Category Archives: economy

An Open Letter to the Ohio Senate

Ladies and Gentlemen:

We are all aware that the Ohio Supreme Court has effectively prevented the state from moving forward with Governor Strickland’s plan to allow the installation of slot machines at race tracks around the state.

In order to close the budget gap which the court’s action had created, the Governor has announced his intention to ask the General Assembly to rescind the 4.2% income tax reduction which went into effect last January 1st.

While the Governor went through considerable verbal gymnastics to avoid calling this a tax increase, the facts are clear. The new lower rate went into effect on January 1, 2009. Ohioans have been paying the lower rate in their payroll withholding for more than nine months. Ohio businesses have been paying the lower rate in their quarterly tax payments as well.

By asking that the lower rate be rescinded, the governor will not just raise the tax rate Ohioans will have to pay going forward; he will require them to pay it retroactively back to the first of the year.

This is not just a tax increase; it is a RETROACTIVE TAX INCREASE.
Since the Governor has broken his promise not to increase taxes in this budget, it now falls to the General Assembly to decide whether the working men and women of Ohio will be forced to bear this additional burden.

We are all aware that our state is in the midst of the most severe economic downturn it has experienced in a generation. We know that Ohio’s combined state and local tax burden is among the highest in the nation, so that earlier in the decade when the national economy enjoyed healthy growth, Ohio’s growth was sluggish at best.

Further, because of various plans being considered now in Washington, Ohio families face the very real prospect of considerably higher energy costs and considerably higher health insurance costs. To raise their Ohio income taxes at this time is unwise and unfair.

The alternative to raising taxes is, of course, cutting spending. There were many interesting proposals to reduce state spending that were offered early in the budget process last spring. Among them, reorganizing Ohio government and reducing the number of cabinet offices; and, offering home care options in Medicaid instead of more expensive nursing home care. I’ve asked Ohio’s Americans for Prosperity members to make their own suggestions about possible spending cuts and send them to you and to me.

The economic crisis in Ohio is severe and growing. It is up to you to protect Ohio’s working men and women from Governor Strickland’s broken promise. A tax increase in the midst of this recession would be devastating.

On behalf of Americans for Prosperity’s 17,000 Ohio members, and on behalf of Ohio’s working men and women, I urge you to say no Ted Strickland’s retroactive tax increase. I urge you to say no to higher taxes, and instead, to cut spending.

Respectfully,
Jack Boyle
State Director
Americans for Prosperity – Ohio

Source: www.americansforprosperity.org, Oct. 19, 2009

Paying for Health Care Reform

By Daniel Downs

President Obama often said people like himself could pay for health care reform. That is, high-income taxpayers can afford high tax rates to help fund universal health care.

Thomas Jefferson held a similar view. He was critical of industrious citizens getting rich while others citizens were going without. He believed the wealthy should assist the less fortunate to achieve a livable income.

The difference between the views of Obama and Jefferson may not be apparent. Nevertheless, there is a significant difference in their views. Obama adheres to a form of contemporary liberalism that has embraced the values of humanism, egalitarianism, and welfare socialism. Although Jefferson was more liberal than many of his day, he was nevertheless a rock solid natural law proponent. His values were characterized by traditional moral values, entrepreneurial capitalism, and natural rights equality. Stated more simply, Obama tends towards being a big government socialism while Jefferson was oriented toward being a limited government capitalism.

To Jefferson, the term capitalist meant entrepreneurs of small businesses including farms, repair shops, small manufacturers or craftsmen, merchants, and the like.

Today, the term capitalism certainly includes owners of small businesses; but, in practice, many modern politicians favor a big business view. Internationalists, like Obama and most federal politicians, give their allegiance to supporting national, international, and especially Wall Street business.

However, Jefferson, as did Adam Smith, opposed big business as a threat to independent “capitalists”. One reason was that they regarded big business as quasi-governmental entities, and so do many financial experts today. Like incorporated federal banks and Fannie Mae, for-profit corporations are government created entities.

The point is this: Obama, as representative of the Democratic Party, says he wants the more wealthy to pay for their welfare based benefits program for middle and lower income citizens. The obvious problem is high income citizens live off the productivity of lower income employees, taxpayers, and consumers. Early Americans like Thomas Jefferson were very critical of it. Why? As expressed by John Locke, property and productivity belonged to the worker. In other words, the means of production belonged to all Americans equal to their need and capacity.

