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(upbeat music playing) (bell ringing) - Hello and welcome to the City Club of Cleveland, where we are devoted to conversations of consequence that help democracy thrive.

I'm Dan Moulthrop, Chief Executive here, and a proud member.

Today is July 16th, you're with our virtual City Club Friday forum.

We're live from the studios of our partner; Ideastream Public Media.

Big thanks to them.

This appears to be our last virtual Friday forum.

So just over two weeks ago, the state budget was passed after months of debate in both the Ohio House and the Ohio Senate.

This budget cycle happens, as you likely know, every two years and it ultimately determines how public resources will be spent on all of the things our communities need; things like K12 public schools, health and human services, local governments, public transit, libraries, economic development, infrastructure, and a whole lot more.

This particular budget is Governor DeWine's second budget cycle and it also comes on the heels of the state's reopening after public health precautions were put in place due to COVID-19.

This makes it one of the most vital tools to help address some of the alarming disparities and challenges Ohioans face during the course of the pandemic.

But behind all the numbers, all the mandates, all the new packages, all the new school funding formulas, what will it mean for everyday Ohioans and all of our communities?

Joining us this afternoon in our studio is Andy Chow.

He's a reporter and producer for the Ohio Public Radio Statehouse News Bureau.

Andy, it's great to see you, and it's great to have a guest in the studio.

- It's great to be here, thanks.

Also joining us from Columbus are Hannah Halbert.

She's Executive Director at Policy Matters Ohio, and Greg Lawson, he's a research fellow at the Buckeye Institute.

Welcome to the City Club both of you.

- [Hannah] Great to be here today, thanks Dan.

- [Greg] Thanks very much, wonderful to be on.

- Thank you for being with us.

So we're gonna, it's a City Club forum, so we'll spend the first half hour hearing from each of you.

And then in the second half hour, we get to questions from the audience.

And if you have questions for our panel about the state budget, you can text that question to 330-541-5794.

The number again is 330-541-5794 to text your question.

If you wanna tweet it, you can tweet it @TheCityClub and we will work it into the second half of the program.

So Hannah Halbert, I'd like to start with you.

The headlines from the budget, the big stories that came out of this budget, because it is a really different budget than what we've seen in years past.

- [Hannah] Yeah, there's some big headlines and I've heard this budget called a whole lot of things.

A mixed bag, a little bit of a confusion about how we're gonna move forward coming out of the pandemic.

One of the things that I think though is really important is that there are places in this budget that demonstrate that when people come together, raise concerns, raise issues with legislators, that show up for town halls, they send in those emails, they make those phone calls and they demand some better things for their community.

They demand those changes.

That can happen.

So we do see real improvements in the way we're going to be funding schools going forward.

Some very modest, but my goodness, very needed improvements and things like public childcare access, protections for SNAP recipients, people who need food access, things like maternal healthcare.

Basic stuff: food, health, safety of moms and babies, and educating our kids.

Those were places where people came together, made real change.

Now all of that sits on top of some really, what I think in the long run of Ohio is going to be some pretty harmful tax changes.

It's really undercutting our ability to do things like this for people to make sure we have that strong foundation both coming out of this pandemic and in, you know, in decades to come.

- Hannah Halbert is Executive Director of Policy Matters Ohio.

Greg Lawson of the Buckeye Institute.

Hannah's sort of outlined some kind of pro-family, what you might see as pro-family things in this budget, with school funding childcare and, you know, medical leave and that sort of thing, but balancing that against changes to taxation, which she does not view quite so favorably.

I imagine the Buckeye Institute has a different point of view on tax cuts for one.

- [Greg] Well, we do, and I think the reason that we do is because tax cuts in the long run, it's not just about, it's about creating the right framework for economic growth over time.

And it's about making sure people have money in their pockets over time.

And I think a lot of times we need to understand too that we're talking about overall taxes in Ohio.

Obviously the budget deals with state taxes and the state income tax and there were big changes there that Hannah mentioned but we also have to look at how this interacts with a lot of the issues with local taxes too because it's the total tax burden that is still coming out of people's wallets.

It's still coming out of Bob & Betty Buckeye's wallet, whether it's the city of Cleveland or whether it's the state of Ohio or whether it's Washington DC.

And so, you know, the state is trying to make moves to make Ohio overall more competitive so that we can create an environment where jobs will continue to come to Ohio.

And that is one of the big challenges Ohio has had for decades.

I mean, we are talking about over half a century, where Ohio has not created jobs at the rate of the national average.

And that means that Ohio is having challenges creating the opportunities because at the end of the day, government is going to need tax payers in the state to be able to pay the taxes, whatever the rates are.

And if we can't create the incentives to continue to have people coming to Ohio and stop leaving Ohio, which we're one of the top states for outbound migration, when you look at some of the moving van companies and things like that, we're gonna have a problem paying for the services that we all wanna see.

- Greg Lawson is with the Buckeye Institute, and Greg beyond the tax policy changes, which of course are, as Oliver Wendell Holmes said, what we use to purchase civilization.

What else do you see as the two other big headlines in this budget?

- [Greg] Well, I think one of them is that we did deal with a lot of school funding issues and there are some nuanced differences I'm sure that Hannah and I would have about that.

But I think that there was an investment that's made to make sure that we're getting schools there, I'd say too.

This was a big budget for empowering parents.

When you think about all of the COVID shutdowns and things that have happened over the last year and some of the gaps that were already existing for students, especially lower income and minority students that we already were suffering from pre-COVID, well, they're going to be worse because of all of the shutdown things, whatever one's thoughts are about the shutdown.

