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ArtsChat Ohio: Breaking Down the Budget Process

ArtsChat Ohio is an audio blog bringing you the latest news and updates from Ohio Arts Council staff members. These conversations are recorded to be enjoyed using the audio player below. A transcript and show notes are also included. 

 

Transcript
Audio transcript edited for clarity.

CARLA: Hello everyone! I’m Carla Oesterle, the Ohio Arts Council’s fiscal operations associate.

JUSTIN: And I’m Justin Nigro, our operations and public affairs director.

CARLA: We’re here to welcome you to another session of ArtsChat Ohio. It’s budget season for the State of Ohio. Justin and I are here today to talk about the state’s budgeting process from start to finish.

How are you today, Justin? Are you feeling ready to talk money?

JUSTIN: With you, Carla, always!

CARLA: Great! So, I think it’s important to start with a few basics about how the State of Ohio goes about budgeting, and then we’ll walk through the budget cycle. First things first, it’s important to know that Ohio budgets biennially. So, we have budgets in place for two years at a time. Things can change, of course, in those two years, but the two-year plan usually does stay intact unless there’s a major recession or unexpected surplus of funds.

JUSTIN: Second, let’s get to know the players. First, you have the governor of Ohio in the executive branch, who makes budget recommendations to Ohio’s legislature, the Ohio General Assembly. So, the governor, as executive, sets the tone to start budget considerations, and the governor also holds a lot of power at the end of the process through the line-item veto. More on this later.

The legislature also holds power all throughout the process, especially as the budget is being shaped and questioned. Like the governor, they look at revenue projections, analyze proposed expenditures, and hear testimony from every state agency and lots of advocates and citizens in order to inform the state’s budget choices.

And, if you remember your middle-school civics, the legislature holds the power of appropriation. They ultimately hold the purse strings. In practice, the legislature works closely with the executive branch to exercise that power.

CARLA: Next, our fiscal year starts on July 1 and ends on June 30, so we currently are living in State Fiscal Year 2021. That means on July 1, 2021, we’ll begin living in the “future”—Fiscal Year 2022.

JUSTIN: Last, I think it’s important to remember—and this is basic, but important—that a budget is made of revenues and expenditures. The revenues are projected, so they can change if there’s a recession or windfall. The expenditures are essentially what we call appropriations. Appropriations are the maximum limit an agency can expend in each line item in any given fiscal year.

Agencies can underspend appropriations or have them cut, but they cannot go over their appropriations within some sort of legislative action. Linked with this idea is that Ohio’s budget—almost all state budgets—must balance. We are not like the federal government and cannot print money, so to speak, to balance our budget, or use major deficit spending for ongoing operations and policies.

CARLA: Very cool. So, with that in mind, that future budget is the one you’re hearing about in the news right now—it covers FY 2022, which begins July 1 of this year, and FY 2023, which begins on July 1, 2022. Those are the budget recommendations that the governor put forward and that the legislature is currently considering.

So, let’s talk next about how the budget process kicks off. It starts with the executive branch and the Office of Budget and Management (OBM). The OBM director is appointed by the Governor and works with the Governor’s Office to start the process. Planning starts early—about a year before the two-year budget is enacted. It starts when OBM gives agencies something called “guidance” to plan their budgets. Yes, “guidance” is the official title, and the purpose is—as the title suggests—to guide state agencies, including the Ohio Arts Council, through the process of putting together their plan for different budget “scenarios.” Those scenarios typically have agencies plan to receive 90 percent of their old (aka current) funding level—that’s a 10 percent cut—or flat funding at 100 percent of their old (aka current) funding level.

JUSTIN: And so, Carla, when does our agency typically receive that guidance?

CARLA: We received guidance for the FY 2022-23 budget in July 2020. And keep in mind, that’s for a budget beginning July 2022.

So that began a two-month process of internal budget planning and development.

JUSTIN: I remember it like it was yesterday! So that entails a compilation of a lot of technical information, which you lead, Carla, as well as some narrative writing, which I help to coordinate along with our executive director, Donna Collins.

CARLA: Oh yes. Lots of work, lots of fun. So, we submit that required information in September, and that gives OBM and the Governor’s Office a few months to review not only our budget information and scenarios, but those of all state government agencies.

JUSTIN: A budget is a set of priorities, and that’s essentially what the governor sifts through. What are the priorities of this administration? And so, February, then, the governor releases the executive recommendations, and that begins the more visible, public discussion of the state budget—which we’re in right now—which lasts right through June.

