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FEDERAL TAX POLICY and BUDGET CUTS
“Can Bad Get Any Worse?”

July 2003

Ohio

Ohio has an estimated $720 million budget shortfall for the balance of FY 03, and an estimated $4 billion budget gap for the FY 04-FY 05 biennium. The Governor’s proposed budget for the biennium would cut or freeze spending for 36 state agencies, plus limit increases for the others to 1% or less. These cuts come on top of $2 billion in cuts over the last three fiscal years.

Housing Cuts

- Although the Governor proposes to increase the “dedicated source” of funds for Ohio’s Housing Trust Fund (generating $80 million over the biennium), there will actually be a 23% cut ($18.8 million) in state funds for low income housing because five other low income housing programs will lose all of their General Revenue Fund appropriations.

- TANF Housing Program ($11.7 million)
- Affordable Housing Loans ($28.8 million)
- Emergency Shelter Grants ($4.7 million)
- Supportive Housing for the Homeless ($5.5 million)
- Community Development Corp. Grant Program ($3.6 million)

The intent of the HTF is to increase the permanent supply of affordable low income housing stock. Allowing services (such as activities in support of emergency shelter) to be funded out of the HTF for the first time forces all housing and homelessness needs to compete for 23% fewer dollars.

- Yet another resource for low income housing is eroding as the State uses “Unclaimed Funds” to address non-housing budget gaps.

- In the past, Ohio has devoted a portion of its “Unclaimed Funds” to supplement the federal Low Income Housing Tax Credit program.
- This supplement enables housing projects to reduce rents by as much as $75 per month, roughly 10% of a poverty-level, elderly renter’s income.
- However in FY 03, $126 million was siphoned away, and at least another $25 million is expected to be drained away in FY 04.

Head Start Cuts

The Governor is proposing a major change in the way the state Head Start program is funded and administered, resulting in 4,000 fewer children participating. Also, the program would not provide related medical care.
Childcare Cuts

A recent “budget corrections” bill proposed a series of cuts to childcare that the State hopes will save it $268 million over the biennium.

- 18,500 children will lose subsidized childcare.

To achieve this reduction, the Governor proposes:

- Lowering eligibility to 150% of poverty (from 185%).
- Increasing co-payments (up to 10% of family income).
- Freezing the rate paid to childcare providers.

- Cutbacks can mean more families staying on welfare longer, or going on welfare again because they can’t get or afford childcare.

- As fewer children are served and as the State reduces its payment rate, providers will have to lay off employees, and perhaps close down all together.

Medicaid Cuts

The Governor proposed a number of Medicaid cuts, including:

- Eliminating Medicaid for 33,000 working parents.
- Eliminating dental, vision, psychological, and podiatry care for adults.
- Requiring co-pays for “non-preferred” drugs.
- Freezing provider reimbursement rates.
- Cutting $64 million (out of $95.7 million) from the Disability Assistance Medical program by limiting: the number of people eligible, the length of eligibility, and the range of services.

Other Cuts

- Disability Assistance Cash. This program provides small amounts of cash assistance to people who are unemployable because of physical or mental impairment. The Governor would eliminate eligibility for:

- Children under 18 (currently 1,163)
- Pregnant women (currently 1,117)
- Residents of alcohol or drug treatment centers (currently 1,577)
- Future elderly people (allowing those currently elderly to continue)
- Workforce Investment Act. A $36 million cut (27%) is proposed.

- Food Bank. Cut $2 million (50%) from a program providing 14 million meals.
- Adult Protective Services. The Governor would eliminate this $2.7 million program which investigates abuse, neglect, or exploitation of elderly people. Cuyahoga County alone investigated over 2,000 cases in the past.
- STARS program. The Governor plans to eliminate this $2 million program which enabled senior citizens to tutor and mentor in schools.

Sources: Federation for Community Planning; Coalition on Homelessness and Housing in Ohio; Ohio Empowerment Coalition; Ohio Association of Community Action Agencies

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The mission of the Center for Community Change is to develop the power and capacity of low-income people, especially low-income people of color, to improve their communities and shape the public policies that affect their lives.

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