THE OHIO BUDGET PROCESS

THEOHIO BUDGET PROCESS

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TheBudgeting Process

Abudget is an annual appropriation of expected expenditure andrevenue. Budget preparation is a long and tedious process thatrequires input from various agencies and legal entities. The main useof a budget is to enable the government plan in its course ofproviding services to the people. Resources are required and so is adefinite plan to distribute the resources to achieve optimum benefitsfor the people. The state of Ohio also has its budget that runs twoyears beginning July 1stto June 30thof the second year. To enact the budget process, several separatebills are required by law from various state agencies.

InOhio, the Ohio the office budget management, the office of thegovernor and the Ohio state legislative assembly is mandated with thegreatest responsibilities in the budget making process. The ultimatedecision of distributing these resources to the various expenditurepriorities lies with the state legislative organ. The mandate of thegeneral assembly participation in the budgeting process is peggedupon (Article II, SEC 22) of the Ohio state constitution. That lawrequires a withdrawal of resources from the treasurer be preceded byan appropriation law that should also not be more than two years. Theappropriation bills follow the regular law enactment procedure ofintroduction, hearings and enactment on or before June 30thof the same year (Steinglass, &amp Scarselli, 2011, pg268).

Thebudget allocations start in July of an even-numbered year. The officeof budget and management starts the process through communicatingdetailed requirements to the various agencies that ought to befollowed in the preparation of their budget proposals. Theinstruction regarding the same is sent to those agencies expected tobenefit from appropriated funds. The office expects the agenciesappropriation budgets to be submitted beginning late August toearlier days of November. On receipt of the budget proposal, theoffice of budget and management conduct a critical review and holdssittings and hearings with the relevant agencies if there is any needto do so.

Thethird stage in the process is the preliminary recommendations wherethe office of budget and management in consultation with the governorand the governor executive members makes various recommendations. Therecommendations are appropriately communicated to the relevantagency, and if need be, the victim agencies are allowed to file anappeal with the office of the governor. When the recommendations arefinalized, they are published in the executive budget. The executivebudget include a report of the tax expenditures which represent theamount of expenditure not in the general reserve fund. The generalreserve includes all revenues from which the government can pay itsdues given an absence of a special fund to cover the same. The taxexpenditures section of the executive budget is prepared by thedepartment of taxation.

Afterall the budget recommendations and the tax expenditure report havebeen finalized, the governor is allowed to present the report to thegeneral assembly in the January of every odd year. However, thetiming is adjusted in case a new governor takes office, and the sameis limited to March 15th of the odd year. The legislative commission,on receipt of the budget proposal, drafts this proposal to bill whichcan be enacted to become law. The bills are introduced into thelegislative agency by the chairperson of finance and appropriationcommittee of the Ohio General Assembly. Upon introduction, the billundergoes the hearing and committee stage so as to conduct the finerdetails of the budget and revises the proposals appropriately. Thecommittee prepares substitute bills with specific recommendations tothe subcommittees. The substitute bills are further considered andthen amended as need be by the whole committee.

Thereport is sent back to the House floor for third reading and thethird consideration. Once the bills are enacted, they are forwardedto the Senate for consideration using the same legal procedure oflegislation. Conference committee are then staged for education andmain appropriation bills, hearing by these committees is limited totwo weeks per bill, and their recommendation reports are sent back tothe house and the senate. The bills will be enacted into law if boththe house and the general assembly agree to the proposals by theconferences committees. The governor has veto power to disapprove alaw he already enacted through subsequent appropriation. The actsbecome law immediately the governor ascends to the bill. This is thesimple budgetary process of the Ohio state government. It is theprocess carried out by every resident of Ohio, but the office of thegovernor, the legislative organ and the office of budget andmanagement are the principle organs that participate in the budgetingprocess (Khan&amp Hildreth, 2003)

Revenues

Inas much as the state government of Ohio intends to provide theservice, it should show how it plans to raise the resources. Taxationis the mega source of revenue for the state of Ohio. For thefinancial year ended 2014, the sales and use tax category provided42% of the tax revenue. This was closely followed by the personal taxcategory that raised a total of 38%. The other tax categories raisedthe remaining sources of revenue. Those other categories includecigarette tax, lottery profit tax, business taxation, public utilitytax, and non-tax income. Together they contributed cumulative revenueof 20% which is significantly lower than any of the two major sourcesof funding. Taxation is important to source revenue for the state ofOhio and. Therefore, any policy about taxation is critical because itcan affect the revenue of the state.

