Tag Archives: state budget

Obamacare, Politics and the Myth of Free Money

By Kevin Holtsberry

A growing chorus, pushed by liberal interest groups, think tanks and a sympathetic media, is castigating governors who are reluctant to expand Medicaid and implement state level exchanges in the wake of the recent Supreme Court ruling. These critics present themselves as seeking only the good of citizens while accusing the governors of playing politics.

This is disingenuous at best. First, pretending that supporters of the Affordable Care Act (aka Obamacare) are not engaged in politics requires a level of naïveté larger than the national deficit. You might recall how the bill was rammed through Congress using every parliamentarian trick available and remains widely unpopular.

You might also recall the immense pressure applied to the Supreme Court in the run up to its decision. Any attempt to overturn the act was portrayed as judicial usurpation and a threat to the American system. And in the aftermath of the decision, the left insisted that the court had spoken and that now the country must fall in line. All of this activity aimed at passing and implementing the most ambitious piece of legislation in my lifetime was certainly not beanbag.

And more importantly, this accusation of “politics” ignores the fundamental fact that public policy in a participatory democracy always involves politics. The components of the act are not somehow exempt from political debate and discussion simply because of a court ruling. And given the stakes, and the forthcoming presidential election, it is only natural that elected officials across the country are being cautious.

Second, the underlying argument assumes that federal spending is somehow “free” money and that the offer of expansion is simply to good to pass up.

In a rather rich case of projection, Innovation Ohio accuses Governor Kasich of playing politics while Ohio loses millions. The ideologically sympathetic Toledo Blade follows a similar line, accusing Kasich of politics on the issue rather than taking the generous federal money and immediately implementing Obamacare in Ohio.

The irony is that this mindset is what has gotten us to where we are today. It is a belief that federal dollars are free and Ohioans should grab every penny lest they be scooped up by other states. The history of Medicaid is one of states getting hooked on federal dollars only to have the program gobble up their budgets even as it offers less and less flexibility and reduced quality of care.

But state taxpayers are federal taxpayers. These dollars don’t magically appear in Washington to be doled out to states, the money comes from individuals in those very same states. Ohioans are rightly concerned about the federal deficit and about paying higher taxes. Increased spending in Washington impacts Ohioans to pretend otherwise is to ignore fiscal reality.

The Blade casually tosses aside the fears of increased Medicaid enrollment through a woodworking effect as if the dollar amounts are not significant. But those numbers are big enough to give governors across the country, both Republican and Democrat, pause. And whose numbers should we trust, state experts or liberal think tanks who support Obamacare?

These governors understand that Medicaid is a deeply flawed system that hooks states on a process of expanded enrollment with the promise of federal funds. Once on this path any attempt to reign in spending or control costs means giving up not only the state’s share of spending but the feds as well.

And is it really realistic to assume the federal government will never attempt to roll back the amount it covers? Half the assumed savings of Obamacare comes from reducing Medicaid reimbursement rates. Facing a deficit beyond what many of us can conceptualize, will Washington continue to pay out vast sums to states already committed to expanded coverage for their citizens?

In reality, what underlies this debate is a mix of politics, policy disagreements and deep uncertainty about the future. Governors understand that what is good for Washington is not always (rarely?) good for the states. They understand that Medicaid is a failed program that has devastated state budgets, increasingly involves reduced flexibility, and carries with it perverse incentives.

Caution in this case is not mere politics but good common sense.

Kevin Holtsberry is President of the Buckeye Institute for Public Policy Solutions.

Issue 13, Analysis of Xenia Community School Emergency Operating Levy (revised)

By Daniel Downs

On November 8, Xenia Community School District officials ask voters to pass an emergency operating levy to avoid a budget deficit. School officials estimate the annual operating deficit will be $3,078,329. The 4.8 mill levy will generate the same amount for 5 years and will increase taxes about $147 a year on property valuated at $100,000.

After passing a bond issue, ½ percent permanent improvement levy, and several renewal levies, one has to ask whether or not this levy is really needed. To answer that question, I did my homework. I researched our state’s public school funding budgets. I then evaluated Xenia Community School District’s financial reports and budget projections including the recent five year budget forecast.

