Archive for Election Corner

Major Shifts in Ohio Governor’s Race Impact Primary Battles

Both the Ohio Democratic and Republican Party made major news in November impacting the May, 2018 Primary for Governor. Governor John Kasich cannot seek a third term due to the state of Ohio’s Constitution limit on Governors serving two consecutive terms in office. The open Governor’s seat has set off a battle among Republicans and Democrats seeking to serve as the state’s top elected officials.

Democrats have been watching a group of candidates’ campaign for Governor who have never been elected to statewide office. That all changed in November. Former Ohio Attorney General and State Treasurer Richard Cordray announced he was stepping down from the high-profile federal government job as director of the Consumer Financial Protection Bureau. Everyone in Ohio understands Cordray would not leave this office early and permit the Trump Administration to appoint a conservative new leader to this organization if he was not going to run for Governor. Cordray’s experience at the state and federal level makes him the instant frontrunner in the Democratic Primary. His late entry into the race may not prevent a Democratic Primary battle though. The response of the current field of Democratic candidates for Governor to Cordray’s resignation from his federal post was not welcoming. Most of his potential opponents questioned why he would relinquish this critical federal post to the Trump Administration. Cordray, who is a very accomplished lawyer who clerked at the U.S. Supreme Court, will have to move quickly to raise money to prepare for a Democratic Primary battle and will likely need the help of national Democratic leaders such as former President Obama, former Secretary of State Hillary Clinton and others to prevent a costly Primary Election he cannot afford to endure.

Corday’s potential entry into the Governor’s race also impacted the Republicans seeking to replace John Kasich. In a startling announcement, Ohio Secretary of State Jon Husted, who has raised millions of dollars and been running an aggressive and impressive campaign for Governor, announced he would join Ohio Attorney General Mike Dewine’s campaign as his Lt. Governor. Husted’s move is a huge win for the Dewine campaign and illustrates the dominance of Dewine’s name identification with voters but also the deep connection he has built battling the opioid addiction crisis facing the Buckeye State. The Dewine-Husted ticket is a Republican game plan that worked in 1990 when Dewine was seeking the Governor’s seat but decided to join George Voinovich on his ticket and Bob Taft agreed not to challenge Voinovich but to seek instead to run for Ohio Secretary of State. The 1990 Republican moves resulted in statewide election victories not just that year but in every year except in 2006. The Dewine-Husted move also cripples of the campaigns of the two other candidates seeking the Republican nomination for Governor. Mike Dewine was going to be very difficult to beat in a Primary Election battle that included Jon Husted. With Jon Husted actually on Mike Dewine’s team, substantial business community support and a limited field will make the Dewine-Husted team nearly impossible to defeat.

A little November excitement may lead to a less than exciting May than was expected. However, there will be plenty of fireworks in 2018 as both political parties seek to have their candidate reside in the Governor’s Mansion.

Kasich Administration Kick-Offs State Capital Budget Bill Process

The kick-off is a well-established football tradition most Ohioans are aware of. For serious students of state of Ohio government, the kick-off for the state of Ohio capital budget bill starts with a standard guidance memo from the Director of the Ohio Office of Budget and Management. On September 25, 2017 Governor Kasich’s OBM Director Tim Keen released the FY 2019-20 state of Ohio capital budget guidance memo to state agencies and other organizations that may be eligible for state of Ohio capital funding in the upcoming capital bill.

Keen’s state of Ohio capital budget guidance memo is anything but exciting. It is a highly technical document closer to a legal analysis of what and how capital budget items for the state of Ohio should be submitted. Though boring, the OBM capital budget guidance memo has some very important information in it for those planning to seek capital budget requests. The guidance memo again defines “capital” items to include the “cost of acquiring, constructing, reconstructing, rehabilitating, remodeling, renovating, enlarging, improving, and/or equipping facilities.”

In addition, the memo outlines what projects are eligible for capital budget funding either from a state agency or a community project. State capital appropriations are funded primarily through the issuance of State bonds. Capital budget projects funded through State bonds must (1) fall within the authorized purposes for State bonded debt set forth in Article VIII of the Ohio Constitution and (2) meet federal tax law requirements for tax exempt bonds. To be eligible for bond funding in the State capital budget, a project must fall within the capital purposes authorized by the voters as set forth in the Ohio Constitution such as: highways; local government infrastructure; parks and recreation; natural resources and conservation; higher education facilities; elementary and second public school facilities; facilities to house branches and agencies of State government and their functions, including State office buildings and facilities; correction and juvenile detention facilities, mental health and development disabilities facilities; cultural, historical and sports facilities; and research and development (including coal research and development) and site development. Also, the Ohio Revised Code and federal tax law also contain provisions that govern the allowable uses of bond proceeds for capital projects, including the types of projects and expenditures, and the extent to which non-governmental entities (both private for-profit and not-for-profit) can benefit from the project.