That's gonna be a problem.

We're trying to create pro-family empowerment policies that give families tools to be able to get education services.

There's a wide range of what's called school choice things that are in here that we can get into some more details later, but that is gonna be really important because children are being left behind in education.

That's true.

Now we can have some differences about how we've fund that, but we gotta fix that and we think empowering parents.

This budget was the best budget I've ever seen for putting the parents in the driver's seat for making choices for their children.

- Greg Lawson is with the Buckeye Institute.

Andy Chow, turning to you specifically to kind of tell us what these changes mean.

Tax cuts first, how much are Ohioan's taxes being cut?

- So there was a disagreement between the House and the Senate going back and forth.

Eventually they landed on a 3% tax cut across the board eliminating the highest tax bracket.

And so total tax cuts, you're seeing about $1.6 billion in total tax cuts.

The interesting thing here is that there's always this shift in the Statehouse where they're looking at, are they gonna cut taxes?

Are they gonna make investments?

And that you never really know, depending on the lawmakers, depending on the makeup of the House and the Senate where they're gonna go.

And there was really a moment there where we thought that the tax cuts were gonna be much bigger than where they landed at 3%.

The Senate wanted 5% and then we learned that there was a surplus in the budget.

And then you had Senate leaders saying, well, we wanna broaden that even beyond 5%.

They landed at 3%, then, you know, that's when you'll hear Greg and Hannah talk about what that means for Ohio, but really it does continue to move the state forward, policy-making wise in a place where they want to continue cutting taxes because they believe that's what's going to spur economic growth.

They believe that's what's going to invite more jobs to the state - Andy Chow's with the Statehouse News Bureau.

And can you briefly summarize the new school funding formula... (Andy laughing) in five hours or less?

- So it's a formula that takes into account income taxes.

It's a formula that takes into account property taxes.

It removes some of the caps.

It removes some of the denials, really.

What we're gonna see here is a formula where you can hopefully, theoretically plug in each district's numbers to come up with a plan that's more predictable, that's more reliable.

And what we're gonna see in the next couple years is is this something that's equitable?

Is this something that does seem to be fair across the board for districts, whether they're in rural areas, suburban areas and urban areas?

And so that's gonna be something that's gonna continue for the two years.

We're gonna keep an eye out on how really does this impact school districts.

- So it sounds like we all know that the school funding formula that existed prior to this budget was declared unconstitutional twice over many decades.

We know that this is a step towards solving it.

We don't yet know if this is the answer.

- We don't yet know if this is the answer.

Part of the fear from lawmakers was that it was going to, that the bill was gonna be too high, that it was gonna be a lot of money coming from the state to school districts, and where was that balance?

And for the most part, we're just not sure yet, but you have a lot of people, especially in the House, Republicans and Democrats who do believe that this is a fair funding formula, and that it's just going to take more money coming from the state to invest in certain school districts in the long run.

- Hannah Halbert at Policy Matters Ohio, part of what's happened with education policy and education funding policy is a change to how vouchers are issued and how districts and parents qualified for that.

Can you explain that a little bit and explain your point of view on it?

- [Hannah] So, you know, my concern, and I think you've heard Greg talk about parental choice and parents sort of getting to drive the bus on that.

But really when you look at the system, what we're talking about is diverting lots of state dollars into a system that is highly unaccountable.

So maybe this is a little flimsy but we all remember the testimony from a few weeks ago from the folks that were sticking quarters and keys and things to them.

And, you know, we need to have some standards.

We need to have some education standards so people can think critically and deal with the things they're facing in the world.

And we're dumping millions of dollars into a system that doesn't have accountability, that doesn't have no requirements on basic science to teach accurate history.

We don't really know how effective these programs are.

And we're doing it at the cost to our public education system, which has tons of accountability measures happening.

- But the new way in which vouchers are issued, Andy Chow maybe you can clarify this a little bit, are not as painful to local school districts as they have been in the past, because I know that there are some districts locally here in greater Cleveland that lose boatload of cash.

Every time, they lose the entire per pupil revenue when a parent decides to take a voucher and move their child into an independent school.

- Yeah, and so one way, a real simplified way of looking at it is the money would go to a local school district and then the student from that school district would then choose to go to a charter school.

So then that money that once went to the school district was then pulled out of that district to follow the student.

Now this is more of a direct line to students who decide to go to charter schools.

So there is still a question, like Hannah said about, are these school districts, are there enough standards around these charter schools?

Are there enough, is it worth sending the money?

- (indistinct) using vouchers in school districts that have sort of below, you know, subpar grades on the report card, taking those vouchers and going to a Catholic school or an independent school or something like that?

- Right, the EdChoice Scholarship Program, right.

And so I think what is seen as a good thing in the long run from Democrats and Republicans at the State House is that the funding system and then the voucher system will give more of an outlook of exactly how much money is going towards the voucher program.

Exactly how much money is going towards charter schools.

And so you do hear some school districts saying, traditional public schools saying that they're happy with more of a direct funding program.

The EdChoice thing has always been a hotly debated subject as well though.

- Andy Chow is with the Ohio Public Radio Statehouse News Bureau.

Also with us Hannah Halbert of Policy Matters Ohio, Greg Lawson of the Buckeye Institute.

We're talking about the state budget and what it means to you, what it means in your life.

This is your City Club Friday forum.

If you have a question about the budget, give us give us a text, send us a text.

I almost went into like the old school mode, give us a call.

Send us a text to 330-541-5794.

The number again, 330-541-5794 to text your question.