Taxing for the limited functions of government was and is the necessary cost to secure property and life as well as to maintain the freedom to pursue as much happiness as possible. Taxing for redistribution from the haves to the have-nots was regarded as robbery just as the low wage living was regarded as slavery.

Returning health care and how to pay for it, we can restate the issue like this: the wealthy own businesses, investment and legal firms, as well as medical practices. The so-called poor do not. Therefore, the rich should pay more to provide adequate health care for the poor and middle-class.

Yet, one could argue that most businesses already pay their employees’ health care. They also pay into Medicare as well as into group health care. Employees pay a small portion of the health insurance costs. It is part of the overall wage.

So then, why should we make businesses pay their employees higher wages?

The only reason to pay employees higher wages would be for them to pay 100 percent of the cost of health care insurance. Who says it has to be a responsibility of employers and government. Are not individuals capable of purchasing their own group insurance?

The same is true of all other government-initiated social safety net programs including social security, welfare, and ESEA (now called No Child Left Behind), and S-CHIP. With the proper education, individuals and their local communities would be more capable of and efficient at providing their own social safety nets.

Without poor wage earners, all of those programs would not be needed and would be more difficult to justify.

Those social safety net programs were all good ideas, but all became means to enlarging federal powers over American lives. Except for Social Security, most of those programs never produced the results that were sold to American citizens. Corporations whose revenues are in the multi-millions and billions often get welfare subsidies. Are not the bank and manufacturer bailouts a form of welfare? After billions of taxpayer funding, the ESEA program still has not closed the educational gap between children of poor families and others; it still has resolved the huge school drop out problem; add it still has not made American children’s globally competitive in math and science. One would think that over 40 years or 3 generations Americans would have achieved this goal. Then there is S-CHIP (State Children Health Insurance Program) that never has been used strictly to help the children of poor families. Why? Because the agenda of liberal bureaucrats always has been to complete the goal of making the middle class welfare dependents or good socialists.

Democrats justify their health care reform based on the millions of Americans without adequate health care. Yet, Congressional Budget Office analysis of so-called Affordable Health Care for America Act (HR 3962) shows over 18 million will still be uninsured by 2019 under the bogus reform bill.

The fake reform will not even end the injustice perpetrated by the the government’s so-called safety net. After paying 20-40 years into the Medicare retirement age health care fund, the state often takes every possession of those who cash in on the supposed safety net. That seems more like a big brother scam and not a safety net.

Maybe, Bernie Madoff’s real crime was learning and practicing the art of his liberal big brother.

The answer to the health care problem is not the enlargement of government or government run health care. It is reforming the political economy. If as President Obama, Jim Wallis, and others claim, the rich can afford to pay more taxes for health care reform, they could afford to pay better wage rates so that all American could purchase health care they and their families want. The cure for making health care affordable (reducing costs and increasing earned income) would solve many other societal problems tied to America’s political economy.

H1N1 : Bailing Out Drug Companies

By Daniel Downs

Writing in the Epoch Times, Ronald Whitmont (M.D) quotes Center of Disease Control statistics showing the current level of deaths related to H1N1 and flu viruses are lower that the previous year.

Here’s what he wrote:

“In the 2007–2008 flu season, the CDC reported that the peak death rate (for pneumonia and influenza) was 9.1 percent. The highest death rate since the novel H1N1 pandemic began in early 2009 has only been 6.0 percent.”

If I’m not mistaken, flu shots for H1N1 were not available at the time of the CDC report, which was September 12, 2009.

Just last week, the mainstream media reported an epidemic number of H1N1 related deaths: 19 in just one week. Fox News reported 1,000 deaths.

Fox News sensational reporting failed to mention the time span during which those 1,000 deaths occurred. Was it 5 years, 10 years, 20 years, or more? It may have been for the past century. Even if the figure represents the number of deaths since the H1N1 outbreak (April 2009), the number of all influenza related deaths is still less than last season.

What Fox News number of death actually represents is anyone’s guess. One question that can be answered is whether the latest CDC statistics shows as drastic an increase in H1N1 deaths as hyped by the media.

The latest CDC report on influenza is for the week ending on October 24. The peak death rate for influenza and pneumonia related deaths was 7 percent. That is a 1 percent increase since the week ending on September 12 and 2 percent less than last season.

