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Bad news for Columbus this week, as the Democratic National Committee announced it would be taking its 2016 convention to Philadelphia. The day of the announcement, Ohio Democratic Party Chair David Pepper appeared with his GOP counterpart, Ohio Republican Party Chair Matt Borges, before members of the Ohio Newspaper Association. And there are now three potential ballot issues on legalizing marijuana in Ohio.

Gov. John Kasich's budget is getting a going-over from lawmakers on the House Finance Committee, and this week those legislators grilled members of the governor's team dealing with Medicaid about Medicaid expansion, and Tax Commissioner Joe Testa about the shift in reliance on income taxes to consumption or sales taxes, including an increase in the state sales tax and the commercial activity tax or CAT, and hikes in the taxes on tobacco and oil and gas drillers. To consider that and much more, two of Ohio's leading budget gurus talk about what they see and don't see in this budget. Neil Clark is the former chief financial officer of the Ohio Senate Republican Caucus. And Bill Shkurti was the state budget director under Democratic Gov. Richard Celeste.

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00:00:00	>> SUPPORT FOR THE STATEWIDE BROADCAST OF "THE STATE OF OHIO"
00:00:02	COMES FROM THE LAW OFFICES OF PORTER, WRIGHT, MORRIS AND
00:00:10	ARTHUR, LLP, HELPING BUSINESS AND INDIVIDUALS WITH COMPLEX
00:00:11	LEGAL PROBLEMS IN OHIO, ACROSS THE COUNTRY, AND AROUND THE
00:00:12	WORLD -- ONLINE AT PORTERWRIGHT.COM.
00:00:14	AND FROM THE OHIO EDUCATION ASSOCIATION, REPRESENTING
00:00:16	120,000 MEMBERS, WHO WORK TO INSPIRER THEIR STUDENTS TO THINK
00:00:18	CREATIVELY AND EXPERIENCE THE JOY OF LEARNING -- ONLINE AT
00:00:20	OHEA.COM. KAREN: OHIO MAY BE A SWING
00:00:24	STATE, BUT IT WILL HOST ONLY ONE POLITICAL CONVENTION NEXT YEAR.
00:00:26	AND TWO LONGTIME BUDGET EXPERTS TEAR INTO THE STATE BUDGET AND
00:00:29	SAY WHAT THEY SEE IN IT FOR THE FUTURE.
00:00:30	ALL THIS WEEK IN "THE STATE OF OHIO."
00:00:33	[CAPTIONING PERFORMED BY THE NATIONAL CAPTIONING INSTITUTE,
00:00:37	WHICH IS RESPONSIBLE FOR ITS CAPTION CONTENT AND ACCURACY.
00:00:39	VISIT NCICAP.ORG] BAD NEWS FOR COLUMBUS THIS WEEK,
00:00:44	AS THE DEMOCRATIC NATIONAL COMMITTEE ANNOUNCED IT WOULD BE
00:00:48	TAKING ITS 2016 CONVENTION TO PHILADELPHIA.
00:00:51	CITY LEADERS CLAIMED COLUMBUS CAME OUT OF THE BID SHINING, AND
00:00:55	STILL HAS WHAT MAYOR MIKE COLEMAN CALLED "SWAGGER," BUT
00:00:58	IT'S A DISAPPOINTMENT FOR MANY ON BOTH SIDES, BECAUSE OF THE
00:01:02	POTENTIAL ECONOMIC IMPACT AND NATIONAL EXPOSURE.
00:01:05	THE DAY OF THE ANNOUNCEMENT, OHIO DEMOCRATIC PARTY CHAIR
00:01:07	DAVID PEPPER APPEARED WITH HIS GOP COUNTERPART, OHIO REPUBLICAN
00:01:10	PARTY CHAIR MATT BORGES, BEFORE MEMBERS OF THE OHIO NEWSPAPER
00:01:13	ASSOCIATION. PEPPER SAID HE WAS DISAPPOINTED,
00:01:15	ESPECIALLY SINCE CLEVELAND WILL BE HOSTING THE 2016 REPUBLICAN
00:01:18	CONVENTION THE WEEK BEFORE THE DEMOCRATS' EVENT.
00:01:22	CHAIR PEPPER: THEY HAVE A WEEK TO DO SOMETHING THAT IS VERY
00:01:27	IMPORTANT, AND A WEEK OF ATTENTION NATIONALLY ON OHIO,
00:01:33	BUT THEY ALSO HAVE A WEEK TO DO WHAT WE WOULD HAVE WANTED TO
00:01:36	HAVE DONE, ORGANIZE AND ENERGIZE EURO VOTERS, AND COMMUNICATE TO
00:01:41	PEOPLE WHO MIGHT NOT BE THE INSIDE VOTERS, BUT INDEPENDENTS,
00:01:47	AND IT IS A BIG HELP TO HAVE THAT WEEK.
00:01:48	I FEEL GOOD ABOUT OHIO FOUR DEMOCRATS EITHER WAY, BUT
00:01:53	OBVIOUSLY NOT HAVING THAT WEEK, AS CHAIR BROWN SAID EARLIER, IS
00:01:57	A LOST OPPORTUNITY. WE WILL MAKE UP THE DIFFERENCE
00:01:59	IS -- DIFFERENCES AND IN THE END , WE WILL HAVE PRESIDENTIAL
00:02:06	CANDIDATES IN OHIO A WHOLE LOT. THERE WILL BE OTHER
00:02:12	OPPORTUNITIES IN THE SUMMER AND FALL OF NEXT YEAR TO MAKE SURE
00:02:16	CANDIDATES ARE COMMUNICATING, BUT IT CERTAINLY IS A LOST
00:02:21	OPPORTUNITY. CHAIR BORGES: CANDIDATES WILL
00:02:30	COME TO THIS STATE, THEY ALWAYS DO.