If you're on Twitter, please tweet it @TheCityClub and we'll work it into the program.

Another issue that popped up that, that sort of made a lot of headlines during the debate, the negotiations around the budget, Hannah Halbert had to do with Broadband access and expenditures for increased access.

This was one of the biggest problems that was brought to light at the very beginning of the pandemic when all of us and our children were relying on internet access to continue our work, continue our education.

Talk about how the outcome.

- [Hannah] So that disparity was made very obvious last year.

And initially there was money provided.

There was going to be real investment in Broadband, here in Ohio.

It should have been a pretty uncontroversial investment for folks but the Senate decided to remove those provisions, took out funding and placed lots of roadblocks into the bill to prevent municipalities from sort of figuring it out for themselves, helping their own residents, come up to speed in terms of technology.

Thankfully, because again lots of folks from around the state said, hey, wait, we need this.

Like we want this funded.

The legislature was all ultimately moved to increase that, put that money back into the budget, remove those barriers for local governments and really help us at least get a foothold on the right path to bringing folks up and starting to eliminate some of those disparities and technology access.

- Greg Lawson, how do you see it?

- [Greg] We actually were very supportive of money going into Broadband.

We think that unserved areas certainly need to have access to it.

I mean, Broadband is now the lifeblood for a lot of things.

It was teleworking telehealth, which became very important for tons of folks during the COVID pandemic, and frankly should continue to be something that is an option for a lot of people for a lot of different reasons.

And of course, education, distance learning.

I mean, it's kind of absurd when you have to have kids sitting in parking lots trying to connect because they don't have access to things at home.

We don't wanna see that happen.

And so the funding side of it is not really all that much of a concern, but in terms of the dollar amount, the one thing where I would say we do have some disagreement with my friends in Policy Matters is there need to be some kind of guardrails because when we're talking about government, what we call governmental networks or municipalities that create their own networks, there's a lot of ways that this can shake out.

But if you have government competing, and I wanna be kind of clear too, if you have government taking money and building over top of existing infrastructure that's there from private entities, I'm not sure that that's the best use of those dollars.

We wanna get those dollars, the stretch as far as we possibly can to help as many people as we possibly can.

And, you know, what we do see sometimes is wealthier communities kinda grabbing money to build their own networks out when they already have a provider, or maybe even more than one provider who's already providing services.

Now maybe they're not as happy as they want to be with that, but is that how we wanna use public dollars?

Or do we wanna use the public dollars to subsidize folks to be able to build out to the areas that aren't being served now at all?

And I think this is one of the areas where some guardrails for how the money is spent is something we probably need to have some further conversations about so we're getting all of the, so that we can help as many people as possible and not duplicate services.

And also, government, you know, there's a lot of ways that they can spend money that's not where you see it.

And they can do some sort of opaque sort of subsidization that actually costs taxpayers more money.

In other words, you're not having people pay for the service.

You're subsidizing the service and you're not being open about it 'cause you're diverting it from your municipal electric account or you're using it from your general revenue fund to back things up like that.

And these are kind of challenges that I think are problematic.

We need to get it to the unserved people, period.

That's no questions about that, but how do we make sure those dollars aren't getting siphoned off into things that aren't nearly as useful as advocates sometimes say they are.

- It's really interesting, I mean, just to stick with Broadband for a second, Andy Chow, it has become a piece of infrastructure, right?

Like it is how commerce happens now, as much as the roadways are part of how commerce happens, right, and there's no way around that.

Typically my understanding is that municipal Broadband would emerge in places where private entities have chosen not to do business.

- Right Well, the issue here is that private entities have voiced a lot of excitement and approval of wanting to go into these areas.

They just believe that they don't have the enough money at the front end of it to be worth the investment in the long run.

So you have municipalities saying, listen, if we cover the cost for a little bit of it, you come in here then we can work out a deal where it is profitable for you in the long run, maybe sort of increasing the enticement of these private sector entities.

And so that's where this money comes in from the state where they say, listen, we'll help dig the line.

We'll help get you there.

If you can finish that last mile, if you can finish that connectivity issue and really connect people at the end, we'll help with the infrastructure side of it.

But if you're gonna create a budget that cuts taxes in the interest of growing jobs, if you're gonna create a budget that sends more money to allow people to go to online charter schools, then you would think that the lawmakers are hoping to expand Broadband to really, you know, finish the leg of all of that.

So yes, you're gonna provide Broadband to more people so you can have jobs in more places around the state and online charter schools.

- So do you get the sense, well, I'll throw this out to anybody, and Greg, you first.

Do you get the sense this is enough to solve the problem?

- [Greg] I think that it is a down payment.

We probably will see more spending as time goes on on this.

I don't think this is gonna be the end of the story, but I do wanna just clarify.

I think that one thing that you do see happen in some communities is the government actually provides services.

I mean, there are cases where they lay down the fiber and then private folks riff off of the fiber that they're laying, but there are examples where the actual government is actually providing the full service themself, not just laying like dark fiber or something like that.

That is, I think, where the problem is is that when the government literally is offering the service versus being able to help folks be able to- - Greg, I wanna just ask you- - [Hannah] And thank goodness for those places.

(Hannah laughing) - Greg, I just wanna push back a little bit and ask you, in the case of Cleveland, we have a municipal-owned utility.

Now there's a lot of savings that could be found by leveraging, if you already own the poles, you already own the right of way, if you can just hang fiber along that same right of way that you're using to deliver electricity, isn't that a cost savings?

Isn't that something that we should all be in favor of if that were to happen?