According to Whitmont, H1N1 is not only a milder and less lethal form of the flu but also is not transmitted from person to person as easily as other types of influenza. Therefore, most people who contract H1N1 will recover without needing medical attention. Those at risk are people with preconditions like asthma or diabetes.

“Ninety percent of those who suffered complications from H1N1 since early 2009 also had either asthma or a seizure disorder. Those with preexisting or underlying medical conditions (asthma, seizure disorder, diabetes, heart disease, and pregnancy) are at increased risk of suffering complications, which is typical for influenza.”

If H1N1 is a health-risk to those with other medical illnesses, why then are the government and media pushing the H1N1 vaccine as some sort of life-saving miracle drug?

I can think of only one reason: To bailout drug companies.

Since the government’s bailout-drug-companies sales campaign, the fake epidemic has been less deadly than the typical flu season of 2007-2008. It is interesting that the government and their corporate media partners are using a capitalistic approach to bailing out the drug companies.

We are all government-for profit guinea pigs now!

How About Reducing Some Bureaucracy?

By Marc Kilmer

Ohio is only a few months into the new fiscal year and the state is already facing a budget deficit. On one side are the governor and some of his legislative allies, proposing to close the deficit by raising taxes. On the other side are some legislators who want to close the deficit by consolidating government services. The idea of raising taxes in order to keep afloat a bloated state bureaucracy should be a nonstarter, but many in Columbus are choosing bureaucrats over taxpayers in this fight.

First, we need to be clear about something — Governor Strickland’s tax proposal is a tax increase, pure and simple. He wants to raise tax rates that have been in place since January. It’s not a “postponement” of a scheduled tax cut; it’s an increase in tax rates that are already in place. The governor wants to call it something other than a tax hike since he has loudly opposed raising taxes in the past, but there’s no avoiding the simple fact that his plan increases the state’s current income tax rates.

The governor says the only alternative to this tax hike is to cut education spending. Legislators should welcome the opportunity to examine just how well the state is spending taxpayers’ money on educating students. Student spending has steadily risen over the years but there is no evidence students are getting a better education. If they were so inclined, the governor and legislators could work together to seek more effective ways to fund education. But this probably won’t happen.

A good alternative to the false choice of cutting taxes or reducing education spending is the proposal to consolidate state government agencies. This would merely eliminate some redundant state agencies and departments and move their functions to another area of the government. It would not cut any government services. The projected $1 billion in savings would come from the staff reductions and savings on rent, equipment, and supplies.

Public employee unions claim the state government is already going through an “unprecedented downsizing.” It’s hard to see how this is true. In 1998, the state had 174,000 full-time and part-time employees. In 2008 that number had swelled to over 187,000. State taxpayers fund the salaries and benefits for all these workers. If the business of state government can be accomplished just as well with fewer workers, then legislators of both parties should embrace that goal.

Some object to this consolidation measure on grounds that it would not produce the savings projected or that these savings would not happen quickly enough to affect the current deficit. There is probably merit in both these claims. However, the fundamental reason to consolidate state government is not the monetary savings it will produce, but the reduction in unnecessary government bureaucracy. This would be a good idea even if it produced no savings to taxpayers. The fact that it will certainly save some money (and do so quickly depending on when the restructuring begins) makes it a great idea.

Saving taxpayer money is more than a function of just trimming government spending. State policymakers need to rethink how the state and local governments spend taxpayers’ money, which may mean restructuring state government, ending public sector unionization, reducing taxing districts, and other similar steps. Only through fundamental reform of how state and local governments operate can Ohio restore its economic strength. This state government reorganization proposal is a good first step.

Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.

King on water issues affecting Xenia Township and City of Xenia

By Alan King

Imagine with me for a moment that you and your neighbors live above a great pool of natural gas. The people in the town over the hill want to pump your gas to the townsfolk so they can stay cozy in the winter. You’re a good neighbor and say, “Fine.” After all, there’s plenty of gas. Why not share the wealth? Now imagine that your country cousins living near the town want to get some of that gas for themselves. The pipeline is right there and all it takes is a hookup. Of course, they should pay for it, just like the townsfolk do. After all, it does cost something to put in the pipes and pump it up the hill.

