Ohio Lottery

• Governor’s proposal: none; at the time the budget was introduced, he said he needed more time to get advice. His best buddies promptly lined up lobbying business with the two prime, rival suitors for any private Lottery operation. His budget did exempt Lottery rules and fees from legislative oversight.
• House amendments: none
• Senate amendments: first introduced a requirement, written by one of two main Lottery vendors, to privatize Lottery by a date certain in 2012; after massive criticism, (including an expression of “shock” by Speaker Batchelder), the Senate rewrote the provision to require the state to examine Lottery privatization and report back to the Legislature later in 2011.
• SCORE: the public gets a rare, if partial, win
• By the way, if Kasich tells you he had nothing to do with this provision, don’t buy it. The amendment was written and submitted into the Senate bill by the partner of Kasich’s lobbyist BFF Doug Preisse. There’s no way this wasn’t done without the Governor’s approval.

Liquor Enterprise

• Governor’s proposal: transfer the state’s liquor enterprise to JobsOhio, who will then, in turn, sell the revenue stream from liquor profits to the private sector for pennies on the dollar (see our earlier coverage), break up various parts of the enterprise and further outsource them without oversight
• House amendments: specifies that only the Division of Liquor Control can be hired by Jobs Ohio to operate the liquor enterprise; and JobsOhio can sell the enterprise back to the state at some later date
• Senate amendments: provides oversight of all contracts between JobsOhio and the state to operate the liquor business; notably, the Senate did not incorporate Grendell’s amendment to ensure the state didn’t underprice liquor profits, and use the proceeds to fund local governments and schools
• Status: still in the bill, with some modifications by both House and Senate
• SCORE: massive loser for the people of Ohio who will see a revenue stream in excess of $250-million a year dry up to launch a very dubious “private non-profit corporation” to conduct state economic development activities without public oversight or transparency.

Prisons

• Governor’s proposal: sell off five prisons to the private sector
• House amendments: make it six, and exempt the operators from all state and local taxation
• Senate amendment: killed the House exemption, requiring private operators to pay taxes
• SCORE: still in the bill; very unlikely to save taxpayers any real money as high-risk prisoners will be transfered to state-run, not private facilities.

Oil and Gas drilling in state parks

• Governor’s proposal: expands oil and gas drilling into state lands, including state parks; reduces funding for state parks, which have a maintenance backlog in the $100s of millions. Drilling has been estimated to be worth less than $5 million per year for the state and have potentially huge environmental consequences. Meanwhile, the Governor’s budget de-funded county soil and water districts completely–the very entities who could assist in ensuring discharge from drilling operation was properly routed away from streams and drinking water.
• House amendments: restored funding for soil and water districts
• Senate amendments: removes state parks from the mix, proposing to deal with it in separate, standalone legislation. The parks, meanwhile, are still drastically underfunded.
• SCORE: still a big loser; drilling may not come to state parks, but it’s coming to other public lands, and the parks still continue to be underfunded (personally I wouldn’t mind paying a couple bucks entry fee to use a state park, as is done in other states, rather than see them go without maintenance or perhaps even close, but god forbid we raise taxes on “Bob and Betty Buckeye”)

Everything else

• Governor’s proposal: give his budget director broad, unchecked authority to privatize anything in the state without involvement of the legislature for whatever price feels good. See our previous coverage (this was our site’s most visited and shared article)
• House amendment: removes authority to privatize anything except the Turnpike
• Senate amendment: requires legislative oversight and approval for any future Turnpike privatization
• SCORE: big fail for Kasich, a win for the legislature and the public

That is why today I was shocked, and pleased, to find the editors of the Dispatch taking a well reasoned and well defended stance against expanding oil and gas drilling on state owned lands. The Dispatch did a great job hitting all of the main points of contention in this debate. Ranging from the minuscule amount of money that will be raised to the fact that 99.5% of land in Ohio is already open for drilling, the article did a fantastic job in totally debasing the argument in support of the movement to expand drilling in this state.

In fact, as I type this right now the House of Representatives is debating a bill on the House floor, HB 133, that would do exactly that. The bill would allow all state owned land to be open to oil and gas drilling. There is a companion piece of legislation in the Senate but don’t be surprised if the Senate simply decides to include their legislation in the amendments they will be making in the state budget in the coming week. Both bills include language that would direct any funds generated by the expanded drilling to go toward capital improvements in state parks.