- Well, I think that if you're, and I think the state has a whole Broadband plan where you can use right of way of a lot of public areas.

And so I think there is, absolutely.

And the short answer is yes, but I think again, one of the key questions is, are you laying it there and then private folks are leveraging what you're doing to provide services or are you the government body itself actually doing like, I'm doing the internet, I am providing the- - I'm picking up your trash.

- [Greg] The actual content or something like that.

- You know, but if I'm picking up your trash and I'm providing your electricity, couldn't I also do the internet?

I'm just like, I mean, philosophically.

- [Hannah] In fact it's that how many parts of America we're able to electricity at some point without the government coming in?

I know Appalachia would've been...

When I may not have electricity like 20 years ago when I was coming up.

There are places and circumstances where the market and private providers that are profit seeking just can't step in there and do it.

And so we to have room for the public sector to come in and provide those populations, those geographies access to basic services and utilities.

And no one at this point can say that the internet is anything but that kind of service, that's the role it plays.

So it just, you know, the bottom line on this Broadband is like, you know, hey, like maybe in some other place and some other time, private sector can eliminate all things, but that is not what we got here.

And there has to be a role for the public sector and we're taking the right step to get us there.

- Let's move to a few other areas that are in the budget.

And as I sort of, I said at the beginning, we're never gonna get to all of it, there's a lot.

But in terms of energy policy and support for alternative energy, renewable sources, Andy Chow, what happened with that in this budget?

- Well, I don't believe the budget really touched on that directly, but there were a lot of, you know, when the budget happens, lawmakers are moving chess pieces around making deals here and there.

And so something that happened during the budget process was a bill called SB52 which allowed local municipalities, county commissioners to decide on their own to exclude wind and solar farms.

And so that's something that is now signed into law where if your county commission is proposed a solar farm or a wind farm and it doesn't like it, they can say, no, we're going to not allow that renewable energy industry into our county or into these unincorporated zones.

And then it does allow for the county residents to hold a referendum on that.

And so that's been seen as a big step backwards for the renewable energy development.

- Greg Lawson, how does the Buckeye Institute see that?

Is that a net positive?

Is that good for the business community?

Is that good for Ohio?

- [Greg] Well, it's a mixed bag, frankly, because you have several competing things here.

What you have is, you have property rights and the rights of people to enjoy their property and one other things.

What you don't see when you have the wind and the big solar farms, it gets the large enough scale so that you can get all the hype of utilization that you want, or the amount, the generation, I should say, you want.

It can be quite challenging.

And some people feel like the clock makes their property value less.

Now other people want to use their property to put it on there because they're gonna get paid, to put, you know, a windmill on their farm.

- [Dan] It's a business.

- [Greg] And they don't like being shut down.

You've kind of got this situation where you have residents who lived away from things.

All of a sudden, you're building up this wind farm, and it's creating a challenge for what you paid for with your property and now it's hurting you, but it's helping other folks.

So you have this dynamic.

What they're trying to do is find a mechanism where the voice of the people ultimately can make that kind of a determination because, you know, and you'll hear, I know, like the gas folks, you know, you can have gas drilling and stuff that's close to the property and things like that.

And there's definitely truth to that, but it also depends on how many, what kind of gas well you're doing and how big the gas thing is.

I mean, we don't have the things like the wind that's in the sky like that.

There are issues with flickering and problems with home residents.

So they're trying to thread a needle here to be respectful on both sides.

- Do county commissioners have the same rights to veto projects, gas projects that they now have to veto with wind projects?

- [Greg] No, I don't believe they do.

- Does that feel consistent to you?

- [Greg] Well I think there is a consistency challenge there and we actually didn't really get heavily involved in that particular piece of legislation because frankly it's an issue where there are two fairly irreconcilable positions and they both sort of deal with the choices of individuals.

'Cause you gotta remember, individuals can still choose to do this and there is still a referendum capacity here.

So if enough people in a jurisdiction want to do this, you wouldn't be endjoining people from doing it if they make that voice.

But I mean, again, this comes down to sort of two different people have two different uses that they wanna use for their property.

How do you reconcile those two cases?

- Hannah, hold on a second, I wanna turn to you for a different topic if it's okay.

How did health and human services fare in the budget this year?

The year we just endured was the year of public health.

- [Hannah] Well, let me just say this question on energy real quick.

This is just picking winners and losers, and we have deeply invested in trans-traditional energy corporations, putting the thumb on the scale there.

That's sort of what writes the dissonance in those two provisions.

Hopefully Ohio can do better in the future and really sort of step up into what we're gonna need in the future, and we could not just have clean energy, but actually be a leader in cleaner, safer, better energy sources.

Get people to work on that.

- [Dan] Let me just ask before...

Hold on one second, Andy chow, just to close that out.

Does what happened there feel like the result of intense corporate lobbying?

- Absolutely, well, you have two things going on.

You have corporate lobbying and groups that did not want these wind and solar farms to go up.

And then you do have this grassroots effort.

And then there's also a question of who's funding that grassroots effort.

There's always been a question of, is there money coming in from the coal industry or the gas industry that's sort of pumping money into these grassroots things?

But you have these local residents saying we don't want wind farms in our counties.

We don't want solar farms in our county.

- Hannah Halbert, back to the other question I asked you about health and human services.

- [Hannah] Thanks, Dan, I'm sorry about that diversion.

But, you know, there were moments in this budget cycle that health and human services looked very bleak.

There were some very, to say mean-spirited just, I don't think it really captures, because it's not just mean-spirit, it's actually bad economic policy as well.