Without belaboring this story, let me say that this is just the scenario that we now have in Xenia Township. Except that we’re talking about water. The water that flows from the taps in all of Xenia’s neighborhoods comes from a well field in Xenia Township near Oldtown. Two or three million gallons every day.

And Xenia bumps up their water rates 50% for all of that Xenia Township water sold in Xenia Township. In Amlin Heights and Murray Hill. On Wilson Drive, Purcell Drive, and Fairground Road. On Robert Lane and Richard Drive. These families live right next to city residents that are paying just $360 annually for water. Township residents pay $530. In Wilberforce, it’s even worse. The water gets sold to Greene County and then resold to them at a markup. The average Wilberforce family pays more like $720 a year for their water. Double.

Sewer rates are the same for everyone. And fuel oil, electricity and gas. Cable TV and phones. Gasoline. Not Xenia water, though.

This does not seem fair. If we charged Xenia a fraction of a penny a gallon for depleting our natural resources, we’d make millions. And Xenia pumps extra Township water every day that goes to Cedarville and Shawnee Lake. Do we share in any of that money? Not so much. The Xenia City Council has a right to be proud of their efforts to keep water rates low for its citizens, but I think that it is time that Xenia Township folks got a fair shake as well. And now we have some leverage that we can use to get this fixed.

Xenia is asking the Township for extensive restrictions on a large area of land around the Oldtown well fields in order to make them safer for future generations of water consumers. I applaud this foresight and think that the Township should cooperate in making this happen. Before we do what they want, though, I would just like to have a little conversation with the City about fairness. How about city people paying a bit more for their water and township people paying the same?

After all, the water and the air should belong to all of us and it should be up to all of us to protect them and use them wisely. And nobody should make rip-off profits from their neighbors just because they can. We’re not that kind of people around here.

Alan King For Xenia Township Trustee

Time to End the Giveaway to Big Labor

By Marc Kilner

If there was a law that increased the cost of government projects, deprived Ohio companies of work, and was used as a tool for businesses to harass rivals, you would think there would be a strong push for its repeal. But if that law is Ohio’s prevailing wage law, you find little effort from legislators to eliminate it. This law is simply a way to divert taxpayers’ money to union-controlled construction firms and damage non-union companies. It’s time for Ohio policymakers to help the state’s economy by getting rid of the prevailing wage law.

Enacted in 1931, the law requires companies to pay workers on most government construction projects what a government-mandated “prevailing wage.” This wage is determined by a complex set of bureaucratic guidelines, and violating these guidelines — even if the violation is only for a few dollars and is unintentional — can lead to big fines.

The intended purpose of the prevailing wage law is to keep government construction projects from depressing local wages. Its real effect, though, is to increase the cost of these projects to taxpayers since by mandating higher wages than would otherwise be paid and decreasing the number of bids for the project. Taxpayer-funded construction could be done for less money if this law was repealed, helping both local governments and the state during this period of severely decreased tax revenue.

Not only are taxpayers hurt, but so, too, are the companies which unintentionally violate the law’s complex regulations. There are many instances of companies filing complaints against other businesses in order to stifle competition.

The misuse of this law to harm competition (and taxpayers) was on clear display last year when non-union companies lost bids on the construction of the Huntington Park Stadium. Although their bids were lower than unionized competitors, the companies had a few prevailing wage violations in previous years, making them ineligible for county work. So companies that submitted higher bids won while taxpayers lost.

The latest fight on the prevailing wage front comes with the Ohio Valley Associated Contractors and Builders levying complaints against union firms for violating the law. They are doing this to show just how ridiculous the regulations are and in the hope that it will lead to reform. While it may be poetic justice that union firms are now suffering under a law long used to hurt nonunion companies, in the end no one wins in this battle.

This political jockeying could be ended if the prevailing wage law were repealed. Businesses would no longer have to worry about unintentionally violating the law. And with the increased competition on government construction projects and the ability of local governments to accept the lowest bid for these projects, taxpayers would see significant savings.

This law’s repeal would be a winning proposition for most Ohioans. Some businesses would no longer be as competitive for these contracts, though, and some union bosses would no longer have the leverage they possess today. Protecting inefficient businesses and the power of Big Labor should not be a priority for Ohio’s legislators, though.

The prevailing wage has a long and dark history in Ohio. It has caused almost eighty years of wasting taxpayer money and conflict between union and nonunion businesses. In the midst of deep economic difficulties for the state, repealing the prevailing wage law would help stimulate the economy and reduce government spending. It’s time for this pernicious law to go.

Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.

Issue 3 : Should Out-of-State Bookies be Allowed to Operate Casinos in Ohio?

By Citizens For Community Values

Two out-of-state companies are attempting to write their business plan into Ohio’s constitution by creating a monopoly that would allow them to build four casinos in our state.

Penn National Gaming, which currently operates 32 gambling facilities in the U.S. and Canada, has partnered with Dan Gilbert, a billionaire from Michigan, who owns Quicken Loans and the Cleveland Cavaliers, to place ISSUE 3 before the voters on November 3, 2009.

During a recent ISSUE 3 debate at the Cleveland City Club Gilbert was asked a question about his 1981 arrest for illegal bookmaking. (Read the Columbus Dispatch article here.) (Listen to the debate on Podcast here.)

Unidentified Questioner: “I understand you were arrested in the past for illegal bookmaking. So if issue 3 passes can you tell me what crimes do you believe should preclude individuals from getting a gaming license, and specifically is bookmaking one of those crimes?”

Dan Gilbert’s Reply: “Yeah so when I was 18 years old in Michigan State when I was a freshman in the dorm room, we had those you know those little card NFL cards that you play. I don’t know, Bernie might have been playing, I don’t know, and somebody walked into some policeman on the corner, came in and they swept the dorms and they took out four, five, or seven I can’t remember the number, and then they dropped the case a few months later and no money was ever exchanged and that’s what happened to me at Michigan State. But so as far as what crimes, I don’t know, probably murder, rape, extortion of funds, larceny, things like that.”

FACT CHECK…Line by Line

Gilbert said: “Yeah so when I was 18 years old in Michigan State when I was a freshman in the dorm room, we had those you know those little card NFL cards that you play.”

USA Today describes it this way: “Gilbert was arrested with three other students in 1981 on charges of operating a bookmaking ring at Michigan State that handled $114,000 in bets on football and basketball games.’’

Gilbert said: “…somebody walked into some policeman on the corner came in and they swept the dorms…”

Forbes.com describes it this way: “One kid who couldn’t cover his debts panicked and called his father, who alerted the authorities. A wired undercover cop, posing as the kid’s dad, busted the ring. ‘It was a pretty sophisticated operation,’ says Jeffrey Patzer, who prosecuted the case, ‘way above average for what I knew of so-called organized crime.’ ”

Gilbert said: “…then they dropped the case a few months later…”

USA Today describes it this way: “Gilbert was accused of conspiring to violate state gambling laws. He was fined, given three years’ probation and ordered to do 100 hours of community service, the paper said. The felony was dropped after he completed the sentences.”

Anyone can understand the embarrassment of stupid youthful indiscretions, particularly when it has to do with violations of the law. If these are all of the facts, it sounds like Gilbert got off pretty easy.

But with today’s 24-hour newscycles and instant access to so much of the past with a click of the mouse, Gilbert should know that lying about something that is so easily discoverable and getting caught again may well say more about who he is today than who he was when a freshman in college.

The Constitution, Federal Legislation, and Ohio

By Matt Meyer

“First do no harm” should hang above the halls of Congress. Unfortunately, those four simple words aren’t a consideration in our nation’s capital. How else could you explain the budget-busting global warming and national health care bills currently dominating the public debate? Separately, each measure is fiscally irresponsible. Taken together, the bills will devastate Ohio’s weak economy and place enormous unfunded mandates on the state’s Swiss cheese budget.

First, there is the Waxman-Markey cap-and-trade bill. With Ohio’s natural abundance of coal, almost 90% of Ohio’s energy is produced by CO2 producing coal-fired power plants. Those power plants feed electricity to what is left of Ohio’s manufacturing plants, which produce still more CO2 emissions. All of that production translates into jobs. On the renewable energy side of the fence, Ohio isn’t blessed with an abundance of sunshine, consistent wind, or powerful rivers to power solar panels, wind turbines, or hydro plants. Although Ohio currently has two nuclear power plants, there appears to be no political will to build additional nuclear power plants.

Given these irrefutable facts, it is hard to imagine a scenario in which Ohioans don’t suffer increased costs, job losses, and economic decline should the cap and trade bill pass. Unlike the future made-in-Hollywood catastrophes portrayed by the global warming crowd, those costs, losses, and decline will be immediate and real for Ohioans.