The levy is proposed as a way to avoid a budget deficit projected by the school’s five year forecast. The forecast is based on various assumptions concerning the economy, state and federal funding, and local conditions. Most of the budget assumptions seem reasonable. For example, property taxes and income tax revenues are expected to increase annually by a meager 1.5 percent. What does not seem reasonable is the belief that Gov. Kasich’s new foundation formula will result in zero growth after 2013. Historically, basic state funding for local public school has always trended upward. Decreases have been brief while increases have continued long-term. The new state budget (HB 153) continues this trend. This year the unrestricted state funding for Ohio schools totaled $6.4 billion. It increases to $6.69 billion in 2012 and $6.72 in 2013. There is no reason to believe it will not continue to keep up with inflation. This assumption of the Xenia budget forecast may be based more on the fear or dislike of Gov. Kasich’s increased funding for alternate forms of schooling than on real historical trends. Federal funding of alternate forms of schooling also consists of millions of dollars.

Several other budget items estimated to decrease over 34% include “restricted grants-in-aid” and “all other revenue”. Here again, the estimates do not seem reasonable. Xenia’s financial statements show federal restricted grants-in-aid has grown from $2.4 million in 2000 to $6.3 million in 2010. Even with the end of most stimulus money, federal funding continues to increase until 2013. The state budget does project a 14.4% decrease in federal funding for 2013; but barring a double-dip recession or zero GDP growth, federal aid will most likely bounce back in 2014.

The “all other revenue” item mentioned above consists of many different types of revenue sources. Some of those are interest income, rental income, tuition fees, compensation for loss of assets, and oddly enough federal restricted grants-in-aid. Except for interest income, this item coincides with revenues under a category called “other government funds” in the school district’s financial statements. Federal “restricted grants-in-aid” and the “other government funds” refer the are the same thing with rent and tuition included under Other Government Funds.

Another problem with the assumption concerning “restricted grants-in-aid” is the error about the Education Jobs Fund. The state budget shows it continuing into 2013 not ending. The $1 million from this fund will still be available in 2013 and probably beyond. (See footnote 1)

Xenia’s budget forecast lists “career technical fund” as a annual revenue source of only $82,678. Yet, a “special education fund” has over 10 times the amount of the “career technical fund”. Why not use this fund for students with learning disabilities. The Race to the Top fund also has about 10 times more money available for local schools. A new restricted use fund is the math science partnership fund. It has about $1 million more than the “career technical fund” that is available to school districts.

Without a doubt, there are some state and federal funds being phased out while new ones are being added. Coupled with economic uncertainty, confidence about the future of the economy is a scarce commodity. In light of the above, it is equally difficult to believe that the proposed budget deficit is real. If another recession occurs or if near zero growth continues, a budget deficit may occur, but only because employee costs continue to grow. According to the school’s budget forecast, union employees have agreed to a pay freeze. If so, only rising costs of employee benefits will contribute to a deficit. Of course, a loss of funds used to replace school buses, compensate for loss of tangible property tax revenues, and the loss of stimulus funds must count for something. (See footnote 2)   Yet, overall state and federal funding for local school continues to increase.

My analysis can be summarized this way: A vote for Issue 13 comes down to whether voters believe the school district’s forecast, whether they believe the historical funding trends and the state’s actual budget, or whether they believe the recent predictions of a slowly improving economy.


Note 1:   Xenia Community School District’s 5-year forecast was published in October 2011. However, statements about Ohio’s biennium budget that passed on 30 June 2011 indicate part of the forecast was written before its publication, which explains the errors mentioned above.

Note 2:   In my original post, I wrote the “a large portion of funds for bus replacement, tangible property taxes, and stimulus money must count for something.” My original statement seems somewhat misleading and has been corrected. However, Xenia School District’s 2010 financial statement shows lost “bus purchase allowance” funds amounted to $52,850. These funds were reported under the revenue category “Capital Grants and Contributions.” This amount is not enough to effect a serious budget deficit.

Ohio Legislature Passes Pro-Life State Budget

(COLUMBUS) – Today the Ohio Legislature passed a state budget which includes multiple pro-life amendments. The state budget, House Bill 153, now advances to pro-life Governor John Kasich. Among other things, the state budget contains Ohio Right to Life amendments that will protect taxpayer dollars from paying for abortion. The first amendment bans abortions from being performed in public hospitals. The second amendment prohibits abortion coverage in insurance plans of local public employees.

“These two pro-life amendments will ensure that Ohio taxpayer dollars are not funding abortion,” said Mike Gonidakis, executive director of Ohio Right to Life. “It is crystal clear that a vast majority of Ohioans oppose all forms of taxpayer funding of abortion.”