00:02:32	WE ARE FORTUNATE. THE PRIMARY DEBATE -- THE FIRST
00:02:37	IS ACTUALLY THIS AUGUST. CAN YOU BELIEVE IT IS UPON US?
00:02:40	IN SIX MONTHS, WE BE HOSTING THE FIRST DEBATE AMONG THE
00:02:44	REPUBLICAN PRIMARY CANDIDATES HERE IN OHIO.
00:02:48	IT WILL ALSO BE IN CLEVELAND, AND ANOTHER HONOR FOR US.
00:02:52	YOU'LL GET TIRED OF SEEING THE CANDIDATES FOR PRESIDENT, VICE
00:02:57	PRESIDENT, WHAT NOT, COME THROUGH THIS STATE OVER THE NEXT
00:03:02	20 MONTHS OR SO. SO, THERE WILL BE PLENTY OF
00:03:05	THAT. THERE IS ANOTHER ASPECT THAT IS
00:03:09	IMPORTANT FOR US. WE WILL BE TAKING THIS
00:03:12	CONVENTION TO A PART OF THE STATE THAT, CANDIDLY, IS NOT
00:03:15	ALWAYS THE BEST PERFORMING AREA FOR REPUBLICANS.
00:03:18	WE HAVE AN OPPORTUNITY TO GO TO A PART OF THE STATE THAT MAYBE
00:03:23	HAS AN OPINION OF THE REPUBLICAN PARTY THAT HAS NOT ALWAYS BEEN
00:03:27	THE BEST FOR US, AND WE CAN SHOW THEM A DIFFERENT SIDE OF THE
00:03:31	REPUBLICAN PARTY. WE HAVE AN OPPORTUNITY TO DO
00:03:33	THIS. WE CANNOT LET THIS OPPORTUNITY
00:03:35	GO BY. KAREN: THIS WAS THE CHAIRS'
00:03:38	FIRST APPEARANCE TOGETHER IN THOSE POSITIONS, AND, AS
00:03:40	EXPECTED, THEY SAID SOME INTERESTING STUFF.
00:03:42	WE'LL HAVE MORE FROM THEM NEXT WEEK.
00:03:43	THERE ARE NOW THREE POTENTIAL BALLOT ISSUES ON LEGALIZING
00:03:46	MARIJUANA. THE GROUP RESPONSIBLE OHIOANS
00:03:49	FOR CANNABIS FILED PAPERWORK FOR A CONSTITUTIONAL AMENDMENT FOR
00:03:52	THE 2016 BALLOT. IT WOULD ALLOW ANYONE TO GROW
00:03:55	AND SELL MARIJUANA, SIMILAR TO THE PROPOSAL FROM THE OHIO
00:03:58	RIGHTS GROUP, WHICH IS TIED WITH THE NATIONAL ORGANIZATION FOR
00:04:02	THE REFORM OF MARIJUANA LAWS, OR NORML.
00:04:05	THAT GROUP HAS BEEN WORKING ON AN AMENDMENT FOR SOME TIME, AND
00:04:08	RESPONSIBLE OHIOANS FOR CANNABIS SAYS IT'S STEPPING IN BECAUSE
00:04:10	IT'S WORRIED THE OHIO RIGHTS GROUP WON'T BE ABLE TO GET THE
00:04:14	REQUIRED SIGNATURES IN TIME FOR NEXT YEAR'S BALLOT.
00:04:17	MEANWHILE, THE GROUP RESPONSIBLEOHIO PUT OUT ITS LIST
00:04:20	OF THE 10 SPECIFIC GROWING SITES THAT WILL BE PERMITTED IN THE
00:04:23	CONSTITUTIONAL AMENDMENT. THEY WILL BE IN BUTLER,
00:04:30	CLERMONT, FRANKLIN, HAMILTON, LICKING, LORAIN, LUCAS,
00:04:32	MONTGOMERY, STARK AND SUMMIT COUNTIES.
00:04:34	RESPONSIBLEOHIO PLANS TO PUT ITS MUCH MORE REGULATED BALLOT ISSUE
00:04:37	BEFORE VOTERS THIS YEAR, THOUGH IT HASN'T FILED PAPERWORK OR
00:04:40	STARTED GATHERING SIGNATURES. GOVERNOR JOHN KASICH'S BUDGET IS
00:04:44	GETTING A GOING-OVER FROM LAWMAKERS ON THE HOUSE FINANCE
00:04:47	COMMITTEE, AND THIS WEEK THOSE LEGISLATORS GRILLED MEMBERS OF
00:04:51	THE GOVERNOR'S TEAM DEALING WITH MEDICAID ABOUT MEDICAID
00:04:53	EXPANSION, AND TAX COMMISSIONER JOE TESTA ABOUT THE SHIFT IN
00:04:56	RELIANCE ON INCOME TAXES TO CONSUMPTION OR SALES TAXES,
00:05:00	INCLUDING AN INCREASE IN THE STATE SALES TAX AND THE
00:05:03	COMMERCIAL ACTIVITY TAX OR CAT, AND HIKES IN THE TAXES ON
00:05:06	TOBACCO AND OIL AND GAS DRILLERS.
00:05:08	TO CONSIDER THAT AND MUCH MORE, ONCE AGAIN, I'M SO PLEASED THAT
00:05:11	TWO OF OHIO'S LEADING BUDGET GURUS ACCEPTED MY INVITATION TO
00:05:13	BE HERE AND TALK ABOUT WHAT THEY SEE AND DON'T SEE IN THIS
00:05:16	BUDGET. NEIL CLARK IS THE FORMER CHIEF
00:05:19	FINANCIAL OFFICER OF THE OHIO SENATE REPUBLICAN CAUCUS.