On health care, Medicaid spending already consumes 39% of the state budget. The Baucus national health care bill would restrict Ohio from setting eligibility requirements, which would increase the load on states by $37 billion according to the Congressional Budget Office. Because Ohio is the seventh largest state and possesses an anemic economy, a big slice of that $37 billion will fall on Ohio taxpayers.

With these enormous economic stakes, Ohio’s two senators must put aside partisan urges, resist trendy but illogical policy options, and work toward solutions that are in the state’s best interests. To do otherwise is not only bad for Ohioans, but would actually go against the Founders’ original intent for the Senate when it was first established in the Constitution.

For America’s first 126 years, U.S. senators were elected by state legislatures. The reason rests in the Founders use of checks and balances to keep the political system in harmony. With U.S. representatives elected by popular vote in apportioned districts based on each state’s share of the total U.S. population, the House served as the place where the “will of the people” ruled. In theory, if a handful of large states with a majority of representatives banded together, they could pass legislation harmful to the other states.

In the Senate, however, to check the tyranny of the majority, the Founders allocated each state only two senators, thereby structurally blocking large states from riding roughshod over the smaller states as could happen in the House. To further check the accumulation of power in the federal government, the Founders placed the election of senators in the hands of state legislatures who would ensure that those individuals elected to the Senate would protect the interests of the states regardless of what the passions of the people wanted. For example, a majority of people in a state may want a federal program that individually costs them very little in taxes, but would place large unfunded costs on the state.

In 1913, the passage of the 17th Amendment altered this finely tuned structure by placing the election of senators in the hands of the people. Not surprisingly, shortly after this structural change to the Constitution, the era of big government in Washington, D.C. unchecked by the states began its march. Congress went from the New Deal to the Great Society to the era of unfunded mandates to today when Washington simultaneously considers bills that would nationalize 17% of the U.S. economy, and imposes additional burdens on our energy production just months after exploding the federal deficit, nationalizing car companies and banks, and passing the largest single year budget in American history.

So, how could Ohio’s senators or senate candidates support legislation like the Waxman-Markey or Baucus bills? When they no longer have to be accountable to the state they represent because it has no power to check their votes (i.e., a legislative threat not to reelect them should they vote yea), they can place other special interests and even their own ideological views ahead of what is best for Ohio, its economy, and its citizens.

The irony, of course, is that these “reforms” will hit Ohioans regressively so that the very middle class workers and poor that they claim to fight for will be hit the hardest.

Source: Buckeye Institute Weekly News Digest, October 12, 2009.

Strickland’s Tax Proposal Not the Answer

By Marc Kilmer

Months after a contentious legislative session that struggled over balancing the state budget, Ohio is still facing a deficit. To deal with this, Governor Ted Strickland has proposed postponing scheduled tax cuts. He says the only other option is to cut spending. But what if there was a better way of dealing with these budget problems? If state policymakers would have taken steps to reform the bloated state bureaucracy, Ohioans would not be faced with this ongoing budget mess.

There were over 182,000 people employed by the Ohio state government in 2007, the last year for which numbers are available from the Census Bureau. Another 546,000 were employed by local governments. Your taxes pay the salaries of each of them. On the whole, these are hard-working people who do a good job and help provide necessary services. They are well-compensated for these services, though, and they receive good fringe benefits. No one is saying these government employees should not be paid for their services. But if their compensation was more in line with the private sector, taxpayers would see significant savings.

For instance, state employee salaries have risen faster than salaries for other Ohio workers. From 2001 to 2007, Ohioans’ per capita income rose 21%. State employee income, however, rose 27%. If state employees’ income would have risen at the rate of the rest of Ohioans, the state government would have spent $413 million less this year. And if the number of state employees remained at its 2001 level, the state would have spent $648 million less this year.

Considering that Governor Strickland is talking about $844 million in reduced education spending if the proposed income tax cuts take effect, it’s clear that the growth in state government employment is a significant contribution to the present budget problems. If state policymakers would have applied the brakes to state hiring over the past eight years, there would be no need for the governor to be discussing raising taxes.