Additional pro-life amendments were also included. One measure requires the Ohio Department of Health to apply for federal abstinence education grants to reduce the number of unplanned pregnancies. The final pro-life amendment preserves the right of student groups to use and benefit from school funds and facilities, therefore protecting the rights of pro-life groups on college campuses.

House Bill 153 will be signed into law on June 30th by pro-life Governor John Kasich, who Ohio Right to Life fully expects to support each of these life-saving measures. Ohio Right to Life expresses its sincere gratitude to Senate President Tom Niehaus (R-New Richmond), Senator Shannon Jones (R-Springboro), Senator Peggy Lehner (R-Kettering), Senator Scott Oelslager (R-North Canton), along with Speaker of the House Bill Batchelder (R-Medina) and Representative Jim Buchy (R-Greenville) for their pro-life leadership in the General Assembly.

An Ohio Budget Perspective

Ohio’s new budget preserves $7 billion in tax breaks and keeps in place tax cuts exceeding $10,000 a year for the wealthiest 1% of Ohioans. It also cuts over $2 billion from schools and over $1 billion from local government, and slashes state spending for libraries, mental health and children’s services, while proposing selling the state liquor profits, five state prisons, expanding charter schools and vouchers, and proposing a semi-privatized state for higher education institutions called ‘charter’ universities. Weve heard it called a “slash and sell budget” and a “pass the buck budget” and both seem right, as it will certainly result in more unequal services across communities and higher local taxes. Here are (just some of) Policy Matters Ohio’s initial analyses:

Local Government Fund – The state seizes more than $440 million in local government funds, and more than $560 million in replacement funds for local government tax sources eliminated or reduced through state action. This will result in cuts to basic services delivered at the local level from policing, to fire protection, to snowplowing, to recreation. Expect longer waits, fewer hours, weaker services and higher local taxes as a result.

Education – The two-year budget slashes more than $2.3 billion from education compared to the 2010-11 budget while putting potentially hundreds of millions more into charters and vouchers. The proposal would drop state funding for schools below 2003 levels by 2013 and push more of the funding burden to local taxpayers.

$7 Billion in Breaks – While shredding schools and local governments in the above ways and more, the budget does not examine even one of the 128 tax breaks that cost the state more than $7 billion, preference some businesses over others, and continue crazy credits like the one to hire a lobbyist without paying a sales tax or to pay a pittance in tax when purchasing a timeshare for a private jet.

And Break some More – Amid disingenuous cries that “we’re broke”, is a continued push to add new breaks for the very wealthiest. Two new proposals would give special favors to those who need them least. The capital gains cut would save middle-income taxpayers $2 a year on average while the top 1% would pay more than $6,500 less. The estate tax grab would hurt local government and preference the wealthiest heirs more than 90% of Ohioans would never owe the estate tax after they die.

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 Shouldn’t Count on Federal Bailout

By Marc Kilmer

Governor Strickland and the General Assembly last week agreed on a tax hike to close this fiscal year’s budget deficit. When they return in January, though, they will have to deal with a projected deficit of roughly $5 billion for next fiscal year. The governor is hoping the federal government will send some money Ohio’s way to make this deficit disappear. While a federal bailout is unlikely, even if it happens Ohio’s budget problems won’t go away.

The seemingly endless debate in the General Assembly this year over closing the deficit clearly illustrates that Ohio has budget problems. The spending obligations made by politicians can’t be funded with the money being paid by state taxpayers. Politicians of both parties were unwilling to cut state spending to close the gap. Instead, they supported a federal “stimulus” bill that papered over part of the difference and then raised taxes.

Since the next fiscal year will also have a deficit, we can count on similar tactics in the 2010 legislative session. Trimming a little spending, “delaying” tax cuts, or hoping for a federal bailout won’t address the fundamental problem: Ohio’s politicians simply spend too much.

From 1998 to 2008, Ohio’s budget grew by 41%. New government programs were created, existing government programs were expanded, and various interest groups were given tax dollars for their desired projects. Republicans as well as Democrats were happy handing out tax dollars at ever-increasing rates and there was little fiscal discipline in Columbus.

When tax revenue was flowing in, it was easy to sustain the growth of Big Government. When tax revenue declines, though, those who now count on the new government spending fiercely resist seeing it stop or even decrease. Legislators and the governor are faced with an uncomfortable situation.

