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Governor says no local projects to be funded in next state capital budget

The state of Ohio's next capital budget will include no funding for local projects such as parks, museums, and recreational facilities, if Governor John Kasich gets his way.

Assuming the Ohio General Assembly concurs with the governor, which appears likely, elimination of "community projects" from the capital budget would be another body blow to local governments, which are already facing a loss of more than $400 million in state funding in fiscal years 2012 and 2013.

While appropriations for local projects have steadily declined in the last few capital bills, legislators still found a way to fund approximately $100 million of these community projects in the last capital bill enacted in 2008.

But last week, Tim Keen, Kasich's director of the Office of Budget & Management, said in a memorandum to directors and fiscal officers that local projects would not be funded in the governor's capital budget proposal.

"Capital bill appropriations directly impact operating budgets via debt service payments on the bond issuances used to support capital expenditures," Keen said.

"Therefore, consistent with Governor Kasich's commitment to restrain government spending, it is imperative that the FYs 2013-2014 capital bill also be restrained in size," Keen wrote in the memo, which accompanied the capital budget guidance documents.

"Accordingly, the bill will focus on necessary maintenance and upkeep of the state's current capital assets with an extremely high threshold that would have to be met in order to fund new construction.

"Under these circumstances, the bill will contain no community projects. Thus, all state agencies, colleges, and universities should use the preparation of their six-year capital plan and their two-year capital funding request as an opportunity to carefully review their capital needs and only request funding for those projects that are most essential."

Senate President Tom Niehaus (R-New Richmond) said Tuesday in an interview that he has yet to read the capital bill guidance but agrees with an approach of fiscal restraint.

"We must be cognizant of the fact that we are in very difficult economic times right now and so any spending that we do based on borrowed funds we just need to review carefully," he said. "But this is a process and this the very beginning of the process and so I'm sure that we will have vigorous debate over the coming months.

"We have heard from entities around the state that there is a need for capital investment and they are looking for assistance from taxpayers through the state capital bill," Niehaus said. "That's why we have a process to have the hearings and determine what those needs are."

Even the more traditional beneficiaries of the capital budget, such as higher education institutions and state agencies, are likely to be disappointed by the meager size of the forthcoming bill.

In recent times, colleges and universities alone were receiving roughly $500 million in funding for buildings and improvements every two years.  That changed in 2010, when there was no capital bill at all, and the upcoming bill is not expected to provide anything close to that level of funding.

Alll state agency capital budget requests must be submitted to the Office of Budget & Management by Dec. 16. The budget office will spend the next three months or so planning the bill for a spring rollout, with legislative hearings to follow.

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