Of course, if the number of state employees remained at its 2001 level and their compensation grew only as much as the rest of Ohioans’ compensation, this would translate to even more than $648 million in reduced spending. There would also be savings from the fringe benefits these employees receive, such as health insurance and pensions. And if these benefits were more in line with the private sector, state taxpayers would see even larger savings.

Take state employee health insurance, for instance. Government workers receive good health insurance coverage and they only pay an average of 15% of their premiums. In the private sector, employees pay closer to 30% of their premiums. If state employees were more like private sector employees, that would save taxpayers around $150 million this year.

Government employees should certainly be compensated for their services. But there is no reason why they should have better pay and benefits than they would receive in the private sector. When there is such a large gap between the state government’s spending and revenue, state policymakers need to review the generous compensation and benefits received by state employees and look for ways to rein it in. A hiring freeze, reducing the rate of salary increases, and paring back benefits to private sector levels are not radical propositions. In fact, it’s just common sense.

Source: Buckeye Institute Weekly News Digest, October 5, 2009.

3C is Going to Cost, Cost, Cost Ohio Taxpayers

By Marc Kilmer

Hopping a train and riding from Cincinnati to Cleveland or Columbus certainly seems like a popular idea. Opinion polls show strong support for it, a wide variety of civic organizations are backing it, and people are coming to meetings excited to see the trains roll. All this begs the question, though — if passenger rail is so popular, why do Ohio’s taxpayers need to subsidize almost 60% of its yearly cost?

There is often a difference between what people say and what they actually do. It’s easy to tell a pollster you are in favor of something. That’s an abstract question. But when it comes to actually paying money to achieve that object or otherwise paying a cost for it, many times the actions people take differs from what they tell pollsters. Other priorities take precedence over this objective they supposedly strongly supported.

Passenger rail in Ohio is a perfect example of this. The government agencies and community groups advocating for rail routinely trumpet opinion polls showing the strong support for their position. Amtrak’s recently completed feasibility study of passenger rail in the state, though, shows that this supposedly strong support is an illusion.

Sure, passenger rail supporters claim otherwise. They say that since Amtrak predicts nearly 500,000 people will ride it every year, there is a huge demand for rail service. This number is a bit misleading, though, as it includes people who will make multiple trips a year on the train. As other passenger rail systems have shown, a small number of people make numerous trips. Usually these are higher-income workers who travel between cities for meetings. The vast majority of people who have access to passenger rail never set foot in a train station.

Even if there are 500,000 trips a year on this new service (a dubious proposition), those riding the trains would only do so if someone else paid for most of the cost of their ride. Passenger rail users in Ohio would only pay for 41% of the cost of operating the system. State taxpayers would be paying the rest. If you have a business selling a product for forty-one cents that costs you $1.00 to manufacture, then you don’t really have a product people want.

Of course, the situation gets even worse for passenger rail advocates. Not only would taxpayers be required to pay $17 million a year for a system that costs $29 million a year to operate, they would also be required to fund the system’s start-up costs, which would run close to $500 million. And given the history of rail projects around the nation, it’s almost certain these initial estimates will be exceeded by the actual cost of the project.

Rail enthusiasts claim that of course passenger rail will be subsidized by taxpayers, just like all other transportation is subsidized. What they overlook is that road transportation is almost entirely funded by gas taxes paid by drivers and other vehicle-related revenue such as car registration fees. Air travel receives a subsidy, certainly, but it is less than one cent per passenger mile. Rail, on the other hand, receives twenty-two cents per passenger mile. When it comes to fleecing the taxpayers for transportation subsidies, rail is king.

Ohio’s backers of rail contend that Ohio’s neighbors are proceeding with passenger rail so Ohio shouldn’t be left behind. It’s true that taxpayers in Michigan, Illinois, and other states are subsidizing passenger rail in their states. If these state governments are wasting money, does it mean Ohio should, too? Lawmakers in some of these states are reconsidering their support for passenger rail. Michigan, for instance, is looking to slash rail subsidies and rail ridership is declining. These states would be in a much better fiscal position if they would have never begun rail subsidies in the first place.

Passenger rail may sound good in theory but when it actually comes to paying for it, those who would ride it just aren’t willing to pay its full cost. With Ohio’s budget problems, it makes little sense to ask taxpayers to pay the tickets of the small minority of state residents who would take the train. Any way you look at it, if passenger rail returns to Ohio, only a few Ohioans will use it, but every taxpayer will be taken for a ride.