An Ohio Capital Budget with a Twist

State capital budget activities, at least in one chamber of the Ohio General Assembly, are getting off to an earlier start than usual. That’s because Ohio House Finance Chair Jay Edwards (R-Athens) is asking groups to submit their capital budget requests to his office no later than December 18, 2023. Senate Finance Chair Matt Dolan (R-Chagrin Falls) is sticking with a more traditional calendar and asking for projects to be submitted to his office no later than April 8, 2024. But there is a bit of twist this time around in that legislators will also be divvying up the $700 million general revenue-funded One-Time Strategic Community Investment Fund that was created in last year’s state budget. A dollar amount has yet to be attached to the capital bill.

Legislators will also be divvying up the $700 million general revenue funded One-Time Strategic Community Investment Fund.

The Basics of the Capital Budget and the One-Time Strategic Community Investment Fund

In addition to the traditional biennium capital budget process the legislature is preparing to embark on, the legislature has an additional fund to support local projects this year. H.B. 33 transferred $700.0 million from the General Revenue Fund (GRF) to the newly established One-Time Strategic Community Investments Fund. While the legislation does not specifically outline the allowable uses for this fund, the hope is that it will fund meaningful, transformational one-time investments that positively affect Ohioans and will not need additional state funding for completion in the future. Arguably the most noteworthy benefit of having the additional funds is that it is not bound by the many constraints that apply to the capital budget. Requesting funding from the One-Time Strategic Community Investments Fund follow the same timeline as capital projects in both the House and Senate.

What are Community Projects?

The Greater Cleveland Funders Collaborative (GCFC), previously the Funders Collaborative on COVID Recovery (FCCR), which includes United Way of Greater Cleveland, is developing a prioritized short list of Capital Budget requests from human service organizations in Cuyahoga County to assist our state legislators as they begin their work on the Ohio Capital Budget over the coming months. Check out what projects were funded in Cuyahoga County in 2022.Community projects make up only a small amount of the budget, they are important to local communities. Community projects might include parks, cultural institutions, sports stadiums, museums, social service agencies, and hospitals; legislators are eager to secure these types of cultural and infrastructure projects for their districts.

The 134th General Assembly appropriated $3.51 billion including $2.28 billion in new debt for the biennium ending June 30, 2024.

The 134th General Assembly appropriated $3.51 billion including $2.28 billion in new debt for the biennium ending June 30, 2024. Of this total amount, $149,517,000 million was appropriated for community projects. There were 49 Cuyahoga County community projects funded for a total of $20,549,500. Seven of these projects were for health and or human service purposes. These projects were awarded funds totaling $3,850,000 representing about a fifth of the amount appropriated for community projects in Cuyahoga County. That 20 percent for health and human service community projects is fairly typical.Ohio Office of Budget and Management Director Kimberly Murnieks, in a memo to State Senator Matt Dolan (Chair, Senate Finance Committee) and State Representative Jay Edwards (Chair, House Finance Committee), outlined the information that community projects should be ready to supply OMB:

• Project name, a general description of the overall project, and a specific description of the purposes or specific portion(s) of the overall project for which state capital dollars would be used.
• Physical location and address of the project (city/village/township and county).
• Legal Entity Name and any alternative Doing Business As (DBA) trade names on file with the Ohio Secretary of State and the organization sponsoring the project.
• Identification of the facility or asset owner during construction and after work is completed.
• Estimated total project cost, including an itemized breakout of those costs over the next three capital biennia (FY 2025-26, FY 2027-28, FY 2029-30).
• Amount of state funding being requested for the FY 2025-26 capital biennium.
• Amount and source of non-state funding, including private, not-for-profit, local, and federal funds supporting the project.
• The amount and source of state funding the project or asset has received in the past, and whether the project will be requesting additional state funding in future capital biennia.
• Identification and a description of any use by or involvement of private for-profit businesses or not-for-profit entities.
• Identification and description of any use or involvement by the federal government.
• Identification of the annual amount of and source(s) of funding for ongoing operational costs.
• Any additional relevant information that the requesting organization believes would be of assistance in evaluating the project’s value and eligibility to receive state capital funding; and
• Description of how the project’s support will benefit the public and how often the public will be able to gain access to the facilities or services provided by the community project funds.

Key players of the capital budget process

House Finance Committee:

• Chairman Jay Edwards (R-Nelsonville)
• Vice Chairman Jeff LaRue (R-Violet Twp.)
• Ranking Member Bride Rose Sweeney (D-Westlake)
• Dan Baker, Ohio House Majority Finance Director
• Stephen Harris, Ohio House Minority Finance Director

Senate Finance Committee:

• Chairman Matt Dolan (R-Chagrin Falls)
• Vice Chairman Jerry C. Cirino (R-Kirtland)
• Ranking Member Vernon Sykes (D-Akron)
• Ray DiRossi, Ohio Senate Finance, Majority, Director
• Terese Herhold, Ohio Senate Finance, Minority, Director

Office of Budget and Management

• Kimberly Murnieks, Director
• Christina Frass, Assistant Director

Governor’s Office

• Governor Mike DeWine
• Lieutenant Governor Jon Husted
• Giles Allen, Director of Legislative Affairs, Office of Ohio Governor Mike DeWine
• Monique Cox-Moore, Northern Ohio Regional Liaison and Cultural Outreach Coordinator
• Cabinet Directors

What projects can the State Capital Budget fund?

