Tag Archives: deficit

Gov. Kaisch’s State Budget: The Ugly, the Bad, and the Good

In my opinion, Gov. Kaisch is not the handsomest dude on the planet. I suspect his wife may have a different opinion.

What the governor lacks in appearance he makes up in statesmanship. His speech to the legislators on the budget was downright inspirational. Not only that but he even dared to praise the members of the opposing party for their work and accomplishments on a number of issues.

It almost made me cry.

I did say–almost!

Seriously, the budget itself is a mixed bag of missed opportunities (the bad) and a number of advancements for Ohioans and their economy (the good). Of course, it all depends on who you talk to, or, in this case, whose report you read.

According to the report by Matt Mayer, President of the Buckeye Institute, the governor’s budget missed some important opportunities. The bad news is the general revenue fund will be $1.26 billion greater for 2012 than in 2011 and $1.73 billion for 2013. That is a biennium increase of 12 percent. This is the second highest increase since 1990.

So how can the Governor increase spending with an $8 billion deficit? According to Mayer, the governor’s budget shows total revenues exceeding the deficit by $8 billion, which causes Mayer a lot of concern. It shows Gov. Kaisch has chosen to continue the same old policies of the past that eventually resulted in the present fiscal crisis.

Equally disturbing is the governor’s cuts to local governments. Instead of innovating new strategy to fund both state and local governance, the governor chose the slash-and-burn approach. This easy money strategy doesn’t reduce the size of state government and thus return local tax dollars back to local governments who must continue or fund new programs. Gov. Kaisch simply cuts funding to local governments to increase spending and balance the budget.

The $5 million budget deficit proposed by Xenia city and school officials may be nothing more than advanced notice of the state budget cuts. On the other hand, the budget deficit could be the typical 10% inflation budget estimates for contingency purposes; all institutions increase budget estimates for unforeseen costs. Budgets are based on previous year revenues, expenditures, known issues that will increase costs, plus 10% for unknown costs usually in addition to a contingency fund for emergencies.

Be that as it may, Mayer wishes Gov. Kaisch would have made the difficult choice of cut government employee compensation a little as well as cut the executive and legislative branch budgets. If he had cut the death tax, the bill making away through both houses, he would have as much money to spend, and many others will wish he had less money to throw at his program agendas.

Mayer did find some good in the Gov. Kaisch’s budget. The governor made noteworthy strides in such areas as prison reform, healthcare cost containment, and education funding. He included alternative sentencing approaches to non-violent offender that along with reforms nursing home service costs to Medicare will save taxpayers millions of dollars.

Some think his nursing home reforms are ugly and bad too.

Gov. Kaisch chalked up a few more good points with a number of his educational reforms. For example, his “support for Teach for America and doubling of EdChoice scholarships are vital lifelines to the most vulnerable and will inject more competition into our broken K-12 system.” Scraping the previous governor’s unfunded, evidenceless, one-size-fits-all Evidence Based School-Improvement Model will end the veiled attempt to increase dues-paying membership for unions. At the college level, the governor calls for professors to use fewer assistants for classroom instruction and a three-year degree. (Here, it is assumed that also means high schools will be required to ensure college-bound student meet the once first year prerequisites whether through coursework in high schools, college campuses, or virtual schools. That in itself would not only save a lot of money but would also be a systemic great achievement.)

Many of us may like Governor’s enthusiasm and business acumen, but analysts like Mayer give us reason to doubt his ability to help Ohio innovate its way to a better future and greater prosperity. If he cannot find innovative ways to fund government, can we expect he will achieve his inspiring goals for Ohio? Unless his goals are primary for big corporate concerns, maybe not.

To read Matt Mayer’s report on Governor Kaisch’s budget, visit the Buckeye Institute website: http://www.buckeyeinstitute.org/reports.

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.

A better way to balance State budget than cut services to the poor, elderly, and library patrons : HB 25/SB 52 Reorganizing Ohio’s Executive Branch

In April, Gov. Strickland issued an executive order to reduce and control spending. In May, the office of Budget and Management estimated an additional budget shortfall would exceed $900. In response to this assessment, Gov. Strickland made the following statement:

“The national recession continues to present historic economic challenges for every state and Ohio is no exception. Even though we have reduced state government spending by nearly $2 billion this biennium, we are now faced with even steeper revenue shortages. Addressing the challenges before us will require extraordinary collaboration and bipartisan consensus-building among the state’s elected leadership. I know that we can work together to make the tough choices necessary to maintain a balanced budget while continuing to invest in education and job-creation that will lead to Ohio’s economic revival.

Did the governor mean state jobs or private sector jobs? Earlier this month, Gov. Strickland said state government must be reduced by another $2 billion to balance the budget. To accomplish this, he has closed mental health facilities and other facilities, reduce staff to Reagan era numbers, and reduced budgets of most state agencies. State employees have voluntarily sacrificed further increases in pay for several years. After all of these fiscally responsible steps, a budget deficit of $3.2 billion still exists.

I suppose that is why Gov. Strickland proposes additional cuts to local library budgets. The deficit probably accounts for a number of proposed cut is services for the poor and elderly as well.

In his last press release, Gov. Strickland repeatedly said, “We must resize the government.” Of course, he means the cuts to agency budgets and some of their personnel. What he doesn’t mean is downsizing the executive branch itself. Yet, there are concurrent bill in both House and Senate committees that will do just that. In February, Representatives Jarrod Martin and Robert Hackett cosponsored HB 25 and Senator Timothy Grendell is the sponsor of SB 52. (Where is Senator Chris Widener?) If these bills would pass, at least $2 of the $3.2 billion would be realized.

Yes, it would be limited-government advocates dream come true. The 20 cabinet-level agencies would be consolidated into 10 cabinet-level departments.

Yes, it would actually reflect the downsizing occurring throughout the private sector as well.

According to analysis by the Ohio Legislative Service Commission, the bill would not “affect the provision of services by and operations of political subdivisions.” Because government is notorious for inefficiency anyway, the disruption of some services during the transition is bound to occur. Nevertheless, less bureaucracy means less waste and (god-forbid) less taxation.

Although Gov. Strickland still says he doesn’t want to raise new taxes, his comrades on Capitol Hill and elsewhere are creating a New Deal Era economic crisis requiring more taxes and more national debt to justify the enlargement of the federal powers and further the Left’s goal of a fully socialist-Marxist economy. Maybe that t is why loyal party member Strickland is in the key position in a key state.

This federally-driven economic crisis is even more reason for getting Ohio legislators to pass HB25/SB52 to consolidate the executive branch and meet the balance budget. If we can achieve it in Ohio, we can also achieve it at the federal level too. “Yes we can!”