The Kasich administration and Republican lawmakers made good on the governor’s year-end promise Tuesday in the roll-out of a Senate joint resolution that calls for a 10-year, $1.875 billion voter reauthorization of the State Capital Improvement Program set to expire in 2016. Sponsor testimony before the Senate Finance Committee drew support from Budget Director Tim Keen, who called the bond request “reasonable and justifiable” in view of the program’s timetable and impact on job creation.
Sens. Gayle Manning (R-Ridgeville) and Kevin Bacon (R-Columbus), joint sponsors of SJR6, provided an overview of the ballot proposal to reauthorize a local funding stream first created in 1987. Director Michael Miller of the Ohio Public Works Commission also spoke. The commission administers the program but leaves project proposals to 19 Local District Public Works Integrating Committees, which may recommend improvements to roads, bridges, culverts, water supply systems, wastewater systems, storm water collection systems, and solid waste disposal facilities.
“The role of the Public Works Commission is to ensure that key decisions are made within local communities fairly and objectively, and to maintain the state-local partnership established through the State Capital Improvement Program,” Bacon said, noting the latter receives 88 percent of bond funding while the Small Government Program and Emergency Program draw 10 percent and 2 percent, respectively.
Keen highlighted the program’s economic benefits — $1.35 billion in local public works projects under current funding. He said voter reauthorization of the bonding authority this May would maintain the program with the full faith and credit of the state and satisfy annual debt service with General Revenue funds.
“This timeframe is consistent with those in the two previous reauthorizations, providing local governments with assurance of a stable funding stream and the planning time needed to successfully implement public improvement projects. This schedule also gives the Public Works Commission and its district integrating committees the time required to solicit, review, approve and release new funding for projects in July 2016,” he said.
Keen said Gov. Kasich has voiced strong support for the “job creation, quality of life and, in many cases, public health and safety” advanced by debt-based funding of local government improvements, beginning with the governor’s announcement of the bond proposal at Republican leaders’ year-end review of 2013.
“He views this as one of the most direct and meaningful ways for state government to support its local government partners and — with the expansion of funding proposed by SJR6 — to significantly increase that support in order to meet the needs of Ohio communities for infrastructure repairs and improvements,” said Keen.
He added that budget fixes under the Kasich administration make it a good time for new bonding authority over and above existing annual debt of $230 million for the State Capital Improvement Program. He said total GRF-backed debt is projected to be $9.5 billion by the end of FY14.
“Given the state’s strong fiscal condition — thanks to the governor’s leadership and support of the General Assembly — this proposal’s additional annual debt service of $40 million … is clearly manageable and affordable — both in absolute terms and relative to the state’s 5 percent debt service limitation,” said Keen.
SJR6 drew questions from both sides of the aisle. Sen. Shannon Jones (R-Springboro) wondered how much debt the state would incur under program reauthorization if all programs, including Third Frontier, were under the 5 percent cap. Keen put the projected figure at 4.5 – 4.6 percent.
Sen. Charleta Tavares (D-Columbus) asked how the current proposal for $175 million in annual bond funding over the first five years and $200 million over the last five years was arrived at, in view of expiring program funding of $120 million and $150 million, respectively, over the current 10-year period.
Keen said the proposed $1.875 billion is “reasonably manageable and affordable” based on current debt service, the upcoming FY15-16 capital bill, and Third Frontier and veterans’ bonus programs — the latter two not subject to the 5 percent constitutional cap. Tavares pressed the point, asking whether the reauthorization would meet actual local government needs, if not wants.
“Demand will exceed the dollars we are providing,” Keen acknowledged, suggesting, however, that the $1.875 billion hits the “sweet spot” between existing bond obligations and debt to be incurred by the approaching capital bill.
Sen. Tom Sawyer (D-Akron) continued Tavares’ line of questioning, asking how local funding amounts are determined. Keen and Miller explained that the Public Works Commission administers a program previously laid out in statute. Sawyer said he and his Democratic colleagues would feel even better about renewed local government funding if they had had the opportunity to participate in the legislation.
”The history of this undertaking has long been bipartisan,” he said of the State Capital Improvement Program. “I’m wondering why we didn’t have the opportunity for bipartisan co-sponsorship.”
Committee Chairman Scott Oelslager (R-North Canton) pointed out that the bill currently has no co-sponsors, and that Sawyer and others will have plenty of opportunity to throw support to SJR6 in the coming weeks.
Tavares continued, asking whether there has been any discussion of shifting public works authorization to a private entity like JobsOhio, which Democrats generally oppose. Oelslager suggested her point was more commentary than question. She was assured, however, that Republicans had no such plans.
“The Ohio Public Works Commission will continue its administration of the State Capital Improvement Program and related small government and emergency programs,” Manning had added during sponsor testimony.
Sen. Bill Coley (R-Middletown) responded with an anecdotal remark of his own, asking the budget director to address a series of newspaper editorials around the state on the need for more local government funding.
”Folks need to remember: State government is essentially a pass through entity,” said Keen, putting total encumbered funding of local government interests at more than 85 percent of the biennial budget.