But, you know, there were rules that would've knocked people off of basic food assistance if they had certain assets.

So you might be forced to sell your beater of a car.

- [Dan] But those weren't in the final budget.

- [Hannah] And those were removed.

So some of the most troubling aspects that came up in this budget cycle were ultimately pulled.

And again, that's because a lot of people called road-showed up and said, wait, wait, wait.

Like I don't know if you intend this consequence of this policy change, but you're gonna set us back.

Now some positives.

So what did make it through again?

'Cause folks said, we need this stuff, childcare.

My goodness, Ohio has a real childcare crisis.

Average childcare expense in Cleveland, about $8000, right?

Huge.

Public childcare access has been set at about 130% of poverty for quite some time.

It was finally moved up to 142% of poverty.

So a little bit of improvement.

That's about $31,000 for a family of three.

That's gonna bring in about 6,000 kids.

So 6,000 kids, lots of parents and caretakers will now have more accessible childcare.

- That's also helpful from a jobs front too, because so many of these childcare jobs disappeared during the pandemic.

- [Hannah] Absolutely, that was one of the hardest hit places.

You know, the pandemic recession was called the she-recession because the impact on women was just tremendous from all different sorts of perspectives, all different views.

And here, you know, we get a little bit further down the road of actually providing accessible and affordable childcare.

Lots of work to do there.

We could have taken it up to 200% of poverty, pulled in the, you know, family of three, around $42,000.

It's just sort of impossible to think that we're asking women, we're asking families to spend what, in some cases, could be well over a third of their income on childcare and then go out and work in very low-paying jobs.

So that's a modest step in the right direction, lots of room to go.

Now, there was an attempt to eliminate what's called the step up to quality program as well.

And this was, you know, supposedly this attempt to make more childcare spots available, to reduce some of the requirements on childcare centers.

And that program, what it is really is a rating system.

You know, childcare providers can get more training, meet health, safety, and educational standards and get more stars, better reimbursements for what they're providing for kids and really make childcare a higher quality in the state.

That was pulled out at one point.

We were gonna do a away with that program.

Really creating a pretty gross two-tiered childcare system in Ohio.

Ultimately that was thankfully restored as well.

- I wanna just provide a little bit more context to what we've been talking about with the poverty level, that $31,000 figure, Hannah, that you mentioned is roughly what $15 an hour works out to.

And so it's, just to put it in that context of kind of, and that is a place where like, those are the wages that, if you're working at Amazon, that's what you're getting.

If you're working doing janitorial at the Cleveland Clinic, that's probably what you're getting.

- Yeah, and this is the issue is our people going to go back to work and take a minimum wage job or a job at $15 an hour, and if they do, then they do have to find some sort of childcare for their kids.

So they have to make that decision between those two things.

- We're gonna move to questions from our audience now.

If you have a question, please text it to 330-541-5794.

That's 330-541-5794.

You can also tweet it @TheCityClub and we'll work it in.

Andy Chow, how did public libraries fare in this budget?

- Public libraries, I'm not sure, hold on.

- Andy's gonna check that, I'm gonna move on to another.

- [Greg] I think they saw a small increase in the public library fund, the percentage.

There's a special fund that is a percentage of basically when you take all this major state taxes and you put 'em together, that's called the general revenue fund, really wonky term, but that's what it's called.

And so there's a percentage of that aggregate amount of money that is set aside for local governments.

And then there's something called the public library fund.

I think they did like two, it was like a 10th of a percent or something like that so there was a small increase in the public library fund.

- Which is notable because sometimes the public libraries become the target of cuts if somebody wants to find it one way or another.

And what we've seen over the past year, how important libraries have been, especially when they had to close down and people were really losing out on that important service.

- Greg Lawson, you just mentioned the local government fund, local government money.

G, this question from one of our listeners, Governor Kasich essentially killed the local government fund.

This is from the listener.

Local governments lost revenue and then had to raise local taxes to maintain services for infrastructure and other things.

This is a very pointed question.

Isn't the legislature playing a shell game when they claim to lower our taxes resulting in a patchwork of policies rates and ultimately results across the state?

I'd like to ask you to clarify though what happened with the local government fund, because that was a big piece of John Kasich's budgets.

- [Greg] It was, I think, in his first or his second budget.

I think it was his first one actually when he was first in office where he essentially did a 50% reduction.

He didn't totally kill it, but he did do a very dramatic reduction.

So it was about a 50%.

And then what they ended up doing is there's a calculation- - [Dan] 50% is like knocked out yet.

- [Greg] Yeah, and so a lot of people are very upset.

Now the argument that is used and there is, I think, some truth to this to get to the question there, that the audience member had is: part of the response that the Governor Kasich had was, we're gonna reduce state taxes.

And if you want local services, then, you know, you have the ability to raise dollars at the local level, then you can choose to do that.

Instead of having it being a revenue, basically a revenue sharing thing where somebody in Cleveland is subsidizing a Cincinnati project or a Cincinnati services.

And I mean, that was the argument and the philosophy behind what Kasich did.

I think that one of the issues that is going to be an interesting problem on an ongoing basis is the municipal income tax.

A lot of these cities are, that gets to the remote work question and issues with that, and that might be worth chatting about too.

But how is that gonna work and what does a future local government fund look like if cities start losing large amounts of revenue, because you have workers who are no longer working within the city but are working from home, working in a different city or working in a township where there's actually no local income tax?

But, you know, the question is, does this create, was it a shell game?

I don't know that it's a shell game because what Kasich was saying is, look, you can choose what services you wanna do at the local level and you can pay for 'em or you don't pay for them.