00:05:22	AND BILL SHKURTI WAS THE STATE BUDGET DIRECTOR UNDER DEMOCRATIC
00:05:26	GOVERNOR RICHARD CELESTE. THANK YOU BOTH FOR BEING HERE
00:05:31	AGAIN. I REALLY APPRECIATE IT.
00:05:32	LET'S START WITH THIS BUDGET COMPARED TO THE PREVIOUS TWO
00:05:38	BUDGETS, HOW IT COMPARES AND YOU SEE SOME DIFFERENCES.
00:05:40	THE ONE THING THAT STANDS OUT FOR ME IS THIS SEEMS TO BE A
00:05:43	CONTINUATION OF THE GOVERNOR'S IDEA OF MOVING TAXES AND A
00:05:48	RELIANCE ON INCOME TAXES TO A RELIANCE ON CONSUMPTION OR SALES
00:05:53	TAXES. NEIL, LET ME START WITH YOU.
00:05:56	YOU HAD SAID NO MAJOR STATE IS DOING THIS, AND IT WAS NOT CLEAR
00:06:02	HOW IT WOULD WORKED OUT. YOU HAD ARGUED FOR A FLAT TAX
00:06:06	AND SENT TO MANY TAXES WERE BEING PASSED ON TO INDIVIDUALS.
00:06:08	NOW THAT WE HAVE GONE THROUGH DIFFERENT STAGES, HOW DO YOU
00:06:13	THINK IT IS GOING? NEIL: ARE YOU SAYING I WAS
00:06:16	RIGHT? [LAUGHTER]
00:06:17	KAREN: I WILL LET YOU SAY THAT. NEIL: WHAT THE GOVERNOR DID A
00:06:25	FEW YEARS AGO -- A BROAD-BASED INCREASE, NO STATE HAS COMPLETED
00:06:30	THE TASK. HE IS SHIFTING NOW FROM USING A
00:06:33	LOWER INCOME TAX WITH REVENUE COMING IN FROM THE COMMERCIAL
00:06:37	ACTIVITY TAX AND A SALES TAX ACROSS THE BOARD INCREASE.
00:06:42	THE THING THAT YOU ARE FACING YOURSELF IS WHAT OCCURS DURING
00:06:48	THE TIME OF A RECESSION WHEN YOU HAVE PUT SO MUCH RELIANCE ON A
00:06:52	SALES TAX AND VERY LITTLE RELIANCE ON AN INCOME TAX.
00:06:56	YOU FIND THAT USUALLY IN A RECESSION CONSUMPTION IS THE
00:07:01	FIRST TO GO. YOU HAVE A SERIOUS DRAW ON YOUR
00:07:05	INCOME BY THAT PARTICULAR PHILOSOPHY.
00:07:07	I THINK THIS BUDGET IS A LOT OF RETREAD, A LOT OF THINGS HE DID
00:07:12	NOT HAVE BEFORE, WHETHER IT IS A CIGARETTE TAX, INCOME TAX
00:07:19	REDUCTIONS, COMMERCIAL ACTIVITY INCREASES, SALES TAX ON SERVICES
00:07:23	-- IT IS A REPEAT. WHEN YOU LOOK AT LBO, LSC CAME
00:07:26	OUT WITH A REPORT THAT SAID IF YOU DID NOTHING -- NO TAX
00:07:32	INCREASES, NO TAX REDUCTIONS, YOU WOULD HAVE $200 MILLION PER
00:07:37	YEAR TO SPEND ON REVENUE. ESSENTIALLY DOING NOTHING IS
00:07:44	ESSENTIALLY THE BETTER PLAY. KAREN: COMPARING THIS BUDGET,
00:07:53	YOU SAID IN 2013 IT WAS UNCLEAR HOW IT WOULD AFFECT LOWER INCOME
00:07:55	OHIOANS AND THAT WAS CLEAR EVIDENCE THAT CUTTING INCOME
00:08:00	TAXES WAS NOT THE BEST WAY TO GROW THE ECONOMY.
00:08:01	WHAT DO YOU THINK NOW QUESTION MARK BILL: -- NOW?
00:08:05	BILL: BIGBILL: PICTURE WISE, IT IS SIMILAR.
00:08:12	I WILL GIVE HIM CREDIT ON JOB TRAINING AND SO FORTH.
00:08:16	WHAT I FIND FASCINATING, IF YOU LOOK AT THE SPENDING SIDE WITHIN
00:08:21	A CERTAIN AMOUNT IT IS A FAIRLY NONIDEOLOGICAL BUDGET.
00:08:25	THERE ARE SOME THINGS DEMOCRATS COULD SUPPORT.
00:08:29	NOT EVERYTHING. IT IS A THOUGHTFUL APPROACH.
00:08:32	THE REVENUE SIDE IS A VERY IDEOLOGICALLY DRIVEN APPROACH.
00:08:36	THE CONSERVATIVE MANTRA OF REDUCING INCOME TAXES, RAISING
00:08:41	CONSUMPTION TAXES, AND I HOPE WE CAN GET INTO THIS IN MORE DETAIL
00:08:43	LATER, I THINK THIS IS SETTING UP, EITHER THIS GOVERNOR IN THE
00:08:48	SECOND HALF OF HIS SECOND TERM, OR WHOEVER THE NEXT GOVERNOR IS,
00:08:52	FOR A BIG FALL WHEN THE ECONOMY TURNS AROUND.
00:08:54	WHEN THE ECONOMY IS GROWING, IT TAPERS OFF A LOT OF THINGS.