I should mention that this is often the time when people who care about the arts throughout the state—arts advocates, businesses, patrons, and supporters, all the many artists and organizations who make up our state—that’s their chance to make known why public funding for the arts is important.

And for our part, we have a few resources available on our website to help inform the public about that topic, our Fast Facts and Budget Overview. They’re worth a look. Have you taken a look at those, Carla?

CARLA: You know I have!

JUSTIN: Excellent.

CARLA: Do you want to talk more about the legislative process, Justin? That’s your jam.

JUSTIN: It is my jam, sure. So, both the House and Senate have Finance Committees who review the governor’s budget recommendations and legislation. Given the size of the budget, both chambers also tend to divide the work into subcommittees or distribute the work to other standing committees or jurisdiction in either chamber.

Here at the Ohio Arts Council, our budget tends to be reviewed by the committees with jurisdiction over higher education. That means our executive director, Donna, has the chance to testify on behalf of the agency once in each chamber before House and Senate members on those committees.

CARLA: Which chamber goes first, Justin?

JUSTIN: The House goes first, typically. They spend February, March, and April reviewing the budget, and then the Senate review follows that, usually occurring in April, May, and June, sometimes with overlap in the middle.

In either chamber, there are typically three opportunities for amendments—twice in committee, and then once on the House or Senate floor before final passage. Each of those stages of amendment gets progressively harder within each chamber. Then, by June, the House and Senate will usually have each passed a different version of the budget, with different legislative policies and appropriation levels for agencies.

CARLA: How do they find compromise on those differences?

JUSTIN: Great question. The House and Senate, toward the end of the process, form a conference committee to reconcile the differences between these bills, and they produce a “conference report.” That’s usually done by the last week in June or so. The conference report cannot be amended when it goes back to each chamber, and typically the governor and executive branch have some input into the conference report as well, so that sets the stage for final passage and approval of the budget.

Once a final bill is sent to the governor, the governor can sign it into law and has the power to use line-item veto to delete anything in the budget bill. Although the governor can veto policy items, the governor cannot increase or decrease appropriations at that point—only eliminate them totally. And then last but not least, the legislature at the very end, retains the ability to override the governor’s vetoes through supermajority votes.

Phew. That’s a lot.

CARLA: That is a lot.

JUSTIN: So, this all takes place by June 30, and then, as you said, Carla, we enter into Fiscal Year 2022—the “future”—on July 1 with a new two-year budget in place.

Every so often, there are times when there is not agreement among the governor and legislature. Typically, in those cases, continuing budgets are passed to keep government running at a minimal level, at least. The federal government operates this way a lot, but it’s more rare at the state level here in Ohio to see that type of governance take place.

CARLA: And all the while as that is going on, I’m busy in the fiscal office closing out the old fiscal year, starting up the new fiscal year, doing all the work that goes along with managing the details of the agency’s budget along with our executive director.

JUSTIN: That’s right. And we’re all very thankful for that, and for you, Carla, and your work in the fiscal office.

So, I think that wraps up our chat on the very basic nuts and bolts of how our state government budgets here in Ohio—the broad strokes at least. If you haven’t read Donna’s testimony, you can find a link to it in the show notes on our website. It’s definitely worth reading to learn more about the work we do through our budget and how we put our funding to work in the state of Ohio. Her testimony was well-received in the House—she gave it back in February. Lots of engaged members, and she’s always so good at answering their questions. So, we hope to have a similarly positive experience in the Senate as well once Donna testifies there.

CARLA: Feel free to reach out to me or Justin directly if you have budget questions. We are happy to nerd out and make ourselves available.

JUSTIN: That’s right! And stay tuned for the next edition of ArtsChat Ohio.


Show Notes

House Bill 110 Ohio Arts Council FY 2022-2023 Biennial Operating Budget Testimony: https://oac.ohio.gov/Portals/0/about/pdfs/FY_22_23_OAC_budget_testimony.pdf?ver=9lGOrevaDP0%3d
Justin Nigro: justin.nigro@oac.ohio.gov | 614-728-4445
Carla Oesterle: carla.oesterle@oac.ohio.gov | 614-728-4471
 

ABOUT THE OHIO ARTS COUNCIL
The Ohio Arts Council is a state agency that funds and supports quality arts experiences to strengthen Ohio communities culturally, educationally, and economically. Connect with the OAC on Facebook, follow us on Twitter, or visit our website at oac.ohio.gov.

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