On March 15, 2011 Governor Kasich released his fiscal years 2012-2013 operating biennial budget and then later in the day held a town hall meeting with key cabinet members and staff to discuss his budget and address questions.

The total two-year budget is $55.5 billion, which includes a 1% increase in 2012 and 6% increase in 2013. This balanced budget proposal includes a mix of tax incentives, restructuring of state agency programs, reduction of local government funding and privatization of state functions. The proposal also addresses the estimated $8 billion deficit and the loss of one-time federal stimulus funds.

Please note that the actual legal/legislative language is currently being drafted and will not be available until the end of March. The information provided has been obtained from the "Blue Book" (http://obm.ohio.gov/SectionPages/Budget/FY1213/ExecutiveBudget.aspx), which is the official budget summary.

Some of the highlights of the Governor's budget proposal include:


  • Preserving the $800 million two-year income tax cut - no tax increases;
  • Adding $34 million in tax incentives aimed at spurring job growth;
  • Reducing the number of employees at the Ohio Department of Taxation by 171 through the closing of regional offices in Akron, Cincinnati, Cleveland, Dayton, Toledo, Youngstown and Zanesville - estimated to save $ 1 billion;
  • Reforming prison sentencing to divert low-level offenders to community-based corrections programs;

Local Government:

  • Saving an estimated $2 billion through reductions in the Local Government Fund and Public Library Fund and through general tax changes;
  • Encouraging local governments to engage in shared services and back office functions;
  • Creating a health insurance program that local governments and school districts may join;


  • Saving $1.4 billion through the newly-created Office of Health Transformation, which will completely replace Governor Strickland's Executive Medicaid Management Administration ("EMMA") with a new system of "outcome-based medicine" that will reward quality over quantity;
  • Modifying Medicaid payment rules to focus on health outcomes;
  • Not reducing Medicaid eligibility;
  • Reducing payments to nursing homes;
  • Reducing payments to hospitals;
  • Reducing payments to children's hospitals;
  • Integrating behavioral healthcare services with physical healthcare services;
  • Expanding long-term care services with a focus on home and community-based care;

Primary Education:

  • Increasing state basic K-12 funding by 2% in 2012 and 1.5% in 2013;
  • Repealing Strickland's Evidenced Based Model for funding;
  • Increasing EdChoice scholarships and removing cap on community schools;
  • Promoting merit-based teacher pay;
  • Establishing "Teach for America" in Ohio, a program that recruits recent college graduates and professionals to teach for two years in low-income communities;

Higher Education:

  • Capping tuition increases at 3.5%;
  • Increasing State Share of Instruction by 2.7% in 2012 and 0.9% in 2013;
  • Requiring universities to produce plans to offer some three-year bachelor's degrees;
  • Requiring public colleges and universities to increase their faculty teaching loads by one class each year;
  • Allowing colleges and universities to replace multiple prime contracting with single prime contracting and eliminate prevailing wage requirements to bring construction costs down;


  • Saving $6.6 million through the sale of five state prisons: the Lake Erie Correctional Institution in Ashtabula County; the North Coast Correctional Treatment Facility in Lorain County; the Grafton Correctional Institution; the North Central Correctional Institution in Marion; and the Marion Juvenile Correctional Facility;
  • Leasing the Division of Liquor Control for 20 to 25 years for $1.2 billion in up-front revenues to help fund the new JobsOhio economic development program (permitting will remain a function within the Ohio Department of Commerce);


  • Opening 200 acres of public lands to oil and gas exploration.

Additional Policies Under Consideration:

While not included in the budget proposal, Governor Kasich is said to be considering additional reforms, such as the privatization of the state lottery and the Ohio Turnpike. It is estimated that the lease or sale of the Ohio turnpike would provide $3 billion in savings with $600 million to be applied to existing bonds. In addition, Governor Kasich is projecting a savings of $1 billion in local government spending through S.B. 5, the pending collective bargaining bill.