00:09:01	IT WILL NOT GO ON FOREVER. THE DECISIONS THEY MAKE NOW WILL
00:09:05	AFFECT THINGS TWO, FOUR, SIX YEARS OUT, AND POLITICIANS ARE
00:09:12	NOT GOOD AT WORRIED ABOUT WHAT HAPPENS.
00:09:13	NEIL: IN THE GOVERNOR'S COMMENTS, HE SAID IF ANYONE HAS
00:09:19	ANY IDEAS, COME TO THE STATE HOUSE WHILE I AM HERE.
00:09:21	[LAUGHTER] I POSTED ON FACEBOOK YOU COULD
00:09:25	GO TO A FLAT TAX OF 2.5%, JUST LIKE OTHER STATES LIKE INDIANA,
00:09:33	ILLINOIS, MICHIGAN, AND PENNSYLVANIA, AND EXEMPT
00:09:36	EVERYONE UNDER $50,000, AND STILL HAVE THE SAME KIND OF
00:09:39	REVENUE TODAY IN YOUR COFFERS, ALMOST TO THE PENNY, BY JUST
00:09:44	DOING THOSE THINGS, SO THAT NO ONE IN THIS STATE WOULD PAY
00:09:47	INCOME TAX IF THEY HAD INCOME BELOW $50,000.
00:09:49	I DO NOT THINK WE LOOK AT REALLY GOOD ALTERNATIVES, LOOKING AT
00:09:54	HOW WE CAN BEST SUIT THE PUBLIC. WE HAVE A $1 BILLION SURPLUS
00:09:57	POSTED YESTERDAY. TAKE THE $1 BILLION SURPLUS, PUT
00:10:01	IT INTO A FUND, AND GIVE EVERY PERSON THAT HAS COLLEGE DEBT A
00:10:07	$5,000, $7,000 TAX CREDIT AS LONG AS THEY STAY IN OHIO.
00:10:10	WITHIN A FEW YEARS, MOST OF OUR PEOPLE LIVING HERE WOULD NOT
00:10:15	HAVE THE COLLEGE DEBT STRENGTHEN THEIR ABILITY TO BUY HOMES,
00:10:20	CARS, AND FIND BETTER EMPLOYMENT.
00:10:22	KAREN: LET ME ASK ABOUT THE RAINY DAY FUND.
00:10:25	THERE IS ALREADY 1,000,000,000.5 THERE NOW.
00:10:29	-- IS THAT ENOUGH? BILL: I DO NOT THINK SO.
00:10:37	THE EXPENSE OF THIS LAST RECESSION SHOWS YOU PROBABLY
00:10:39	NEED MORE LIKE 10% OR 50% OF YOUR BUDGET IN A MANY DAY FUND
00:10:44	RATHER THAN 5%. I GIVE THEM CREDIT, BUT I DO NOT
00:10:48	THINK IS ENOUGH. KAREN: BOTH SIDES SAY THEY
00:10:51	SHOULD USE IT FOR TAX CUTS. NEIL: WHAT BILL IS SAYING -- THE
00:10:56	PROBLEM IS WHEN YOU HAVE 3 MILLION PEOPLE -- 3 MILLION
00:11:00	OHIOANS RIGHT NOW ARE ON MEDICAID.
00:11:03	THAT IS AN ECONOMY WITH 4.8% UNEMPLOYMENT.
00:11:06	WHAT YOU THINK HAPPENS WHEN THAT GOES UP TO 7%?
00:11:12	THE NUMBER WILL GO FROM 3 MILLION TO 4 MILLION, AND THAT
00:11:17	COST ALONE WILL EAT UP THE $1.5 BILLION IN SIX MONTHS.
00:11:19	KAREN: IS THAT A HARD SELL? BILL: POLITICALLY, A HARD SELL.
00:11:24	THE PRO-SPENDING PEOPLE WANT THE SURPLUS USED FOR SPENDING.
00:11:30	FROM A SHORT RANGE VIEW, THEY ARE ACTUALLY CORRECT, BUT IF
00:11:33	YOU'RE LOOKING AT WHAT IS GOOD FOR THE PEOPLE A WHILE IN TERMS
00:11:37	OF STABILIZING THE STATE BUDGET, YOU LOOK AT -- YOU NEED TO DEAL
00:11:42	WITH AFFECTED THE ECONOMY COMES AND GOES.
00:11:44	THE POLITICAL TALK -- ANY GOVERNOR, REPUBLICANS AND
00:11:47	DEMOCRATS DON'T DO IT -- HOW THEY TURN AROUND JOBS, OHIO IS
00:11:52	STILL CAUGHT UP IN WHAT HAPPENS NATIONALLY.
00:11:53	NEIL: WHAT I DO LIKE TO THE GOVERNMENT HAS DONE, UNLIKE
00:11:57	OTHER GOVERNORS, HE GOES IN, GETS A SURPLUS, REDUCES THE
00:12:01	PERMANENT RATES. HE HAS GONE AHEAD AND MADE SURE
00:12:05	IT WAS NOT GIVING YOU TEMPORARY TAX CUTS.
00:12:07	HE WAS GIVING YOU PERMANENT TAX CUTS.
00:12:08	THAT IS IN HIS QUEST TO GET OHIO DOWN TO A VERY LOW INCOME TAX.
00:12:13	INCOME TAX WHEN HE WAS A STATE SENATOR WAS 3.5%.
00:12:16	KAREN: A LEVEL YOU WOULD LIKE TO SEE OHIO RETURN TO.
00:12:20	NEIL: >> -- I WOULD LIKE TO SEE ABOUT 3%.
00:12:26	KAREN: ARE THE PERMANENT CUTS RISKY?