At best the argument for expanding drilling in this state is disingenuous and at its worst it is a bold face lie masquerading as a public giveaway to a powerful private interest group. Republicans like to say that allowing companies to drill on state owned land will help relieve our dependence on foreign energy sources, will create jobs, and will help build Ohio’s economy. What they don’t tell you is that public owned lands make up .5% of the land in Ohio, the amount of oil or gas under that land would be so small that it would be a rain drop in the ocean of fuel sources on the market, and that the extraction of the oil and gas can be damaging to the ecosystem and pollute water supplies. This last point is already being realized by neighboring states.

Pennsylvania, with thousands of fracking wells in operation, has seen its share of problems. Spills and blowouts at the surface can spill fuel and contaminated water on the ground; some streams have been polluted with brine and other chemicals that treatment plants couldn’t handle and some underground water supplies have been contaminated with methane and other chemicals.

It was nice to see the Dispatch finally get one right. Now, if only they can keep this up. I’m not holding my breath though.

The Dispatch reports that Democratic State Representative Denise Driehaus has submitted an amendment seeking restoration of general revenue funding to the districts. Driehaus points out that given the administration’s drive to pursue the practice of “fracking” – a process of drilling for natural gas  that can release toxic wastewater into streams and drinking water, and the massive agricultural run-off poisoning Grand Lake St. Mary’s, now may not be the time to reduce funding for programs that protect soil and water from erosion and runoff.

In the first of what will likely be many such activities, a coalition of environmental groups are pushing back, holding multiple press conferences on Thursday — the anniversary of the gulf oil spill, asking state leaders to identify which state parks they favor opening up to oil and gas drilling. As you may be aware, the Governor’s budget proposal includes a provision to open up Ohio’s State Parks to oil and gas drilling. Drilling for gas in many cases involves a technique known as “fracking”, which has led to seepage of dangerous byproducts into drinking water in neighboring states. The group seeks to get legislators to state their position on the proposal.

You can read more about the campaign here, and if you are interested in getting involved, you can use their letter to legislators as a model and call or write your State Senator or Representative to ask: in which parks do they support drilling? If you get an answer, contact the OEC and let them know.

In all the documents relating to the Governor’s budget I was unable to find any revenue estimates based on the proposals in the budget bill, HB 153.  In fact, it seems unclear at this time but HB 153 does not appropriate any funds from the expansion of available lands to generate royalty fees.  If the Governor’s argument is that these funds are going to help the Department of Natural Resources pay for backlogged projects  it seems those projects are going to have to wait until at least 2014 when, presumably, the state will start realizing revenue from this expansion.

Currently there are two companion bills pending in the state legislature, SB 108 and HB 133, which each create an oil and gas leasing board that would lease ALL state owned property to prospective developers.  Remember, the Governor’s proposed budget only deals with land under control by the Department of Natural Resources.

In the fiscal note for HB 133 LSC published a wealth of information regarding potential revenue amounts if drilling were to be expanded to all state owned land.

What the graph above shows are three different possible scenarios based on the expansion of drilling on all state owned land and the projected first year of revenue from oil and gas royalties.  If HB 133 created an increase of 1% new production that would generate around $954,000 for the state. An increase of 5% would generate $4.7 million and a 10% royalties increase would generate near $9.5 million. The LSC fiscal document puts these numbers into even more of a context:

These figures represent estimates of potential revenues from the first year of production only. Actual revenues and their continuation over time would depend on a number of factors, including (1) the amount of land actually leased for drilling, (2) the length of the leases, (3) the number of wells that actually produce oil and gas during the term of a lease, (4) the amount of oil and gas that is actually recoverable and depletion, and (5) fluctuations in the market price of oil and gas during the term of the leases.

What is important about this information is that the graph above only shows the revenue the state would receive if drilling was expanded to all state property.  The Governor’s proposal only extends it to state parks so these numbers would have to be significantly lower. If you assume that this budget proposal will increase production by 5%, which is probably a pretty liberal assumption, then the state can plan on racking in about $4.5 million its first year.

As the Beacon Journal correctly points out, does it really make sense to jeopardize the preservation of our state’s natural resources to generate less than $5 million annually?  These parks are our parks too, and is it right that a Governor elected with less than 50% of the vote thinks he can simply hold a garage sale of state assets for his rich friends?

The underlying trouble is that the drilling conflicts with the parks’ role as havens for enjoyment of the outdoors. Already, state forests and wildlife areas can be tapped. Adding another 174,000 acres sounds impressive. In reality, the limited amounts of oil and gas would have no discernible effect on prices, all while exposing sensitive areas to heavy equipment and the contaminated drilling water that flows back up from fracturing.