That seems to be why Governor Strickland has expressed his hope for another round of federal money to alleviate the state budget woes. Most other states are in a similar budget predicament, and they, too, would like to see the feds help them cover up their fiscal mismanagement. With estimates that state budget deficits could total $180 billion in the next fiscal year, a hefty federal bailout would be necessary at a time when even the big spenders in DC are blanching at adding to the record-high federal deficit.

Of course, whether the money comes from Columbus or Washington, DC, it comes from our pocketbook. Government can’t spend what it doesn’t first tax or borrow. Ultimately taxpayers will be paying for any federal bailout funds that come to Ohio. The only difference is whether it is funneled through the U.S. Treasury or the Ohio Department of Taxation.

Instead of hoping for an unlikely federal bailout, Ohio policymakers should learn from this year’s budget debacle and get serious about enacting reforms that will provide a more permanent solution to the state’s problems. Eliminating useless government programs, cutting the bloated state workforce and trimming its wages and benefits, and finding more efficient ways to provide necessary services is a good start. It’s also necessary to enact tax and regulatory reforms that will make Ohio an attractive place for businesses, which will increase tax revenue without the need to hike tax rates.

A federal bailout may make politicians’ jobs easier, but it’s not what Ohio really needs.

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

A Real Job Creation Plan

By Marc Kilmer

While the state budget impasse remains unresolved, legislative leaders are fighting over which government programs to cut. Unfortunately, one area of state spending seems sacrosanct — corporate welfare. As long as state politicians continue to lavish money on ineffective programs like the Third Frontier or the Department of Development instead of working on real reforms to promote economic growth, Ohio’s unemployed will continue to find little relief.

With a deficit of $853 million, it seems a strange time for state policymakers to be proposing to borrow $1 billion to spend on corporate welfare. Yet this, along with Governor Ted Strickland’s recent executive order to refinance the Ohio Venture Capital Program, shows that Ohio’s politicians have learned little about job creation.

Politicians support these programs because they think they provide jobs. This reflects a mindset that is all too prevalent among those who work in Columbus (or Washington, D.C.) — an inflated view of how much the government affects the economy. Instead of viewing job creation and economic growth as the result of the daily interactions of business owners, workers, and consumers, too many politicians see it as a top-down process that can be heavily influenced by government programs.

The constant talk of the jobs “created” by the government is a symptom of this peculiar mindset. The Obama Administration, for instance, claimed its stimulus plan would create or save 3.5 million jobs. As Buckeye Institute fellow Sam Staley wrote about in a recent National Review article, though, this estimate was entirely lacking in credibility. As he pointed out, the Obama Administration estimated Ohio’s Sixth Congressional District would benefit from 7,200 stimulus jobs. Between 2001 and 2007, the area had only seen 3,500 real jobs created. It strains one’s imagination to think the stimulus bill would double the job growth occurring during the national economic boom.

In early November the Obama Administration said that 640,000 jobs had already been created or saved by the stimulus. Of course, as this claim was investigated it quickly became apparent that this was just wishful thinking. Lynn Walsh of the Buckeye Institute pointed out that many of the jobs in Ohio were created or saved in Congressional districts that didn’t even exist. The Columbus Dispatch noted that many of the education jobs claimed to be “saved” by the stimulus weren’t in danger. Other news organizations around the nation also found that local job creation claims were just as bogus.

At the state level, supporters of extending the Third Frontier program tout the 40,000 jobs it has allegedly created. While this number comes from a consulting firm and is on firmer ground than the Obama job creation numbers, it too is suspect. To truly gauge the impact of this program on employment, the analysis should determine whether these jobs would have been created without government spending. It also needs to take into account the jobs destroyed by government taking this money out of the economy through taxes and borrowing.

While Ohio politicians have been relying on the Third Frontier, the Department of Development, and other government agencies to create jobs, the state’s economy has declined. Even before the current recession, Ohio’s job growth lagged behind the national average. Where is the evidence that the top-down, corporate welfare mentality so popular in Columbus has worked?

Instead of expanding state debt and wasting more money on the Department of Development, state policymakers should enact an economic growth platform of tax reduction, ending mandatory unionization, eliminating the prevailing wage law, and cutting state bureaucracy. Ohio will once again be an economic powerhouse when its politicians recognize that the only effective government job creation program comes from creating an environment for individuals to start businesses, employ workers, and grow the economy.

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

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.

