Marc Kovac - Take a break from the campaigns and think about the budget

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COLUMBUS -- While the eyes of Ohio are focused on Barack Obama and Mitt Romney and the Nov. 6 general election, many eyes at the Statehouse are shifting their gaze to next year's biennial budget.

Gov. John Kasich has offered plenty of glimpses of that unfolding debate.

Earlier this month, he called the heads of the state's public colleges and universities to his ceremonial offices to announce a cooperative approach to funding higher education. They used a similar process earlier this year to hash out capital spending.

The governor also has been touting Ohio's economic turnaround, included during a speech at the Republican National Convention, with a laundry list of accomplishments: balanced budget, closed budget gap, dropping unemployment, rainy day fund going from pennies to close to $500 million, lots of Ohioans finding work.

But Kasich has made it clear the state has a long way to go.

"People think we have all this money and we're out of the woods, and we're not," the governor told reporters last week. "A half a billion dollars in the rainy day fund sounds like a lot of money, but, boy, you chew that up in a couple of weeks. ... There are days when we spend almost that much in one day."

He added, concerning the next two-year budget, "There's not going to be a lot of money out there. We're not flush. Our economy is doing better, but it's anemic. We're not off to the races here. It's going to be another tough budget with priorities."

The latter likely will include another attempt at revamping the K-12 school funding formula, further Medicaid reform and tax cuts.

"It's going to be a heck of a budget," Kasich said.

The governor is continuing to push for an increase in taxes on oil and gas produced via horizontal hydraulic fracturing, or fracking.

Some Republican lawmakers have balked at Kasich's plan, which calls for upping severance taxes and using the proceeds to implement a corresponding income tax cut.

"We want the big out-of-state oil companies to pay more for what they take out of our state so we can all have a tax cut here," Kasich said, adding, "Plus we'll have additional tax reform that will come."

Lawmakers could address the issue during the lame duck session after the November election, or they could wait and deal with severance taxes in the new budget. Kasich is confident of the end result but not sure of the timing.

"We're pushing everyday," he said. "The sooner we can get it done, the better. I can't make a prediction now as to when it's going to happen, but it will happen."

All of this will make for an interesting and heated debate, and one that will dominate Ohioans' attention in the new year.

Or now, if they're tired of presidential politics and want to focus on something else.

"It's not easy," Kasich said of the coming budget cycle. "I wish we had incredible growth in America. That would solve so many of our problems. ... This is going to be another tough budget."

(Marc Kovac is the Dix Capital Bureau Chief. Email him at mkovac@dixcom.com or on Twitter at OhioCapitalBlog.)

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