That's a choice there.

We're saying that we are going to reduce the taxes here at the state level to try to make us more competitive that way for jobs.

So I think it depends on how you wanna look at that.

It's sort of in the eye of the beholder.

But I think that there was a rationale that made sense.

Certainly a lot of people disagree with that.

And now we have to raise questions because we're seeing changes to how the local tax space operates.

And so now we're gonna have to probably have some further conversations about whether that is gonna be continued in the same way or not.

- [Dan] Andy Chow, go ahead.

- And while the local government fund was a big issue during the Kasich years, it hasn't been as much of a political football or a budget football during the DeWine years.

But so really when it comes to when we're talking about local government funding, it does go back to the municipal tax issue on the ability for commuter workers to ask for a refund on their 2021 taxes.

It remains to be seen how much of a cut that's gonna result in different city incomes or city budgets.

- [Dan] Hannah Halbert.

- [Hannah] Yeah, I lost the feed for one quick second, but let me just make a comment on the value of cities, because, you know, it is a little bit of a shell game, and it's premised on this idea that cities only are benefiting the people who are using those services in cities.

But the fact is is that cities are huge economic drivers in this state.

And that has spilled over to every one of us and to what we can and can't do here.

Now the municipal income tax, what does that stuff do too?

Like that's water, that's streets, that's really basic fire protection.

Talk about the things that you're gonna feel whenever you're living and working there.

And these proposed changes like the commuter changes, that could be pretty devastating.

Something like, what Cleveland is, what, around 360 million?

A change of 10% would be huge if that it's an estimated loss of the commuter taxes.

So it could be a big deal for those cities.

It could also be a big deal for small and midsize cities.

So again, you know, we have to think about what is the value, how do we properly pull our resources so that basic things that keep us functioning, I think Dan, you said earlier, you know, paying for the things that make a society, that we're getting those things adequately covered and fairly covered.

And the tinkering around with the muni-income taxes, it really does bring on questions of fairness.

- Yeah, I believe the quote.

I'm gonna try and remember it.

(Hannah laughs) Supreme Court Justice Oliver Wendell Holmes said, I like paying taxes, with them I purchase civilization.

But Greg, you wanted to jump in.

- [Greg] Well, I do think it's important to understand that most cities in the country don't have municipal income taxes.

Ohio is an outlier.

Only one other state has more jurisdictions that have cities that levy an income tax at the city level.

So we need to realize most cities in America do not fund it this way.

They do property taxes, some do sales taxes, there's some more revenue sharing in different areas.

There's a variety of different ways that cities do it.

So I couldn't agree more.

We need to make sure that cities have that.

- [Hannah] But that's the thing.

We're not talking about this on context of bringing up those other sources of taxes.

We're talking about this in context of decades of cutting taxes for the wealthiest in the state.

- [Greg] Well, we might need to look at how to change, look on local things though.

- [Hannah] Hey, then that's a different conversation.

But this idea that, you know, it's other places do it and they don't get those services paid for.

They're paying for 'em.

They're paying for them in another way.

But we think that in Ohio, we can just cut, cut, cut, and somehow maintain, build a kind of state that people wanna live in.

That's going to attract people from other places.

You know, we have heard job creation, job creation, job creation, decades.

It's resulted in like huge giveaways and taxes to the very wealthiest.

And we keep having sluggish job growth.

This has been the strategy for years.

It has not resulted in the changes of job growth and it certainly hasn't touched median income.

And my goodness, if you look at poverty coming out of the last recession, we barely cracked our '07 numbers.

Cleveland has some of the highest poverty rates in the nation.

So this idea that if we can just cut the taxes, somehow all of these things that we so need to make our civilization run are just gonna take care of themselves.

And we'll all have jobs and the money is gonna trickle down.

It just hasn't shown up in this state.

And, you know, we got to make this transition and we've got to start taking these things seriously.

- [Greg] I actually agree with Hannah on a number of items there.

- Go ahead.

- [Greg] That she's right that a lot of our tax cuts and a lot of our tax breaks, we have tons of tax breaks, tax loopholes, and they do benefit big companies and big things, not necessarily the folks who are gonna be the longterm job creators and not the main street jobs, by the way, like whether it's the bar, whether it's the bookstore, whether it's the antique shop on main street in downtown Westerville where I live in here in Ohio.

How are we gonna make sure that those jobs, they may not be the big ribbon cutting ceremony that the Facebook Data Center or the Amazon Web Services has, but they're jobs.

And when you look across the state, those in aggregate are more jobs than the big ticket items.

Ohio has a problem with economic development policy, where we think if we give a break to a big guy, we're gonna do it.

The reason we think tax cuts but tax reform really is what it looks like, we would close more tax loopholes to lower the rates for everybody.

That's something that I think, we totally agree on that, I think, Hannah, but we wanna see loopholes closed.

And we actually got, that's one of the bad things about it.

Yeah, but we need to be fair for everybody.

I think that's the key.

- And when we talk about this, this budget eliminated the Ohio Tax Expenditure Commission, and this is something that looked into tax loopholes that identified things that maybe weren't needed anymore to shore up some more money and cover the gap of things.

And that commission's gone now.

- Tax expenditures, just to be, Andy Chow, just explain what a tax expenditure is because it's a wonky term, but I think it's really important.

- Well, when I need to explain it, I usually reach out to Greg and Hannah and have them explain it for me.

But these are loopholes, these are specified tax expenditures, tax breaks for different companies for specific reasons.