Finally and most importantly for local communities, the Keen FY 2019-20 state capital budget guidance memo acknowledged that the upcoming capital budget will contain the popular community projects that funds arts, sports, economic development, historical, parks, health care and other priority community projects. The release of the Keen FY 2019-20 guidance memo in late September indicates planning and lobbying should begin right away for those seeking state of Ohio capital budget funding. It is anticipated Governor Kasich will rely on local business organizations to make recommendations for capital budget community project funding but members of the Ohio House of Representatives and Ohio Senate will have their own application project. The Keen FY 2019-20 guidance memo does not outline how large the capital budget bill will be and it is likely to start small in the eyes of Ohio’s Governor and grow larger as members of the Ohio General Assembly get more engaged in the process.

Ohio Governor’s Campaign Begins to Heat Up

Ohio’s campaign to replace Governor John Kasich appears to be heating up as the 2018 Primary Election draws closer. Policy discussions, political attacks and independent expenditure mailings all illustrate the Ohio Republican Governor’s race is in full gear.

First, the policy fight. Lt. Governor Mary Taylor, trailing badly in fundraiser efforts, went “old school” and starting rolling out policy positions on major issues. Taylor grabbed headlines across Ohio when she rolled out here health care plan for what she will do as Governor on this important topic. Lt. Governor Taylor announced she would not support the continued Medicaid expansion permitted due to funding from the federal government based upon passage of Obamacare. This made headlines because her announcement constituted a major shift in the position of the Governor and her running made in the last two General Elections—John Kasich. Kasich in fact is the leading Republican, nationally supporting the Medicaid expansion as he continues to garner national media attention as Washington struggles to find an answer for health care policy. Lt. Governor Taylor earned some credit for taking a policy position on an issue that constitutes over 50% of the state operating budget spending. However, opponents will surely point out she did nothing to stop the Medicaid expansion as Lt. Governor when half the states in the Union decided not to accept the Obamacare funding.

Northeast Ohio Congressman Jim Renacci launched the first attack of the Republican Primary campaign. Treating his Republican Primary Election opponents like they are from Columbus, Congressman Renacci attacks Mike Dewine, Jon Husted and Mary Taylor as “Fat Cats.” Renacci loaned his campaign $4 M and his spending his money on television advertisement campaign to try and boost his low name ID and damage the brand of his better known opponents. He is also attempting to connect with the Trump voters who gave the President an overwhelming victory in Ohio over Hilliary Clinton. Pundits question whether these “Trump Voters” will actually vote in a Republican Primary. Trump’s efforts in Alabama to elect a Republican Senator appointed to fill the seat of Jeff Sessions did not prove successful and provide more fodder for Renacci’s opponents.

Finally, an independent expenditure campaign supporting Jon Husted’s candidacy is also hard at work. Billionaire philanthropist Clay Mathile donated $1 million to a super PAC that is backing Republican Jon Husted for governor next year, according to federal campaign finance filings.

Between late April and the end of June, Ohio Conservatives for Change raised $1.3 million from four donors: $1 million from Mathile, $125,000 each from Mt. Vernon residents Thomas Ratin and Karen Buchwald Wright and $50,000 from Medical Mutual. Direct mail pieces have begun landing in Republican Primary voters’ mail box with the goal of building the name ID of Husted with core voters. The mail pieces have been positive, profile pieces with the obvious goal of defining Husted in a positive light.

All these battles have not moved the favored candidate, Ohio Attorney General Mike Dewine who continues to run a successful General Election campaign focused on opioids and other election matters of interest to the broader voter based. Dewine benefits from 30 years of campaigns and a strong name ID. More battles are coming as the 2018 Primary Election are coming in the near future.

Three Conclusions from Recent Ohio Campaign Finance Filings

Primary Elections for statewide offices in Ohio are won by two things: connection with ideological voters likely to vote in low turnout off year Primary Elections and money. It is too early to determine where the ideological Democrats and Republicans will align between the candidates but recent campaign finance reports submitted to the Ohio Secretary of State’s office indicate who is winning the money battle.