00:12:30	NEIL: THEY ARE VERY RISKY, BUT WHAT IT IS SUPPOSED TO FORCE YOU
00:12:38	TO DO IS CUT EXPENSES. RIGHT NOW, TODAY, WE ARE NOT
00:12:42	PAYING FOR MEDICAID EXPANSION. SOMEDAY WE WILL PAY FOR MEDICAID
00:12:44	EXPANSION. WHEN YOU HAVE THESE CASELOADS
00:12:47	AND PEOPLE ARE ON THERE -- 3 MILLION PEOPLE ON CASELOADS, AND
00:12:52	YOU ALL OF A SUDDEN SAY I AM TAKING THAT AWAY, YOU WILL HURT
00:12:53	A LOT MORE FAMILIES IN WAYS YOU EVER -- NEVER EXPECTED.
00:12:57	YOU NEED TO GET A PLAN IN PLACE THAT PUTS THE GUARDRAILS AROUND
00:13:02	MEDICAID EXPANSION, OTHERWISE YOU ARE HEADED FOR A DISASTER.
00:13:04	KAREN: LET ME ASK ABOUT THAT -- WHAT HAPPENS WHEN THE FEDERAL
00:13:09	GOVERNMENT START SCALING BACK THEY ARE PAYING QUESTION MARK --
00:13:13	PAYING? BILL: IT HAS TO COME FROM
00:13:19	SOMEWHERE. I SUPPORTED THE GOVERNOR FOR
00:13:21	WHERE OHIO ISN'T WHAT THE FEDS WERE OFFERING.
00:13:23	YOU NEED TO LOOK AT THE DUPLICATIONS -- APPLICATION
00:13:27	SPIRIT WHAT I WOULD DISAGREE WITH NEIL CLARK ABOUT IS THE
00:13:30	IMPACT OF TAX CUTS ON THE STATE ECONOMY.
00:13:33	IF YOU LOOK AT JOB GROWTH SINCE JOHN KASICH HAS BECOME GOVERNOR
00:13:35	-- FOUR PLUS YEARS DOING THIS -- OHIO'S JOB GROWTH IS LAGGING THE
00:13:42	NATIONAL AVERAGE. THE STATEHOUSE REPUBLICANS LIKE
00:13:43	TO PICK ON NEW YORK, CALIFORNIA, COLORADO, BUT THEY HAVE ALL HAD
00:13:50	GREATER JOB GROWTH AND WE HAVE, AND IF YOU LOOK AT KANSAS, WHERE
00:13:52	SAM BROWNBACK TOOK THIS CUT TO THE EXTREME, THEY ARE IN
00:13:59	TROUBLE. WISCONSIN IS IN TROUBLE.
00:14:00	NEW JERSEY IS IN TROUBLE. THESE ARE ALL REPUBLICAN
00:14:05	GOVERNORS THAT PRAYED AT THE ALTAR OF TAX CUTS SOLVE
00:14:06	PROBLEMS. KAREN: THE FLORIDA TAX SYSTEM
00:14:11	HAS IN JOB GROWTH. BILL: TEXAS HAS SEEN JOB GROWTH
00:14:17	NO MATTER WHAT BECAUSE OF THE STUFF THAT IS UNDERGROUND THERE,
00:14:19	THE MILITARY INSTALLATIONS THAT WE PAY FOR.
00:14:22	FLORIDA HAS TOURISM. FLORIDA ALMOST WENT BUST.
00:14:26	NEIL: THEY HAVE 100 MILLION PEOPLE VISITING EVERY YEAR AND
00:14:33	POPULATION BASE OF 18 MILLION. SO, FIVE TIMES THE POPULATION
00:14:37	COMES IN. WHEN YOU ARE WALKING DOWN THE
00:14:39	STREET, THERE IS A GOOD CHANCE THEY ARE NOT EVEN A FLORIDIAN,
00:14:44	BUT THAT IS WHAT MAKES THEIR ECONOMY SO STRONG.
00:14:46	IT IS A SUNNY STATE WITH A LOT OF ENTERTAINMENT VALUE, A LOT OF
00:14:49	ATTRACTIONS THAT BRING IT THERE. WE DO NOT HAVE THAT HERE.
00:14:51	WE CAN SAY THAT CLEVELAND IS BETTER OFF THAN IT WAS A FEW
00:14:55	YEARS AGO, THAT WE ARE REBUILDING OHIO, BUT OHIO WILL
00:15:00	NEVER BE THE PRODUCTION STATE THAT IT ONCE WAS IN
00:15:02	MANUFACTURING. WE NEED TO ACCEPT THAT, BUT THAT
00:15:06	ISTO HAVE WAGES BELOW STANDARD. IT IS NO EXCUSE TO HAVE MINIMUM
00:15:11	WAGE JOBS AS THE PROVIDING SOURCE OF THE MAJORITY OF NEW
00:15:16	JOBS IN OHIO. KAREN: LET ME ASK ABOUT HOW WE
00:15:21	GET NEW REVENUE IN IF WE OFFSET AGAINST TAX CUTS DOWN TO THREE'S
00:15:27	. WHAT IS THE RIGHT WAY --
00:15:30	SEVERANCE TAX? NEIL: WHEN BILL AND I WERE HERE,
00:15:36	THE EQUATION WAS 60/40. THAT IS NOT THE CASE TODAY.
00:15:42	IF YOU WANT TO EQUALIZE THE TAX STRUCTURE IN THIS STATE, YOU
00:15:44	HAVE TO REALIZE THAT BUSINESSES HAVE TO PAY THEIR FAIR SHARE
00:15:47	UNDER THE COMMERCIAL ACTIVITY TAX.
00:15:49	I AGREE WITH THE GOVERNOR DID -- INCREASE IT.