Voters’ Voices Are Silenced By The Ohio General Assembly

By The Ohio Council of Churches

For the past 20 years, Ohio voters have repeatedly said NO to expanding gambling. Two out of the past three years despite millions of dollars spent on advertising by gambling corporations, the voters have overwhelmingly voted No. Therefore, one has to ask the question why would a Governor, who has repeatedly spoken about the dangers of gambling, suddenly announce that he was supporting slot machines at Ohio’s seven horse racing tracks? Searching for new revenues to help fill a $3.2 billion hole in the 2010-11 biennial budget Strickland believes that this decision will create $933 million in the next two years.

If we step back from the rising pressure of falling Ohio tax revenues and rising unemployment, what are the probably impacts of such a decision? The seven racetracks are only required to pay $13 million of their $65 million license fee in the initial year. Therefore, they won’t have to begin any construction or expend any major funding until the November election when voters will decide the fate of Penn National’s casino proposal. The racetrack slots are not scheduled to begin until May 2010 with only two months remaining in the fiscal year. If the owners of the seven tracks decide that competition with the casinos will reduce the profitability outcome for them, they can withdraw from any further payments to the state and discontinue their plans to install slots at their tracks. Robert Griffin, owner of Scioto Downs racetrack, said they are willing to pay the initial $13 million, but questions if they will go ahead and put something in the ground if the casinos ballot issue passes in November.

Half of the total is based upon a $65 million license fee from each of the seven racetracks creating a total of $455 million. However, they are not required to pay the total up front. The racetracks originally asked for a claw-back provision that would allow them to get any license fees that they have paid back if the casino ballot issue passes in November. The legislature has since removed this option. This indicates that the horse tracks may not be in this agreement beyond November and all the $933 million may not materialize.

Warren county commissioners have remarked that they are opposed to gambling on the fairgrounds and it is very unlikely that the Lebanon racetrack there will participate in the slot machine opportunity. This reduces the $933 million estimate by at least $100 million.

The Governor’s decision seems to have been born out of the pressure to fill a $3.2 billion hole in Ohio’s biennial budget. But as is often the case in most decisions made in haste, this one is based on faulty suppositions. Another potential problem is that the compromise reached by the Governor must provide authorization for the slot machines at the racetracks by Executive Order with the House and Senate providing some enabling legislation. The American Policy Roundtable in Cleveland, an anti-gambling organization, has announced their intentions to challenge the action in the Ohio Supreme Court as violating Ohio’s Constitution by allowing casino –style gambling without a statewide vote of the people. They will seek an injunction to prevent the gambling of slots until a ruling by the court. At the very least, this could markedly reduce the revenue for this biennium. It took Pennsylvania three years to handle political hearings and court cases before they could get their first dime from the slots.

I haven’t even mentioned the fact that the economy has severely reduced the revenues in gambling establishments across the country and the Midwest is now exception. The Governor’s budget representatives provided information to legislative committees that each slot machine could deliver over $200 per machine each day. However, the representative from coin industry advocating for the bars and taverns said that the University of Cincinnati study indicated that each slot machine could anticipate $76 per machine. Obviously the large difference in potential funding could drastically reduce the total amount that the racetrack slots could provide the lottery and Ohio’s budget shortfall.

Finally, Ohio law requires that profits from the lottery must be utilized only by Ohio’s primary and secondary education directly and cannot be supplanted for other purposes. Therefore, court action could be initiated if the Lottery Commission tries to transfer profits to the general fund to cover some portion of the state’s financial budget hole.

The Ohio Council of Churches joins with the large majority of faith-based organizations including mainline, conservative and independent churches in strongly opposing the expansion of gambling because of the many negative impacts on communities, families and individuals. But even among those who favor gambling, many can’t support a monopoly for one business or gambling company. The majority of Ohioans oppose putting them into Ohio’s Constitution as the only ones allowed. This is all done without a competitive bid to give Ohio taxpayers a fair share of the profits. Voters remember that only last year, the Governor authorized a Keno game projected to raise $73 million a year. Eleven months later, Keno has produced just $30 million according to Ohio Lottery officials.

The Columbus Dispatch makes the most salient point in an editorial calling the slots a bad deal for Ohio. Because Ohio’s current budget contains $5 billion in stimulus one-time monies, they point out that even if the slots perform as suggested the next biennium will be $4 billion short in the 2012-13 budget. The editorial says, “In the name of balancing the budget, Strickland is asking Ohioans to subject themselves to a parasitic industry, knowing full-well that it will not begin to solve the state’s long-term fiscal problems. Most of the devastating cuts to Ohio’s safety net will still not be funded in this biennium budget and the next without the $5 billion stimulus funds the outlook is even bleaker.

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!”