Monday, July 31, 2017 marked the filing deadline for semiannual reports illustrating fundraising activity since the state of the year. The semiannual reports, required to be filed for non-judicial candidates who did not file post-primary numbers in January, give the latest look at the candidates’ war chests with 10 months to go until the 2018 primaries. Three conclusions can be drawn from the recent Ohio campaign finance filings for those seeking a statewide office.

  1. Republicans seeking Ohio statewide offices hold a substantial lead over potential Democrat opponents. As the table above illustrates, Republicans while not holding any of the offices they are seeking hold a substantial fundraising lead against their Democratic counterparts. Three of the four Republicans seeking the Governor’s office have over $4M in bank while the leading Democrat seeking the office has just over $700,000. Now two of the leading Governor’s candidates are statewide elected officials themselves but the early money lead is substantial for Republican candidates seeking the Governor’s office as well as Secretary of State, Auditor, Treasurer and Attorney General. As an example, former Ohio Senate President and current State Representative Keith Faber has a 7 to 1 lead in fundraiser of over Democratic challenger, former Congressman Zach Space. State Auditor and Republican Attorney General candidate Dave Yost has a 2 to 1 fundraising lead over his Democratic opponent.
  2. Republican Primary Fundraising Leaders are Dewine, Husted, Renacci, LaRose and Sprague. Early results illustrate the strength of Ohio Attorney General Mike Dewine and Ohio Secretary of State Jon Husted. Both Husted and Dewine have over $4M in the bank with Dewine raising the most funds at $4.6 M cash on hand. Congressman Jim Renacci has raised a low amount of money but loaned himself $4M just in time for the campaign finance filing so he has a similar amount in the bank. Dewine, like Congressman Renacci, has the ability to self-finance what is likely going to be a Governor’s race costing well over $20M. Ohio Lt. Governor Mary Taylor is far behind the Husted and Dewine fundraising race with only $436,883. State Senator Frank LaRose is leading his Republican and fellow Ohio Secretary of State candidate State Representative Dorothy Pelanda by a 5 to 1 fundraising margin. Also, State Representative Robert Sprague of Findlay is leading his primary opponent Franklin County Auditor Clarence Mingo in fundraising and cash on hand by a 3 to 1 margin.
  3. Democratic Front Runner Betty Sutton Trailing in Fundraising. On paper, former Congresswoman Betty Sutton appears to be the most experienced candidate the Democrats have for their declared four candidates for Governor. However, Sutton is not leading the fundraising battle. Former Cincinnati area State Representative Connie Pillich is leading among the announced Democratic candidates for Governor with $720,525 in the bank. Sutton is behind not only Connie Pillich but also Democrats Senator Joe Schiavoni, and Dayton Mayor Nan Whaley who are also seeking the Governor’s job. Democratic Governor’s candidates fundraising efforts could be harmed by the questions about whether any of the current candidates will actually be the Democratic standard bearer. Former Ohio Attorney General and current Director Consumer Financial Protection in Washington DC Richard Cordray remains a focus for Democrats to return home and run for Governor. Even Cincinnati’s own Jerry Springer is rumored to be considering a run.

Mid-year campaign finance reports 10 months away from a Primary Election do not tell the tale of the Primary Election results but they do begin to create opportunities and obstacles for the winners and losers in the battle for fundraising dollars.

Ohio House Makes Dramatic Changes to Kasich Budget

The first movement in Governor Kasich’s $69B state operating budget came from leaders of the Ohio House of Representatives and the movement was a substantial.  Responding to the agreement to cut spending substantially as well as to address challenges with the Kasich budget, the Ohio House of Representatives passed House Bill 49 without Governor Kasich’s proposed tax plan and his income tax cut, made several changes impacting economic development, rolled back the proposed Medicaid expansion, made major improvements to higher education and added funding to K-12 education.

As expected, Governor Kasich’s tax plan was the first budget item to go.  The House adopted a completely new tax plan.  The House removed the proposed tax reform plan, including proposed changes to the following taxes: income, sales, severance, commercial activity, tobacco and vapor, and alcohol.  They also struck the centralized collection proposal that would have mandated municipal income tax be collected by the state of Ohio but allowed a business to file a single annual or estimated return through the Ohio Business Gateway which a business may report and pay the total tax due to all the municipalities in which the business earned net profits.  Changes to the Ohio Local Government Fund were also scrapped.