And there are just so many in code, there are so many written out in Ohio for certain things that when you do identify and pick one thing at a time, it does add up to a lot of money that if you do get rid of them, if you get rid of the quote unquote, loopholes, that it can bring back more revenue to the state.

- But one person's loophole is another person's economic development policy.

- Right, and so that goes back to Greg's question is, if you're more targeted and what these expenditures are doing, and if you really evaluate, you know, we've been doing this expenditure for a certain industry for so long, is it really reaping the reward that the state thought it was in the first place?

And so that's what the commission did.

It is wonky, and it was super interesting to actually follow just all these different expenditures that were out there and have them identify which, that weren't really worth the investment anymore.

- A reminder that if you have a question for our panel, you can text it to 330-541-5794, or you can tweet it @TheCityClub and we will work it in.

Another question for all of you, are the resources invested in H2Ohio adequate to protect our water supply and our great lake?

Andy Chow, what's H2Ohio first all?

- Yeah, H2Ohio is a program set up, and actually like a source of revenue that the state can send money into in order to help the waterways, especially places like Lake Erie and its tributaries.

And so at this point, there are different programs in place, different clean water programs in place to help make sure that the algal bloom is contained in places like Lake Erie.

There have been increased funding for this program.

What Governor DeWine has been looking for is more of a long-term funding stream that commits to paying into it in the long-term.

That's something that hasn't really been committed to yet, but it's somewhat of something that they're looking forward to.

But if you talk to farmers, if you talk to environmentalists, they say that they're happy with H2Ohio but there's still more that could be done with it.

- Greg Lawson.

- [Greg] I think that H2Ohio makes sense.

I think that we do need to have a conversation about how we're gonna, you know, pay for it right now.

You're basically rolling over money that the state didn't spend in certain agency budgets, individual agency budgets, and you're rolling the excess or the money you didn't spend over into it.

I think is largely how things are funded now.

And that actually has worked out relatively well in this budget.

But I think that you do have a question about what's sustainable there.

And this is a big deal.

I mean, you know, one of the biggest problems we've got is run off.

When you use all the fertilizer and stuff like that, that creates the conditions for this stuff.

And we certainly, nobody wants to see what happened to Toledo a number of years back, that was a disaster and an embarrassment too.

So I think that this is something that people are still gonna have to talk about.

There's been talks of ballot issues to bond out some stuff.

I'm not sure if that's quite the right thing, but it might be.

I think we're open to having that conversation.

So it's something that is important we need to do.

- Moving on to another question here from one of our listeners, what specific change in funding public education would actually make it constitutional?

And it's sort of a historical question.

What is the thing that made it unconstitutional and how would we address that?

Hannah Halbert I know you're having trouble with the stream.

Did you hear that question?

Hannah is frozen and we seem to be disconnected from Hannah.

Andy Chow, go ahead.

- Yeah, and Greg, of course, correct me if I'm wrong, but the DeRolph case in the US Supreme or in the Ohio Supreme Court said that the funding formula, the way Ohio funds is overly reliant on property taxes.

And so what the state has been trying to do and what leaders have been trying to do is move away from that and include something like income taxes and take other things into account.

So, you know, an area that has a large amount of families who have a low income compared to high-income areas, trying to make sure that it's equitable across the board.

And so what you do hear from advocates, people who have been advocating for low income Ohioans and for higher education and better education standards, they're saying that the house funding formula is a step in that direction where it's not overly reliant on property taxes.

- Greg Lawson, anything to add to that?

- [Greg] Well, that is absolutely right.

I would say that I don't necessarily think that it was unconstitutional before they pass this.

I think that what happened is the court said, we think it's unconstitutional like in 2004, but we relinquish our jurisdiction as a court over this case, go figure it out.

And since then, the state has put a lot more money in.

And to the point that Andy raised, we now do have more going to the overall school funding system than local money.

And so there it has criss-crossed, so where it used to be the property taxes was a majority, it is no longer the majority.

Another thing the state did, which doesn't get, I think, talked about in this conversation a lot is spending, I actually don't have the number off the top of my head, but several billion dollars on infrastructure through School Facilities Commission.

And so we now have built, that was one of the big things in that DeRolph case was we had terrible buildings that had mold.

You didn't have access to technology and think, well, if you go through a lot of towns now, small towns, sometimes nicest looking building in that small town is a building that has been used through that.

I think that's something that matters.

It's not operational or day to day expenses, but that is part of the overall system.

And we have been making massive investments in that as a state.

Maybe not as much as some people think, but it has been a lot.

I think the funding formula here continues to try to move in that direction and continues to look at what, again, a local jurisdiction can raise on its own versus those that can't, 'cause there are some places that you could jack up the property tax millage to really, really high levels.

And it still is like bleeding a turnip.

So you're gonna have to figure out what you're gonna do.

And that is what the school funding system does.

And it's gonna have to do it that way.

Absolutely like changing the state constitution.

- I thank you for that very folksy metaphor.

Hannah Halbert, welcome back.

(both laughing) I'm glad to have you back.

- [Hannah] I was thinking of broadbands.

(both laughing) - Yes, Hannah Halbert would like a word with our legislators about Broadband connectivity and reliability.

- [Hannah] Yeah, that's right.

- Hannah Halbert, another question from our audience: this budget enacted one of the most homophobic laws in the country by allowing medical practitioners to refuse service claiming religious freedom.

Ohio is not a very friendly state for minorities and marginalized peoples, our audience member writes.

How do your guests feel about this new law?

And I suppose it's worth noting too that there's no actual financial budgetary, anything in this bit of legislation that found its way into the Ohio state budget.

