OAC Operations and Public Affairs Director Justin Nigro and HR and Fiscal Director Carla Oesterle walk listeners through a brief overview of the state budgeting process. They also provide an update on the current status of the OAC's budget. Ohio Arts Council · ArtsChat Ohio: Breaking Down the Budget Process 2023 Transcript Carla: Hello, everyone! I’m Carla Oesterle, the HR and fiscal director for the Ohio Arts Council. Justin: And I’m Justin Nigro, the OAC’s operations and public affairs director. Carla: We’re here to welcome you back to ArtsChat Ohio! Justin: That’s right! ArtsChat Ohio is the Ohio Arts Council’s audio blog where, on occasion, we share stories and news with you to keep you in the know about all sorts of topics. Carla: And hey, it’s budget season again for the State of Ohio! Justin and I are here today to talk about the state’s budgeting process from start to finish. Justin: That’s right! So, we’ll start with a few basics about how the State of Ohio crafts its budget—and what that means for us at the Ohio Arts Council and you, as somebody interested in the arts. Carla: Let’s get started! First things first, it’s important to know that Ohio budgets biennially. So, we have budgets in place for two years at a time unless there’s a major economic event, like a recession. Justin: That’s right. So, keep that in mind—it’s a two-year budget. And how does that budget come to be? It all starts with the Governor of Ohio in the executive branch, who makes budget recommendations to Ohio’s legislative branch, also called the Ohio General Assembly or Ohio Legislature. You’ll hear all those terms used together. So, this formally happens in February usually—again, the Governor, as Ohio’s chief executive, makes budget recommendations to the legislature. Then each chamber of the legislature—the Ohio House of Representatives and the Ohio Senate – makes its own recommendations as the budget is further crafted and questioned. Legislators look at revenue projections, analyze proposed expenditures, and hear testimony from every state agency and lots of advocates in order to inform the state’s budget choices. And then, ultimately, the legislature holds the power of appropriation. Now in practice, the legislature does not act totally alone—it works closely with the executive branch to exercise that power. Carla: So, to sum it up, it’s a two-year budget. It’s a process that involves the Governor at the start and finish, and the state legislature in between, as the budget is developed. The next thing we should know is about Ohio’s fiscal year. Ohio’s fiscal year starts on July 1 and ends on June 30. But, on July 1, 2023, we begin a new fiscal year—Fiscal Year 2024. Happy new fiscal year! For us at the OAC, every new fiscal year begins with a new round of grants being issued, right after our board makes final decisions at their board meeting in July. Justin: You can imagine the flow a bit—the state’s elected officials determine the budget, and then we make grants based on available resources. Finally, and this is basic but worth saying—our budget, any budget, is made of revenues and expenditures. So, money in, money out. The state’s revenues are just projections until they are received. Revenue estimates can change if there’s a recession or a windfall. On the other side of the ledger, expenditures are similar to what we call appropriations—you’ve heard me use that word—appropriation is the limits that a state agency can spend in each line item in any given fiscal year. Agencies can underspend appropriations, or appropriations can be reduced by the Governor, but agencies cannot go over their appropriations without some sort of legislative action. Why is that case? Great question—doing it rhetorically to myself. In brief, Ohio’s budget—almost every state budget in the nation—must balance. We are not like the federal government. We cannot print money; we cannot use deficit spending—Ohio’s budget, state government budgets in general, must balance. Carla: So, with that in mind—the balance of the budget—where are we now in the process? Justin: We are right in the middle of legislative consideration, Carla. In February, the Governor put forward budget recommendations that the legislature is currently considering. And, of course, the Governor developed those recommendations with input from agencies like us at the Ohio Arts Council and the advice of his Office of Budget and Management, or OBM. And, new this cycle, state agencies like the OAC have had a chance to ask for appropriations beyond just flat funding. So, for decades really, that wasn’t the case. We could just ask for what we had the year prior. So, after that, again—we’ll talk about this a couple of times—but after that consideration happens by the Governor’s office and his team at OBM, the House will then consider that executive proposal. They’ll spend from February through April reviewing the budget that the Governor’s put forward, and then the Senate review will begin April, May, and June, sometimes with some overlap between those two chambers. In both chambers, there are opportunities for amendments. Then, by June, the House and Senate will each have each passed a different version of the budget, with different policies, different pieces of legislation included, and different appropriation levels, oftentimes for agencies in each version of the bill. Carla: So, thinking about common ground and finding compromise, how do they do it? Justin: Not easy, right? You’ll end up with three proposals by the end of it—you’ll have the Governor’s, the House, and the Senate. They’ll form a conference committee to reconcile the differences between those proposals, those bills, at that point—the budget bill. They produce a “conference report”—usually aiming to do that by the last week in June or so. And then, the conference report cannot be amended when it goes back to each chamber. So that’s it, that’s really the final say when you get to the conference report. Typically, the Governor and the executive branch have some input into the conference report as well to help set the stage for final passage. Once that final bill is sent to the Governor, the Governor can sign it into law but also has the power to use something called that line-item veto to delete pretty much any provision in the budget bill. Although the Governor can veto policy items, the Governor cannot increase or decrease appropriations at that point—the Governor can only totally eliminate them with the veto pen. The legislature, in turn, retains the ability to override the governor’s veto through supermajority votes. So those, in theory, if they were to happen, they would happen later in the summer or into the fall even. But really, the budget’s enactment, the initial state budget for FY 24-25 this cycle, all of that should take place by June 30. And then, like Carla said, “Happy fiscal new year,” Fiscal Year ‘24 on July 1 for us with a new two-year budget. Carla: That’s a lot to think about, Justin. And I’m to going to ask you to repeat one more time a quick go-over of how it works. Justin: Of course. So, again rewinding a bit, the Governor has proposed recommendations for the Ohio Arts Council’s budget that happened back in February. The Governor proposed keeping our budget at a really healthy, stable, steady level that was at a historic high. Flat from 2023, but our budget was then at a historic high, so we were lucky to be at $40 for the arts. That’s where the recommendation was going into ’24 and ‘25. In late April, the House then proposed and approved its own version of the budget, which included an extra $10 million in public funding for OAC grants, so that’s $5 million in each year over the two years. The OAC had identified about $11 million in need, so we’re very grateful to both the Governor and the Ohio House for their support of the agency. So, that also means we’re very close to reaching our goal. The Senate now has a chance to propose its own version of the budget, which they vote on in June. So, right now, all attention is on the 33 members of the Ohio Senate. And we’re at the point when people who care about the arts in the state—you know, whether they are arts advocates, or businesses, or patrons, supporters, audience members, educators, students, all sorts of folks who benefit for the arts in the state—it’s now their chance to justify why public funding for the arts through the Ohio Arts Council is important, and we’ll see where our budget ends up as a result! Carla: Terrific. Thank you, Justin. I think that wraps up our conversation about the nuts and bolts of our state government budgets and the process that we go through. Listeners, if you haven’t read Executive Director Collins’ testimony, it is worth reading to learn more about the work we do through our budget and how we put our funding to work. In addition, there is a Budget Overview document available on our website, that really tells how we make the case for the arts and explains our budget request for more arts funding. For now, feel free to reach out to me or Justin directly if you have budget questions—we’re happy to make ourselves available. Justin: That’s right! And stay tuned for the next edition of ArtsChat Ohio. Show Notes ArtsChat Ohio Audio File Budget Testimony Budget Overview 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 .