Substantial changes impacting economic development were made to House Bill 49.  The House authorized the job creation tax credit to count employees who work from home in the job creation totals, made changes to the motion picture tax credit to require that a project must have 50% of financing secured to be eligible, priority be given to television or miniseries projects, and the Director of the Development Services Agency to charge an application fee equal to 1% of the estimated credit or $10,000 whichever is less.  The House revised the current data call center sales and use tax exemption to allow the capital expenditure to occur over 6 years instead of 5, retained funding for the Incumbent Workforce Training program at $1.25 M per year, and increased spending for the Defense Development Assistance and Ohio Edison Centers.  The House also authorized a county or municipal government to extend a pre-1994 CRA without triggering the laws enacted in 1994, and elevated the threshold for competitive bidding for port authorities to $250,000.  The House changed House Bill 49 to permits local workforce investment boards to conduct meetings by video and teleconference, and continue the ability for a county or municipality to enter into an enterprise zone agreement after October 15, 2017.  The House extended through July 1, 2019 the ability to apply the state historic preservation tax credit to the commercial activities tax, and eliminates the requirement that a new community district be over 1000 acres.  Finally, the House directed the Governor’s Executive Workforce Board to include an analysis of jobs that pay 125% of the federal minimum wage in the methodology for in-demand jobs.

The House also made major changes to the state’s Medicaid program.  They created legislative guardrails around Group VII Medicaid spending by requiring the Kasich Administration to seek Controlling Board approval on a regular basis for the Medicaid expansion, increased nursing home spending, and limited total Medicaid spending on hospitals to $6.9 B per year, and removed the non-contracting language and requires rates in effect on January 1, 2017 to continue over the biennium.

The Ohio House made several substantive changes to the higher education portion of the budget including:

  • Flat funds the State Share of Instruction and Ohio College Opportunity Grant line items;
  • Removed the proposal on textbook costs and replaces it with a textbook study requirement for public universities and community colleges;
  • Continued funding for the Federal Research Network at $3.5 M per year;
  • Provided $5 M in FY’19 for financial assistance to obtain short-term certificates;
  • Permitted a Community College to increase tuition by $10 per credit hour;
  • Clarified that tuition caps do not apply to tuition guarantee programs and removes the restrictions on increases between cohorts;
  • Exempted health insurance, auxiliary goods and services, non-instructional program fees, licensure costs, fines, travel costs and elective service charges from the tuition freeze;
  • Allowed a Community College to offer an applied bachelor’s degree if the degree is not offered by a public or private university within 30 miles and defines “applied bachelors”;
  • Required the Chancellor to investigate fees charged by institutions, prohibits the charging of any fee and permits the Controlling Board may approve the fee;
  • Required that faculty who assign textbooks must file a financial disclosure statement;
  • Reduced all clinical teaching lines by 10% in FY’18 and collapses them into one line in FY’19; and
  • Provided $750,000 for Co-op/Internship programs and provides earmarks for the 9 university programs traditionally funded through this line for their public policy schools.

The House made substantial changes to the Governor’s K-12 education plan.  They actually increased spending by $80 M—making K-12 one of the few financial winners from the House version of the budget.  They also removed Kasich’s controversial proposals to require teachers to have a private sector internships and placing non-voting business leaders on local school boards.  While the House did add K-12 school funding, Governor Kasich’s revisions to the school funding guarantee that attempts to limit paying public school districts for students they do not have survived.

House Bill 49 now moves on to the Ohio Senate who has raised questions about many of the House changes and is likely to enact additional spending cuts and policy changes to the bill with passage expected to meet the July 1, 2017 fiscal year deadline.

Economics of Trumpland

Policy is directly impacted by elections—not just in who is sent to the White House, Congress, Statehouse, or City Hall. Elections provide insight into what policy makers need to address. The 2016 President Election provides substantial insight into the fact that two economic world’s exist—the have and the have nots. Donald Trump illustrated that he could tap into the frustrations of Republican, Independent and Democratic voters from communities that both Republicans and Democrats have taken for granted and, fortunately for Donald Trump, Midwest Industrial states such as Michigan, Ohio, Pennsylvania and Wisconsin put him over the top on the backs of the “have not” communities.

“Trumpland” is communities left behind as the Industrial Revolution fads into the Information Age. Trumpland in Ohio can found in the 43 counties that provided a 25% or higher vote margin for Donald Trump over the 2012 campaign of Republican Mitt Romney. In the 2012 election, these 43 Ohio Counties gave Romney an average margin of victory of 11%. In 2016, Trump won these same counties by an average margin of 42%. This is an unprecedented shift to the Republicans and potentially provides a transformation that could eliminate the New Deal Coalition that Democrats have counted on since the Great Depression in the 1930s.

