Action on more state debt to fund bricks-and-mortar projects around Ohio is on the horizon for the General Assembly, although some differences of opinion have already surfaced regarding the timing for the next capital appropriations budget.
Guidelines for project requests distributed recently by majority House Democrats have started the biennial surge of phone calls and emails to members of both chambers from the wide array of interests that stand to benefit from the fiscal year 2011-2012 construction bonds, ball-parked by the Office of Budget and Management at about $1.8 billion when planning the Third Frontier issue.
That $700 million bond issue, which goes before voters on the May 4 ballot as Issue 1, is the subject of some leeriness as it relates to the timing of the capital bill. Officials want to avoid voter confusion over the high-tech research and development package versus the regular biennial capital budget even though both authorize the issuance of state debt over a number of years.
“We worked hard to be fiscally responsible as it relates to the Third Frontier initiative that’s on the ballot, so I would like for us to concentrate on the Third Frontier and getting that passed before we get into the issue of going forward with the capital budget,” Senate President Bill Harris (R-Ashland) said.
“We ought to not mix apples and oranges for sure. The capital budget is a totally different thing than doing the Third Frontier initiative,” he added, while saying he sees no reason the capital bill couldn’t be processed after summer recess.
House Speaker Armond Budish (D-Beachwood), on the other hand, said in a recent interview regarding the capital bill, “We hope to be working on that very soon. We’d like members to be getting us their projects now.”
In fact, House members were recently sent a capital project request form and a list of project types that don’t qualify for the bond money, such as those entailing operating expenses. This cycle is expected to be no different in that the $100 million or so that’s usually set aside for local “community projects” will get the most attention from legislators even though it accounts for only a fraction of the capital bill.
The speaker echoed the Senate leader in stating that voters should understand the key differences between the legislature-approved capital plan and the pending Third Frontier ballot issue.
“They are completely different,” Speaker Budish said. “One is investment in technology, aerospace, biomedical and other jobs of the future. Capital projects help our communities with capital needs, so they’re very different.
The bond packages are also different in that the Third Frontier unlike the capital bill will not count against the state’s 5% debt ceiling based on general revenues and lottery profits in a given year.
Still, the state’s debt load, along with other fiscal and economic concerns in general are expected to keep the capital bond total somewhat in check this cycle.
“I expect it to be smaller and I expect the projects to be smaller and fewer,” Speaker Budish said.
In preparing policymakers for debate over the Third Frontier plan a few months ago, OBM suggested the FY 2011-2012 capital bill would be about $1.8 billion, which is roughly in line with recent capital spending.
“That’s certainly the sizing we’ve been looking at,” OBM Director Pari Sabety said in an interview. That amount of debt can be authorized under the 5% cap.
The last capital measure (HB562, 127th General Assembly) only appropriated about $1.3 billion, but that was smaller mostly because the state avoided issuing hundreds of millions in bonds for Ohio School Facilities Commission projects by instead financing school construction projects with proceeds from the securitization of $5 billion-plus in tobacco settlement payments.
Timing and financial issues aside, if the debate over the last budget-related bill (HB 318) is any indication, capital bill deliberations could provide fertile ground for the next partisan tug-of-war over state finances and public policies in general.
The last two-year capital budget also doubled as a budget correction measure of sorts, with dozens of provisions hitching a ride and 13 attracting ink from Gov. Ted Strickland’s veto pen.
Director Sabety said there have been preliminary discussions with agencies on corrective language but to what extent the bill would serve as a vehicle for statutory changes hasn’t been hashed out yet with legislative leaders.
Sen. Harris said he wanted to sit down with Gov. Ted Strickland and Speaker Budish to discuss the capital bill plans. The Senate leader has recently tied the lack of any prior GOP input to difficulties in getting bills such as the budget fix through his chamber.
“We have not yet had any types of communications with the governor relative to what his intentions, what he’d like to do with the capital budget,” Sen. Harris said, adding that the House’s preparations have already triggered numerous inquiries. “It’s got lots of people coming to our members and coming to me wanting to talk about the capital budget, and what about community projects and so forth and getting people interested in it, but we don’t have anything at this point that we can work toward.
“It’s uncomfortable to go to a meeting and (hear), ‘This is what I’ve decided what we’re going to do,’… when all the decision-makers haven’t decided it,” Sen. Harris said. “So I just hope that before this goes forward we’ll have an opportunity” to talk.
Ms. Sabety said the administration plans as much and deferred most questions over details of the bill pending those high-level discussions.
“This bill is normally done as a consensus bill between the House, the Senate and the executive branch,” she said. “We’re looking forward to beginning deeper conversations about that but those conversations have not yet begun.”