00:15:52	I AGREE WITH THE GOVERNOR DID, GIVING TAX CREDITS TO PEOPLE
00:15:56	WITH INCOMES OF $40,000 OR LESS. I AGREE WITH THE GOVERNOR ON
00:15:59	CIGARETTES, AND A FEW OTHER ADJUSTMENT.
00:16:02	THE REST OF IT, ACROSS THE BOARD SALES TAX, I DO NOT AGREE WITH.
00:16:06	I DO NOT AGREE WITH A BIG, WEBBING, PERSONAL INCOME TAX-CUT
00:16:11	OR THE SEVERANCE TAX. KAREN: REALISTICALLY, HOW LIKELY
00:16:16	IS IT SOME OF THESE TAXES WILL GO THROUGH?
00:16:18	BILL: HE WILL HAVE A TOUGH SELL BECAUSE IT PUTS HIM IN THE
00:16:25	POSITION OF VOTING FOR A TAX INCREASE EVEN THOUGH THERE IS A
00:16:27	REDUCTION SOMEWHERE ELSE. WHERE HE MIGHT PICK UP SUPPORT
00:16:30	-- PERHAPS FROM DEMOCRATS -- A LOT OF THEM WILL BE RELUCTANT TO
00:16:34	VOTE FOR SOME OF THIS AS WELL. TAKE SOMETHING LIKE THE
00:16:36	CIGARETTE TAX OR THE FRACKING TEXT -- WHICH I AGREE, THOSE
00:16:40	GUYS CAN AFFORD TO PAY A LOT MORE -- BUT THE CIGARETTE TAX IS
00:16:43	A DECLINING REVENUE BASE. THE FRACKING TAX IS AN ERRATIC
00:16:48	REVENUE-BASED OR THE INCOME TAX IS A REVENUE BASE THAT GROWS OF
00:16:51	THE ECONOMY. IF YOU REPLACE THESE IN THE END,
00:16:55	YOU ARE CREATING A PROBLEM FOR SOMEONE ELSE DOWN THE ROAD WHEN
00:16:57	THE ECONOMY SLOWS DOWN. THAT IS WHY THE DECISIONS THEY
00:17:00	MAKE -- THEY WILL DO SOMETHING -- THAT TRACK RECORD SO FAR IS
00:17:04	THAT THE LEGISLATURE HAS NOT ACCEPTED A RIQUNA GOVERNOR HAS
00:17:06	DONE, BUT THEY HAVE DONE ENOUGH THAT HE CAN DECLARE A VICTORY.
00:17:10	IN THE END THEY WILL WORK SOMETHING OUT WHEN THEY ALL LOOK
00:17:13	GOOD, BUT I THINK THEY'RE GETTING DANGEROUSLY CLOSE TO
00:17:15	MORTGAGING THE STATE'S FUTURE. NEIL: THEY NEED TO LOOK AT THE
00:17:23	UNITED STATES -- AS A LAVOY FROM THE REVENUE DISCRETION,
00:17:24	VARIABLES TO ADDRESS -- MEDICAID AND WHAT HE PLANS TO DO ON
00:17:28	PRIMARY AND SECONDARY EDUCATION FROM SHIFTING FROM CERTAIN
00:17:31	SCHOOL DISTRICT. I HAVE NOT HEARD MANY IN THE
00:17:34	STATE HOUSE SAY THAT WAS A GOOD IDEA.
00:17:36	IT WAS FUNNY. I GUESS ON A PHONE CALL, THE
00:17:39	GOVERNOR SAID TO LEGISLATORS DO NOT LOOK AT THE CHARTS BECAUSE I
00:17:43	NEVER DID WHEN I WAS A MEMBER. [LAUGHTER]
00:17:44	I WAS A STAFFER IN 1980. WHERE IS THE PRINTOUT?
00:17:50	I REMEMBER DON TEBOW SAYING WHAT ABOUT WESTERVILLE, WORTHINGTON?
00:18:01	I DO NOT NEVER PEOPLE SAYING WE DO NOT CARE ABOUT THE CHARTS.
00:18:02	KAREN: LET'S TALK ABOUT THE SCHOOL FUNDING FORMULA.
00:18:04	HE IS TRYING TO HELP SCHOOL DISTRICTS ANYMORE HELP THAT HAVE
00:18:09	LOWER PROPERTY WEALTH AND LOWER INCOME, AND TAKING AWAY MONEY
00:18:12	FROM DISTRICTS THAT HAVE HIGHER PROPERTY WEALTH AND INCOME.
00:18:16	THE FORMULA DOES NOT SEEM TO BE ENTIRELY THAT WAY, THOUGH.
00:18:18	HALF OF THE DISTRICTS IN THE STATE WILL BE GETTING LESS MONEY
00:18:23	IN THIS BUDGET AND SOME THAT DO NOT SEEM TO FIT THAT DISCRETION.
00:18:25	SO, WHAT IS GOING ON HERE? BILL: A COUPLE OF THINGS --
00:18:31	FIRST, THE GOVERNOR IN GENERAL IS CORRECT.
00:18:32	THE GOAL IS TO EQUALIZE EDUCATIONAL OPPORTUNITY AND
00:18:38	DIFFERENT DISTRICTS HAVE DIFFERENT ABILITIES.
00:18:39	IN THAT BROAD SENSE, HE IS RIGHT.
00:18:40	SOMETHING THAT HAS SLIPPED FROM CONCEPT TO EXECUTION --MEMBER,
00:18:45	TWO YEARS AGO WE HAD THE SAME DISCUSSION.