- [Hannah] Yeah, yeah.

Quite frankly, I think it's kind of gross.

And when I think about it, I just think the moral imperative of treating people equally in our country should carry the day.

It is just such a gross imposition on the people of this state.

And it's not supported by some budgetary connection.

But really in some ways, whenever, you know, we think about some of the things that we've seen over the time of COVID, all of the sort of special interest, wealthy interests that have been dividing people and trying to push people further and further apart based on identity or belief or race.

I'm unfortunately not surprised.

I guess I'm only surprised in our legislatures' will to go along with that.

Now, the other piece of it, that is just, I just don't get it.

We're spending millions of dollars in Ohio to put up billboards, in New York, in all of these big cities, these East Coast cities advertising our so-called low co- our low tax state.

Come here, come here, come here.

You heard the governor say, oh, I think Ohio is a progressive place.

This is not welcoming at all.

Why would we think someone would come here whenever we're putting someone's health in jeopardy because of who they are?

It makes no sense.

- Greg Lawson, could you address this?

- [Greg] Well, I mean, I don't think you can, I don't understand.

I don't know any doctor, I mean, maybe there are some out there, but I don't have any doctor that would withhold services, (indistinct) somebody put for something.

I don't actually know exactly where it came from, but you can't have doctors withholding services, medical services.

I mean, they take an oath, you know, to take care of people.

The Hippocratic Oath, do no harm.

- Greg, how do you and the Buckeye Institute feel about legislators slipping non-budgetary legislation into the budget, kind of cynically knowing it's gotta pass, we have to get the budget through.

So I'm just gonna slip this thing in here to make the policy change that I wanna see.

- [Greg] It depends on what it is because you do have occasions where you slip something into a budget that has had a lot of hearings.

And it's another item that has had it.

And in some cases you've even had bills passed one chamber already that deal with it and you're basically taking a bill that's passed that has had some vetting and you're putting it in.

That's different than when you have something that has never been heard before and it doesn't have any hearings at all.

Or, you know, something that clearly was bottled up in a committee and was never gonna see the light of day.

So I think that in general, you shouldn't be putting things in there that haven't gone through a vetting process of some kind.

Now, again, there are things that get in budgets that have had a vetting in another committee because it was another piece of legislation.

And I think that that's a distinction that I think is important, but for something that hasn't had any vetting at all, I think that's not good for them.

I mean, we talked about transparency and how public dollars are spent.

You do need to have public transparency here, and now you've got the videos in every committee room so people can watch on the Ohio Channel.

They should do that.

And you can't do that if there's not been any betting at all.

- My friends at Ideastream really appreciate you mentioning log in the Ohio Channel.

Andy Chow, briefly, did the legislature slip anything, any other surprises in?

- Oh, well, they put a lot of different things in, and, you know, I think the most interesting thing about this budget is of course, every time the budget comes around, it does get stuffed with policy that has nothing to do with appropriations or allocating money.

But it was more notable this time around the version that the Senate had.

They came out with a budget that had a lot of policy and to Greg's points, things that have been discussed over and over again for the past couple of years.

And I think the notable thing is just how much was actually taken out during the Conference Committee where the House said, no, we cannot do this going forward.

And then the vetoes that DeWine made as well.

- We have to leave it there.

There is so much more to discuss, but we only have an hour.

Greg Lawson of the Buckeye Institute, Hannah Halbert of Policy Matters Ohio, Andy Chow of the Ohio Public Radio Statehouse News Bureau.

Thank you all for your time.

- Thank you.

- [Hannah] Thank you, Dan.

- It's been great having you as part of our Friday forum.

I wanna take a moment too to thank our partners at Ideastream Public Media.

They have stood by us and been absolutely indispensable in the City Club's journey through COVID.

In particular, I'd like to thank Jeff Carlton, Charles Calhoun, (indistinct) and Natalia Garcia.

They all toil behind the scenes and they make all of this possible.

They get very little credit for them, for their work and I wanna give them some credit today.

16 months ago, when we began our virtual forums, we didn't miss a beat because we have great partners here at Ideastream Public Media.

And some 70 Friday forums later here we are deeply grateful.

As I said, though, we are getting back to in-person programming.

We're live in Public Square every Tuesday this month.

And if you missed the last two Tuesdays, you have two more opportunities to join us.

This coming Tuesday on the 20th, we'll be talking about the future of essential work, and July 27th, we will hear from the head of the greater Cleveland RTA, India Birdsong.

We'll find out how public transit fared in the state budget and what the future public transit looks like.

Next Friday, we're back in person at the City Club with lunch and everything.

We'll be talking with a great panel about the leadership this moment calls for.

We're not talking candidates.

Leadership qualities are our topic.

We've got Mordecai Cargill from ThirdSpace Action Lab, Joyce Huang of MidTown Cleveland, Bob Klonk of Oswald Companies, and Ricardo Leon of Metro West Community Development Organization.

Forum is sold out but you can listen or watch right here, cityclub.org or on WCPN.

Friday, July 30th, we've partnered with the Lincoln Institute of Land Policy to talk about equitable access to our waterfronts.

We'll be joined by Eric Webster of the city of Sandusky, Freddy Collier, who does planning for the city of Cleveland and the Mayor of Euclid-Kirsten Holzheimer Gail.

You can view all of our upcoming forums and grab your tickets today at cityclub.org.

I'm Dan Moulthrop, you know, a year ago, I would end these forums by saying, stay close in your hearts if you can't be close in person.

Today, I'll end by saying this, I'll see you soon.

Our forum is adjourned.

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