Ohio’s state capital budget is typically passed every 2 years in the second year of a General Assembly. The capital budget is legislation where the State of Ohio appropriates resources to state owned infrastructure as well as other government purpose projects called community projects. Importantly, these projects must be eligible to be funded from state bonds pursuant to Article VIII of the Ohio Constitution, as well as state bond law, and federal tax law. This is a critical point and project sponsors would be wise to consult with Ohio’s Office of Budget and Management (OBM) to see whether a potential project meets this test. A list of examples of non-eligible capital projects is included at the end of this article.While community projects make up only a small amount of the average $2 billion capital budget (typically around 6 percent); they often generate a lot of attention in both the legislature and local communities.

How to increase your odds of securing State Capital funding for your project

Successfully seeking state support for a community project through the capital budget requires a well thought out advocacy strategy and plan. Here are a few recommendations you might consider.

1. Ensure that senior staff and board leadership are committed to the causeObtaining state capital funds requires the senior leadership of an organization and its board to be fully committed to helping personally make the case. The CEO and the board chair can expect to spend lots of time with legislators and others, giving tours, attending events, and otherwise looking for opportunities to spend time with legislators so they can make their case once, twice, and maybe three times. Spend the time mapping out connections between board members and staff with state policymakers. If you have board members and staff who are politically active, all the better. Just know you are going to be spending some time on Interstate 71.
2. Decide whether you need outside help to make your caseMost successfully funded capital projects retain outside lobbying assistance. But this assistance usually comes at a price. Organizations can typically end up paying between $3,000 and $10,000 a month in retainer fees for a single lobbyist or a firm. You may have to sign a contract for a full 12-month time period. If your overall project cost is $100,000; it might not make sense to retain a lobbyist. It might be better to invest those funds in the project itself or in developing government relations capacity on your own staff and use them to lead your state capital project effort. If you do decide to hire a lobbyist, ask if they are representing other organizations with a capital request. You can also ask about their success in prior capital budgets and their relationships with key legislators. The table below shows Greater Cleveland health and human service and related earmarks that were included in the most recent operating budget along with the lobbying firm that assisted.
3. Clearly make your caseDraft a one to two-page document that includes a project name, a general description of the project, the overall budget, funds committed by other sources, and a description of how state capital dollars would be used, note if the project has received state capital funds in the past, and finally, a describe how the project will benefit the public and how the public will be able to access the facility or services supported by state funds. If the project has been endorsed by key community leaders, you might include that as well.
4. Tell everyone about your projectShare your two-pager capital project summary with everyone.  A good capital budget lobbying effort includes a strong communications component. This can include thanking your legislative champions in your publications and on social media. You will want to assemble a list of everyone who needs to be reached and make sure that staff and/or board members are linked with those people with whom they have a relationship with. This may be obvious, but some capital projects flounder because proponents never talked to the legislators who represent the area where the project is located. This typically happens when a group is solely focused on legislative leadership. If your project benefits people living outside of the location where it is being constructed, reach out to legislators who represent those areas as well.
5. Get on every listMost state legislators, as well as local community organizations like chambers of commerce, maintain a list of state capital requests that they are supporting. As the capital budget gets underway, legislators and others will share their lists with the Governor’s office, the state budget office, legislative caucus staff (particularly their finance staff), the offices of the Senate President and the Speaker, and of course chairs of the Ohio Senate and Ohio House Finance Committee. If your project benefits people living outside of the location where it is being constructed, reach out to legislators who represent those areas as well. If they are a member of the Finance Committee in the House or Senate, ask them to speak to the Chair to advocate for your project. Another list to get on during this capital budget process is the list being developed by the Greater Cleveland Funders Collaborative (GCFC) previously the Funders Collaborative on COVID Recovery (FCCR). They plan to develop a prioritized short list of Capital Budget requests from human service organizations in Cuyahoga County to assist state ppolicymakersas they work on the Ohio Capital Budget over the coming months. Talk to foundation program officers you work with for more information about this possible new addition to your advocacy toolbox.

You’ve secured funding! But you aren’t done yet.

Congratulations, you’ve completed the hardest part of the process! You’ve secured state capital funding for your project, but what’s next? Organizations will establish a Joint Use and Cooperative Use Agreement with the fiscal intermediary. An organization’s fiscal intermediary depends on which fund source is selected for the funded project, but will likely be an institution of higher education, the Department of Mental Health and Addiction Services, or the Department of Developmental Disabilities based upon health and human service projects typically being funded from the Higher Education Improvement Fund (7034) or the Mental Health Facilities Improvement Fund (7033).

Establishing a Joint Use and Cooperative Use Agreement sounds more daunting than it truly is.

Establishing a Joint Use and Cooperative Use Agreement sounds more daunting than it truly is. Much of the agreement is made of boilerplate legalese and allows for significant flexibility for organizations to meet their obligations of receiving state funding. For example, projects funded by the Higher Education Improvement Fund are required to demonstrate an education benefit the community project with provide. This is commonly done through, but not required to be through, student internships or allowing the institution to utilize event space.Once the agreement is finalized between the fiscal intermediary and the organization receiving the earmark it will be sent to OBM for review and Controlling Board Approval.