00:18:47	KAREN: WE DID. BILL: IN GENERAL, FROM WHAT I
00:18:51	HAVE SEEN, THE GOVERNOR, WHEN HE MAKES A PROPOSAL, IS USUALLY
00:18:57	WELL-STAFF, WELL-PREPARED, AND THE COMMUNICATION MESSAGE IS
00:19:01	GOOD, BUT THEY HAVE A PROBLEM GETTING AROUND THE EDUCATION
00:19:04	ISSUE. IT USED TO BE CALLED 616
00:19:10	GERRYMANDERED SCHOOL DISTRICT. WHATEVER YOU DO, PEOPLE WILL
00:19:12	COMPLAIN. THE GOVERNOR HAS SET UP THESE
00:19:15	PRINCIPLES, WHICH ARE OK. AT THE SAME TIME YOU HAVE
00:19:17	ENROLLMENT SHIFTS AND THE MONEY IS SUPPOSED TO FALL OH STUDENTS
00:19:21	YOU HAVE CHARTER SCHOOLS MIXED IN, AND THEN YOU HAVE -- THEY
00:19:25	ARE TAKING AWAY ANOTHER 37 MILLION THAT THEY USED TO GET.
00:19:32	YOU HAVE ALL OF THIS GOING ON. THE PART THAT I FOUND ODD ABOUT
00:19:37	THE PROPOSAL IS THE EXTREME DIFFERENCES.
00:19:38	POLITICS IS AN INCREMENTAL THING, AND YOU CAN GET TO A
00:19:43	CERTAIN GOAL RAPIDLY, BUT IT IS MORE LIKELY TO BLOW UP, OR YOU
00:19:48	COULD DO IT MORE GRADUALLY. I DO NOT SEE HOW THEY CAN EXPECT
00:19:50	A SCHOOL DISTRICT TO MANAGE -- I DO NOT THINK A SCHOOL DISTRICT
00:19:55	GETS A 20% INFUSION IN ONE YEAR AND SPEND IT WELL.
00:19:57	KAREN: THE CLAIM IS THE SCHOOL DISTRICT IS SITTING ON $4
00:20:02	MILLION IN MONEY. NEIL: I HEARD THAT ON THE
00:20:06	TALKSHOW AND "THE COLUMBUS DISPATCH," WHICH I LOVE BECAUSE
00:20:14	IT WAS OK TO TAKE MONEY OUT OF THE CASINO TO BUILD THEIR ARENA.
00:20:18	THERE HAS NEVER BEEN FIVE YEARS WITHOUT SOMEONE TINKLING WITH
00:20:22	THE EDUCATION FORMULA AND WHAT WE NEED IS A CONSISTENT PLAN SO
00:20:26	THAT SCHOOLS KNOW WHAT TO DO, AND WE NEED TO DISCIPLINE THE
00:20:30	CHARTER SCHOOLS THAT ARE DOING NOTHING.
00:20:31	BILL: YEAH. NEIL: IF YOU'RE GOING TO SAY THE
00:20:34	DOLLAR FOLLOWED'S STUDENT, IT HAD BETTER FOLLOWED TO WHERE IT
00:20:42	GOES INTO EDUCATION, OR NOT GO INTO THE POCKET OF SOMEONE THAT
00:20:44	WEARS A CUTE HAT. KAREN: FOR A WHITE HAT?
00:20:46	NEIL: A CUTE HACK. -- HAT.
00:20:52	KAREN: GIVEN THE LEGISLATURE'S ATTITUDE ON TAX INCREASES, AND
00:20:59	AFFECTED THE LEGISLATURE HAS TO RUN FOR OFFICE AGAIN WITH THE
00:21:02	GOVERNOR DOES NOT, WHAT MESSAGE IS HE SENDING?
00:21:04	NEIL: I WANT MY BUDGET. BILL: I WAS TRYING TO THINK OF
00:21:08	WHAT THE THINKING WAS -- IT COULD BE, IF YOU WANT TO TAKE A
00:21:13	MACHIAVELLIAN STRATEGY, THEY DECLARED WHAT IT SHOULD BE,
00:21:17	DUMPED IT TO THE LEGISLATURE, FIGURED THEY ARE NOT GOING TO
00:21:21	BUY THAT, BUT THEY WILL BUY SOMETHING.
00:21:22	THE PROBLEM IS THEY ARE SO FAR OUT THERE.
00:21:26	I WORKED AS A LEGISLATIVE STAFF MEMBER BEFORE I WORKED IN THE
00:21:31	GOVERNOR'S OFFICE. NEIL HAS, TOO.
00:21:35	I COULD HEAR -- WHAT IS HE DOING?
00:21:37	SCREW THAT. NEIL: I WOULD TAKE EVERYTHING
00:21:41	THE GOVERNOR HAD OUT, AND MEETING THE HOUSE AT IT OUT, AND
00:21:46	PUT MY OWN STUFF IN FOR THE SENATE TO DO ITS OWN MESSAGING,
00:21:49	AND THAT WE WOULD GO INTO CONFERENCE COMMITTEE AND DUKE IT
00:21:52	OUT. THERE IS NO TIME IN CONFERENCE
00:21:55	COMMITTEE FOR PEOPLE TO GIVE YOU LONG-TERM PLANS.
00:21:56	BILL: RIGHT. NEIL: WHEN YOU INTRODUCE IT, IF
00:22:01	IT IS NOT RIGHT, IT AIN'T GOING TO MAKE IT.
00:22:02	SO, I WOULD SAY TO YOU THAT THIS GAME IS OVER.
00:22:05	BILL: WELL, AND THE HARD PART IS, IF I MAY SCHOOL DISTRICT
00:22:10	PERSON, AND THEY CAN TEND TO BE WHINERS.
00:22:14	WE HAD TO DEAL WITH THEM AS WELL.
