Facing an early April target date for enacting the latest capital appropriations measure, House members on Tuesday delved into the nearly $2.4 billion bricks-and-mortar package with an eye toward sending it to the Senate by the end of the month.
If it plays out as expected – and like that last capital bill – the latest iteration (HB 497) will be processed quickly with few substantive changes. The project list has already been vetted extensively behind the scenes by Gov. John Kasich’s administration and his fellow Republicans in control of both chambers of the General Assembly.
The capital bill’s introduction and first hearing came as the House GOP, as promised, split up the governor’s mid-biennium review budget into separate bills that will be heard in 11 different committees. (See separate story) The two budget packages are expected to consume much of the legislature’s attention during the spring session.
Providing introductory testimony to the House Finance & Appropriations Committee, Office of Budget and Management Director Tim Keen said the recommended expenditures for the fiscal year 2015-2016 capital biennium were “made after a careful process that has prioritized the most pressing needs of state government, schools and higher education, with particular emphasis given to each project’s impact on jobs and economic growth.”
“Most expenditures are focused on necessary maintenance and upkeep of the state’s current capital assets, while much of the new construction funded in this bill is used to replace existing facilities that are no longer cost-effective to repair,” he said.
The bill also contains capital “reappropriations,” or generally noncontroversial provisions that allow for ongoing projects to receive continued funding. Mr. Keen explained that the reappropriations are necessary because spending authority is limited to two years.
Of the bill’s $2.38 billion in capital appropriations, $2.07 billion is in general revenue fund-backed bonds and the rest – $317.1 million – comes from various sources outside of the GRF, according to the administration.
The bill includes:
· $675 million for local school construction projects overseen by the Ohio School Facilities Commission.
· $574.3 million for maintenance and renovations at state-owned facilities including state parks, prisons, mental health facilities and other public buildings.
· $454.5 million for Ohio’s 37 public colleges and universities.
· $369 million for local infrastructure projects administered by the Ohio Public Works Commission.
· $100 million for the Clean Ohio program for outdoor recreation projects and the preservation of open spaces and farmlands.
· $160 million for “community projects.”
Mr. Keen said the governor followed the process of the last capital budget (HB482, 129th General Assembly) in crafting the allocation to colleges and universities.
“The governor has again asked higher education to take the lead in developing a collaborative capital funding request that prioritizes the needs of the entire university system ahead of the desires of individual institutions,” he told panelists. “The capital bill before you presents, as adopted, the collaborative committee’s recommendations for the funding of campus-level projects.”
The OBM director said the majority of the higher education funds – $356 million – are targeted to maintenance and repair of existing campus facilities.
Some of the non-GRF funds will go for ongoing work at OSFC, which has already spent billions in matching funds to build and maintain local schools.
Of the $675 million appropriated in the bill for K-12 buildings, $575 million is in GRF-backed debt and $100 million is from “lottery profit proceeds attributed to the video lottery terminal licensing fees to be paid by the racetracks,” Mr. Keen said.
“These VLT license fees are upfront, one-time fees and therefore represent non-recurring revenue. As a result, we believe it is appropriate to again apply these one-time revenues toward school construction projects, as was done in the current capital budget.”
Another non-GRF chunk – $69 million – comes from a Revolving Loan Fund for local infrastructure projects under the PWC that’s part of a total of $444 million in mostly bonds allocated for such work, the OBM director said.
In regards to state agency capital needs addressed in the bill, Mr. Keen said, “The governor’s recommended appropriations are necessary to protect our state infrastructure and maintain the physical facilities in which the citizens of Ohio have already made a significant financial commitment.”
Among the agency allotments is $130 million for the Department of Rehabilitation and Correction, which is experiencing a jump in the prison population despite extensive measures to divert low-level offenders.
“This level of appropriation represents a significant increase from the department’s capital budgets in recent years, but is necessary because prisons constructed 30 years ago are entering a phase that will require more intensive renovations,” Mr. Keen said.
One of the larger agency allocations – $236.4 million – would go to the Department of Natural Resources.
“As you know, Ohio can take pride in having one of the highest rated, most diverse and most heavily visited state park systems in the nation. But this is also a system that’s showing its age, as recreational facilities built in the 1950s and 60s are past due for long-delayed repairs and renovations,” Mr. Keen said. “Appropriations in HB497 take an important step to remedy that situation in our state parks and other ODNR facilities.”
The bill also authorizes two technology projects to be funded with Certificates of Participation, an alternative funding mechanism to GRF-backed bonds under which investors purchase a share of lease revenues of a program rather than bonds being secured by those revenues.
The COP projects in the bill include $45 million for the Department of Administrative Services to implement the Enterprise Data Center Solutions project and $10 million for the state treasurer’s office to replace outdated computers with a new Treasury Management System.
Mr. Keen said the bill contains a few language updates to go along with the appropriations, mainly clean-up provisions related to the dissolution of the Ohio Bonding Authority and the reinstatement of the Transportation Building Fund.
While the administration did not specifically delineate community projects included in the proposed bill, several items requested by eight regional economic development groups and a committee charged with vetting arts projects throughout the state surfaced among the appropriations.
For example, the bill includes a $5 million appropriation for restoration of Cincinnati’s Union Terminal – funding which exceeded the $3.2 million requested.
The legislation also calls for a $2 million appropriation for the Cleveland Museum of Art, which requested $1 million for an expansion, and a $1.1 million appropriation for the Columbus Museum of Art – the full amount requested.