources.

Overall, the GOP leaders said they appreciated Mr. Strickland's acknowledgement of the bipartisan work that occurred at the Statehouse over the past year.

State Auditor: Mary Taylor, recalling changes made to the measure that securitized the state's tobacco settlement payments, said the governor's bond proposal seems to include similar oversight authority for her office.

"One of our primary interests from our office's perspective is to make sure that we have the authority to independently audit the issuance" of bonds, she said. "The auditor of state's responsible for auditing every government entity in Ohio and it's important for us to maintain that independent function."

Attorney General: Marc Dann called the governor's speech "visionary," saying the bond proposal would make investments in the state that would allow Ohio to prosper.

"The capacity exists, there's no question that the need exists. Investing in infrastructure, investing in economic growth as long as it's done strategically, I think is a great idea," he said. "It's not my job to decide whether to do it, but we'll make sure that it's implemented in a responsible, fair way."

Mr. Dann also endorsed Gov. Strickland's call for a cabinet level director of education.

"Unifying the delivery of education policy in the state has worked extremely well for higher ed," he said. "So I think a similar effort on K through 12 can provide the kind of accountability that people in the state are looking for."

State Treasurer: Richard Cordray said the proposed bond issue would begin making necessary investments in the state's future. "We can't stand still because we're in economic cycles. We have to be planning five, 10, 15, 20 years in advance, and that's obviously what the governor's trying to do today."

The November ballot will accommodate two separate bond issues, the veterans' benefit bond proponent said, noting the voters have voted multiple issues in the past.

"That's doable," he said. "It's all part of the total picture. It's a question of setting priorities and I think there's plenty of room for both of these and both of these are consistent with Ohio's traditions."

Secretary of State: Jennifer Brunner said, "If I were the average citizen listening to this speech I would say that 'government's actually doing something.' It's very hopeful and it benefits ordinary people. It was a very good speech."

Gov. Strickland did not mention any of the secretary's proposals for election system changes. "I spoke with his staff ahead of time about whether that was going to be an issue. The answer was, 'no,' because really the way we're going to do this is still emerging," Ms. Brunner said. "He's very supportive but he's not addressing it specifically to give us room to work with the legislature."

Regents Chancellor: Eric Fingerhut said the governor's proposal would address the fact that bachelor's degrees aren't available from most of Ohio's many community and technical colleges and regional campuses. "And a bachelor's degree is what you need to get a job these days," he said.

"When the plan is fully implemented within 10 years, on each of these campuses within 30 miles of every Ohioan, you will be able to get not only an associate's degree, but also a bachelor's degree in the core fields that are necessary for jobs," he said of the University System of Ohio strategic plan. Schools won't offer a complete field of study, but will offer low-cost BAs in the math, science, and business disciplines that are in high demand.

The proposal to allow high school seniors to complete their final year in college would build on existing initiatives, such as the Post Secondary Enrollment Options program, Mr. Fingerhut said. Rather than the "occasional pattern," the governor's proposal would ensure that "every high school senior that they could spend the entire senior year, if the chose, on a college campus and end up with not only a high school diploma, but one year of college under their belt."

OFT: Ohio Federation of Teachers President Sue Taylor said in an interview that the governor's plan to exert more control over the K-12 education system would be a positive step considering the success the administration has had with a similar overhaul of the higher education Board of Regents.

While some education groups opposed former Gov. George Voinovich's bid to make the state board an appointed entity in the 1990s - an effort that resulted in a hybrid panel of appointed and elected members, Ms. Taylor and others said the time is now ripe for change in the primary and secondary education governance structure.

"Any time we can bring coherence and clarity to major programs, it's an important step," she said.

"I have respect for some of the members of our elected board, but frankly over the last several years they've wasted time on topics that have not benefited our students. To go for years debating intelligent design in the science curriculum did not help to elevate education in the state of Ohio. So to create some new leadership positions for primary and secondary education that gives accountability and authority to the executive and legislative branches of government can only strengthen it."

OSBA: "We applaud the governor for his stand on his core principles to strengthen public education," Ohio School Boards Association Executive Director Richard Lewis said in a statement. "Goals such as world-class schools, fostering creativity and innovation, building upon current strengths to ensure future growth and success, and teacher mentorships are crucial if our children are to compete in the global economy."

OSBA said, however, that while the group supports his commitment to education, "some caution is warranted" as the reform proposals are pursued.

"As we address organizational issues, we need to be careful not to erode the role of the State Board of Education," Mr. Lewis said. "A state school board, with elected officials accountable to the public, is one of the fundamentals of our democracy. A strong public education system, with public oversight and accountability to taxpayers, only strengthens our democratic principles."

OMA: Ohio Manufacturing Association President Eric Burkland said on behalf of the Coalition for Affordable Power, "We applaud Gov. Strickland's call for swift passage of Ohio's comprehensive energy bill. Passage of this bill will help preserve today's manufacturing jobs, and his call for new investments in energy technologies hold promise for the jobs of tomorrow."

OEC: Ohio Environmental Council Public Affairs Director Jack Shaner said in a news release, "This speech tells the world, 'Ohio is open for business - clean, green, sustainable business."

"Governor Strickland just stuck a big, green shovel in the ground for clean, sustainable industries and we are thrilled," he said. "We count nearly $1 billion in proposed investments to harvest clean fuels, produce bioproducts, redevelop downtown neighborhoods, clean up brownfields, build trails, preserve greenspace and farmland, and invest in rail infrastructure."

Buckeye Institute: President David Hansen said of the proposed bond sale, "The governor is sacrificing long-term economic growth for a short-term payoff. Bonds are not free. Future generations of Ohioans will be stuck with an ever-increasing mountain of state debt, payable with interest."

"Government has nothing to give that it hasn't already taken away from taxpayers," he added. "More government spending is not the answer. Only cuts in taxes and spending will free our state's entrepreneurs and put our economy back on a path to sustained job creation and economic growth."

Ohio LCV: "The Ohio League of Conservation Voters and the Mainstream Green Coalition would like to thank Governor Strickland for committing to invest $400 million into the Clean Ohio Fund" Executive Director Bill DeMora said in a news release.

"We will work hard to win voter approval for this and the rest of the Ohio Jobs Package so Ohioans across the state can enjoy the environmental and economic benefits of more protected greenspace and farmland, cleaner water, and brownfield clean up."

OFCC: Ohio Fuel Cell Coalition Executive Director Ken Alfred said his group "applauds Governor Strickland's continuing commitment to advanced and renewable energy technologies. The Third Frontier Fuel Cell Initiative is one example of an advanced energy sector program leading the way to new jobs in this emerging industry. We look forward to sharing in this stronger commitment."

Ohio Republican Party: Deputy Chairman Kevin DeWine issued a statement declared the speech to be "dramatically short of bold leadership."

"This is an administration that has presided over the loss of 12,000 jobs in the last year, and now they're predicting a nearly two-billion dollar budget deficit," he said. "It will take more than additional bond debt and a takeover of the education department to fix that. We've heard this speech before. His job creation plan sounds like a repackaged version of the Third Frontier program."

Ohio Democratic Party: Chairman Chris Redfern said Gov. Strickland's speech was a sharp contrast from previous years. "I've been around here for 10 years and I sat through a lot of Bob Taft's speeches, where you have nothing innovative called for. Gov. Strickland every year continues to push for reform, for innovation, for investment."

"Three or four years from now, we'll look back on this date and say, 'That's when school funding reform really began,'" he said. "This is the beginning of dramatic changes in the way we educate young people in this state.
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