00:22:15	IT IS A WONDERFUL THING THEY DO, AND THEY DESERVE STATE SUPPORT,
00:22:19	BUT IT IS NEVER QUITE ENOUGH. THESE ARE THE GOOD TIMES WHEN IT
00:22:22	IS GROWING, AND HALF OF THE DISTRICTS ARE LOSING MONEY --
00:22:26	WHAT THE HELL KIND OF SITUATION IS THAT?
00:22:27	KAREN: WHEN YOU SAY IT IS OVER, WHAT YOU MEAN?
00:22:30	NEIL: THE GENERAL ASSEMBLY WILL HAVE TO DO THE JOB PUTTING THIS
00:22:35	TOGETHER IN A WAY THAT IT IS FAIR.
00:22:36	NOW, WHEN THE GOVERNOR'S BUDGET IS THERE AND THEY HAVE
00:22:41	APPROPRIATIONS FOR PRIMARY AND SECONDARY EDUCATION, THEY HAVE
00:22:43	TO GO BACK AND DO THE SURGERY. THAT MEANS THEY HAVE TO BE
00:22:45	CONFIDENT ENOUGH TO SAY HOW LONG WE GOING TO DO THE FORMULA, HOW
00:22:49	ARE WE GOING TO DISTRIBUTE IT? THEIR FOCUS IS GOING TO BE ON
00:22:54	REBUILDING INTO WHAT THEY BELIEVE IS THE RIGHT WAY, AND
00:22:57	THAT WILL BE DEPENDENT ON THEIR KNOWLEDGE BASE AND WHETHER OR
00:22:59	NOT THEY CAN PULL IT OFF. OVER IN THE SENSE THAT I DO NOT
00:23:02	THINK PEOPLE WILL BE SITTING AROUND SAYING OK, GOVERNOR, WHAT
00:23:05	DID YOU MEAN BY THIS. I THINK IT WILL DO IT
00:23:06	THEMSELVES. BILL: I THINK YOU'LL GET A
00:23:10	PATCHWORK SITUATION THAT WILL GET YOU THROUGH THE NEXT TWO
00:23:12	YEARS, AND THERE WILL PROBABLY BE -- UNLESS THE ECONOMY TURNS
00:23:16	SOUTH -- ENOUGH MONEY TO PAY FOR OVERAGES, JUST LIKE THEY DID TWO
00:23:20	YEARS AGO. IT HAS BEEN A TOUGH CALL FOR
00:23:22	EVERY GOVERNOR. UNTIL SOME GOVERNOR CAN GET SOME
00:23:27	SORT OF BIPARTISAN AGREEMENT AND BRING AT LEAST MOST OF THE
00:23:31	SCHOOL DISTRICT ON BOARD WHERE YOU WANT TO GO FIVE OR 10 YEARS
00:23:32	FROM NOW -- NEIL: UNTIL THE COURTS FINALLY
00:23:37	ENFORCE THE PRINCIPLES WHERE YOU CANNOT RELY ON PROPERTY TAXES,
00:23:42	WE'RE GOING TO CONTINUE TO TINKER WITH THIS YEAR AFTER YEAR
00:23:47	WITHOUT MAKING ANY PROGRESS, AND THEN WHAT WE WILL DO IS THAT
00:23:49	EVERY TIME SO MANY GOES TO A TWO -YEAR SCHOOL OR A FOUR-YOUR
00:23:54	SCHOOL, THE FIRST TWO CORNERS WILL BE SPENT IN REMEDIAL
00:23:58	EDUCATION. THOSE THAT CANNOT GO ON TO
00:23:59	COLLEGE WILL END UP IN MINIMUM-WAGE JOBS.
00:24:03	BILL: AND IF YOU TALK ABOUT HOW YOU WANT TO POSITION OHIO TO BE
00:24:09	SUCCESSFUL ECONOMICALLY AND THE FUTURE, THAT IS NOT THE WAY.
00:24:11	THERE ARE JOBS OUT THERE -- WELL EDUCATED, WERE TRAINED -- IT
00:24:17	DOES NOT HAVE TO BE A FOUR-YEAR DEGREE -- PEOPLE CAN DO, BUT WE
00:24:20	HAVE A MISMATCH. THE GOVERNOR HAS TRIED TO
00:24:24	ADDRESS THIS, BUT UNLESS HE GETS THE K-12 FUNDING ISSUE ON THE
00:24:27	RIGHT TRACK, IT AT LEAST MAKES IT BETTER INSTEAD OF WAS, YOU
00:24:31	WILL NOT GET THERE. NEIL: YOU ARE IN A WORLD ECONOMY
00:24:35	AND WAY TO HAVE WORLD-CLASS EMPLOYEES.
00:24:36	KAREN: NEIL CLARK, BILL SHKURTI, WILL BE WATCHING THIS.
00:24:42	THANK YOU FOR YOUR THOUGHTS. AND THAT'S IT FOR THIS WEEK.
00:24:43	FOR MY COLLEAGUES AT OHIO PUBLIC RADIO AND TELEVISION, THANKS FOR
00:24:45	WATCHING. IF YOU WOULD LIKE TO ASK
00:24:46	QUESTIONS, MAKE COMMENTS, OR WATCH THIS WEEK'S SHOW OR
00:24:48	EARLIER EPISODES, PLEASE VISIT OUR WEBSITE AT STATENEWS.ORG, OR
00:24:50	WATCH ON THE OHIO CHANNEL'S WEBSITE OR AT
00:24:52	IDEASTREAM.ORG/OHIO. AND YOU CAN FOLLOW JO INGLES,
00:24:55	ANDY CHOW, AND ME ON TWITTER, AND PLEASE JOIN US AGAIN NEXT
00:24:59	TIME FOR "THE STATE OF OHIO." ?
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Note : Transcripts are compiled from uncorrected captions