Expenditure

Thestate of Ohio expenditure can be categorized into two major sectionsthe capital and operations expenditure. Capital expenditure isexpenditure on long-term projects whose value is realized after along time and tend to change depending on priorities. However, forthe financial year ended 2014, the capital expenditure was secondhighest between the public works commission and the board of regentseach at 23% of the capital expenditure budget. The board of regentsis the educational capital expenditure for high schools. The thighest expenditure was Ohio facilities and construction projects at37%. Other projects were appropriately funded although at a lowerbudget allocations. The other category is the operating expenditurethat includes allocations for a shorter term periods approximately afinancial year. In this category education was the highest fundedsector with 41% followed by health and human services at 30% of theoperating budget allocations. Higher education as funded at 10%making education sector receiving more than half the operatingexpenditure budget. The general government and the correctionalservices were funded at 8% each of the budget making them the thirdhighest funded sector in the financial year ended 2014 of the Ohiostate (OBM,2014).

Governor`sTax Policy

GovernorKasich served his first term in office from the period beginning 2011and is famously remembered for initiating massive tax cuts in thestate of Ohio during his administration. He subsequently enactedother measures to balance the state budget. During his term, Kasichmaintained the conservative Republican approach and enacted thesweeping tax cut that proved detrimental to the poor andmiddle-income earners. This is because the governor policiesregarding taxation slashed tax from the wealthiest Ohioans and thesubsequently increased the same to the low and middle-income earners.In total, it was estimated that Kasich tax cuts reduced the revenuetax by over $3 billion including the small business cut.

Thesmall business tax cut is reported to have benefited a fewhigh-income earners as opposed to the small business owners. The cutdid not benefit the majority of employers and those who stimulateeconomic growth and is concluded to have neglected the needs of themajority of the people. This was a delicate measure for the governorof Ohio given the fact that a huge source of funding for the budgetcomes from taxation. Any change in taxation policies should be aimedat generating positive income regarding increased revenue, thecreation of employment, stimulating economic growth and fairness intaxation. As opposed, the small and middle-income earners paid morewhich also reduced the total revenue from taxation by $3 billion(Jr.,2015).

However,Kasich move is not to be taken lightly because the governor movedfrom a $7.7 billion budget deficit to a $2.5 billion budget deficit.He boasts by concluding that such performance would have earned a CEOa massive surplus. He started by slashing funding to localgovernments and had an overhaul on the state Medicaid rules. Kasicheliminated state estate tax and intended to remove state income taxas well. Phasing out the state income tax was aimed at stimulatingeconomic activities, hence, economic growth. Operating on a surplusbudget is a promising thing for the state of Ohio but the effect isseen emanating from the slashed expenditure on local governments.

Kasich,approach of taxation policies negatively impacted the life of themiddle and lower income earners since the planned growth onlybenefited the higher income earners. Increasing the tax on the lowand middle-income earners similarly discourage economic growth andproduction because Ohioans may feel like they are working for thegovernment. Slashing the state estate tax could be beneficial becauseit enables many people of Ohio to earn estate at a lower cost that itwas before. The tax is fair and not discriminative as others.Slashing income tax should be equitable and beneficial to manypeople. Reducing tax for higher income earners and subsequentlyincreasing the tax for low and middle-income earners saw a reductionin revenue by $3 billion (Dharmapala,2007).

Thestate of Ohio has a standard plan of budgeting process dominated bythe office of the governor, the office of budget and management andthe legislative organ of the state. Other stakeholders are the Senateand committee of conferences. The Ohio budget is a covers two yearsbegging July 1stto June 30ththe second year. The major funder of the Ohio budget is the taxationsystem while the leading users are the education and health and humanservices sector. Taxation policies affect the level of revenue and,therefore, ought to be made cautiously.

References

Dharmapala,D. (2007) The Congressional Budget Process, Aggregate Spending, andStatutory Budget Rules. SSRN Electronic Journal.http://dx.doi.org/10.2139/ssrn.638722

Jr.,N. (2015). An Ohio Prescription for GOP: Lower Taxes, More Aid forPoor. WSJ. Retrieved 23 October 2015, fromhttp://www.wsj.com/articles/SB10001424127887324263404578614350249607548

Khan,A., &amp Hildreth, W. (2003). Casestudies in public budgeting and financial management.New York: M. Dekker.

Steinglass,S. H., &amp Scarselli, G. J. (2011). TheOhio state constitution.New York: Oxford University Press.

TheOhio Budget Process. (2012) (1st ed.). Retrieved fromhttps://www.google.com/url?sa=t&amprct=j&ampq=&ampesrc=s&ampsource=web&ampcd=1&ampved=0CCYQFjAAahUKEwji2MCHjNnIAhUGox4KHc-3AeE&ampurl=http%3A%2F%2Fwww.lsc.ohio.gov%2Fguidebook%2Fchapter8.pdf&ampusg=AFQjCNEKeolFwq6Qc28z7pNtt9x-yNIKdA&ampsig2=znO7M5Rx4q2rXcCEjBIkOA&ampcad=rja