Trumpland was born through the economic chaos of industrial decline. The common strand most of these 43 Ohio counties have is that they are primarily rural but many of these communities once had a thriving industrial base that is for the most part missing. As the chart above illustrates, the manufacturing jobs that have declined nationally by 5% since 2001 have disappeared in the counties that gave Trump the largest margin of victory compared to Romney. In fact, Monroe County, Ohio gave Trump its largest margin of victory relative to Romney has literally moved from having almost 60% of its jobs in manufacturing and now has less than 2%.

Since 2010, Trumpland’s population declined at an average of 1.77%, with the largest population declines coming in the Southeastern and Northwestern portion of the State. In addition, the median household income in these areas stagnated at an average of $41,107 and the poverty level rose to an average of 13.9%, which is higher than that of the United States. More troubling, Ohio’s Trumpland lags substantially in the number of college graduates which makes the attraction of technology and white collar advanced service jobs nearly impossible as they lack the workforce for these high wage industries.

A review of the Ohio counties in which Trump underperformed Romney also illustrates how regions with a strong economic performance in the post-industrial age also did not respond to Trump’s call for votes. Delaware County underperformed for Trump more than any other Ohio county compared to Romney’s 2012 performance. Trump gained 7% less than Romney in the growing Central Ohio ex-ubran Delaware County. Trumpland didn’t reach Delaware County because the voters in this area are enjoying substantial economic success. Delaware County has a rapidly growing population as well as a poverty level of 3.1%. As Delaware County became more prosperous it began to attract highly educated people from declining population centers, which contributed to nearly one third of its population having a bachelor’s degree. Prosperous Delaware County was not inspired by the Trump narrative. While Trump still won the county, it was at a much lower margin than areas– many of which have not been considered Republican in the past.

The economics of Trumpland is clear. These former industrial regions are increasingly depressed economically and are continually losing population. The people in these areas generally grew up with the idea that the factories and industry that created an economic boom would always be there to provide jobs and a steady income. As these companies began to ship the jobs overseas and technology increased productivity and reduced manufacturing jobs, this way of life began to disappear in front of their eyes. Trump tapped into this frustration and rallied the people with the notion of reshoring factory jobs and restoring the traditional Rust Belt way of life, which in turn propelled him to the presidency.

Kasich K-12 Education Agenda Continues Status Quo

Governor Kasich’s Primary and Secondary Education spending totals $11.2 B in FY 2018, a 1.2% increase from fiscal year 2017, and $11.4 B in FY 2019, a 1.4% increase from fiscal year 2018 serving the 612 public school districts, 49 joint vocational school districts, 52 educational service centers, and 362 community schools.

Kasich K-12 Budget Proposal Highlights

Formula Amount The bill maintains the formula amount from FY 2017 ($6,000) for both FY 2018 and FY 2019 that will serve as the district base payment from the state.
Targeted Assistance The bill maintains the calculation of targeted assistance funding, which is based on a district’s value and income, to provide additional support to low wealth areas.
Special Ed Funding The bill maintains the dollar amounts for the six categories of special education services from FY 2017 for both FY 2018 and FY 2019.
Community Schools Facility Funding Community Schools receive facilities funding equal to $25 for each student in an internet- or computer-based community school and $200 in each fiscal year for each full-time equivalent pupil in all other community or STEM schools.
Gifted Student Funding The bill maintains the dollar amount in current law for gifted identification funding for both FY 2018 and FY 2019 paid to city, local, and exempted village school districts.
Third Grade Reading Bonus The bill maintains the “third grade reading bonus” to city, local, STEM and exempted village school district and community schools for passage of third grade reading test.
School Financing Transport funding a multiplier of the greater of 37.5% and 25% or the district’s SSI (for FY 2018, 19), imposes a 5% state funding growth cap, moves the funding guarantee to 95% if district’s loses more than 10% of students and a sliding scale reduction if enrollment drops from 5-10%, and keeps the Straight A Program.
Integrated Course Content Public and chartered nonpublic schools can integrate academic content in subject areas and allows a student to receive credit for both subject areas integrated into one course.
Subject Area Competency Requires a regulatory framework for academic credit to be granted for student’s work-based learning experiences.
State Tests Begins requiring the phased in release of state achievement test questions