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All Da King's Men

Fixing Ohio

By Da King Published: March 25, 2011

Before we get around to fixing Ohio, we have to identify Ohio's problems.

1) Ohio has an $8 billion budget shortfall.

Here's how the Cleveland Plain Dealer described the problem last March:

COLUMBUS, Ohio -- The state of Ohio is steering straight toward a cliff. At the bottom of that cliff is a hole nearly $8 billion deep.

Ohio leaders have less than a year to throw on the brakes and change course before it's time to draft another two-year state budget. And they will have to do it without federal stimulus dollars and other state nest eggs worth almost $8 billion that were used to prop up the current budget.

Ohio took $4 billion in federal stimulus dollars in 2009 to close the budget gap. Obviously, those stimulus dollars were not an actual solution to Ohio's economic problems. They were just a crutch to prop up Ohio temporarily in the hope that Ohio's economic ship would self-correct. Unfortunately, even though those stimulus dollars are gone, the economic problems remain (along with the stimulus debt we still have to pay for).

2) Ohio is losing jobs.

One of the main reasons for Ohio's $8 billion budget deficit is the fact that Ohio has been losing jobs, causing state tax revenue to fall. Here's another excerpt from last March's Plain Dealer article:

Weak economy hits Ohio hard: The national economic downturn has rocked Ohio especially hard, leaving the state in economic tatters with an unemployment rate now hovering at nearly 11 percent -- a level not seen since September 1983.

The more than 640,000 Ohioans out of work have punched a massive hole in the state budget, with state income tax collections -- which provide about one-third of the revenue for the state's general-revenue fund -- having dropped by 18 percent over the last two years.

A year later, and Ohio's unemployment rate is still 9.2%, higher than the national average. Ohio's unemployment rate now is still higher than it was in January 2009.

Beyond the job losses from the recession, Ohio has lost nearly 600,000 jobs over the last decade, making it the 3rd worst state in the nation for job losses. Only Michigan and California were worse. The state with the best job creation record over the last decade was Texas, followed by Arizona.

3) State spending and taxation.

Even though Ohio has been hemorrhaging jobs, state spending has continued to climb. The state of Ohio spent $68.4 billion in 2000. That soared to $106 billion in 2010. This happened at the same time as Ohio's tax revenue base was shrinking from the job losses. And as anyone from Ohio knows, Ohio didn't just start losing jobs recently. Ohio manufacturing jobs have been disappearing for about 35 years. Our tax base has been dwindling for a long time, and as a result, we've seen tax increase after tax increase to keep up with state spending. According to the Tax Foundation, Ohio has gone from one of the nation's best tax climates to one of the worst over the last 30 years, as you can see in this chart:

In the Tax Foundation's 2010 Index, Ohio ranked 47th in the nation—one of the worst business tax climates in the country. All of Ohio's neighbors rank better on this index.
These are the problems facing Ohio. We have massive budget shortages going forward, job losses, increasing state government spending, and dwindling tax revenues, along with some of the highest state tax rates in the entire country.

What should we do ???

We could increase taxes by $8 billion to cover the budget shortage, but how smart would that be when we already have high tax rates, job losses, and an unfriendly business climate ? Doesn't sound very smart to me at all. Sounds like that would only drive even more jobs away, leading us right back to the same place we are now, only worse. Raising taxes is what we've BEEN doing. As we should all be able to see, THAT HASN'T WORKED. Maybe some people haven't noticed, but Ohio doesn't have the best weather in the country. Having Ohio known as the "shitty weather, high tax" state isn't exactly going to induce people to come here. We NEED taxes to be low in this state, or business can just relocate somewhere else. It's that simple.

We want to attract jobs to Ohio, don't we ? Of course we do. We don't want to drive them away, unless we're suicidal. I hear people say Governor Kasich's SB5 legislation will kill the middle class. To those people, I say, are you freaking kidding me ? We've BEEN killing the middle class for years by losing all our jobs. Kasich is actually trying to get jobs back to this state. However, in the meantime, he has to do something about that $8 billion budget hole. Sorry, but he can't call the magical budget fairy and make that shortage disappear. Cuts have to be made at the same time that we start making Ohio a place businesses will actually want to come to. We are lagging way behind, due to the terrible leadership we've had in the past (both parties). Kasich is trying to change that, but he's taking a beating in the polls for it. Maybe Ohio IS suicidal.

“Ohio needs to be made competitive again,” Kasich said at a downtown ceremony. “Ohio has been and still remains under siege. So you need to look at Senate Bill 5 and all these other reforms … as an opportunity to set the stage to create a platform for job creation, for entrepreneurship.”

By reducing Ohio’s state and local government expenses, Kasich argued, Senate Bill 5 could make the state more attractive to businesses and economic development investors, “so that we don’t have …everybody moving across the bridge to the other side of the river.”

Whether you agree with Kasich's specific budget cuts or not (the unions don't agree, the Democrats don't agree), cuts do have to be made, and the only areas where meaningful state budget cuts can be made are in pensions, health care, education, or welfare. Those are just the facts. Those areas represent the majority of the state budget.

Liberal groups, as usual, are framing everything in terms of class warfare, saying Kasich is catering to the rich at the expense of the middle class. I say, such rhetoric is not helpful and is in fact extremely counterproductive. There is no warfare. This is as close to a classless society as you will find. There are just varying levels of individual success (and who would want it any other way ? It's called 'opportunity'). Our businesses must be profitable in order to employ workers. That's how it works. That's how the middle class is created in this country and in our state, through the successes of our businesses. It will always be so. All government revenue comes from successful businesses in this country. We must do everything we can to insure they remain successful so they can pay decent salaries to our workers...unless you prefer buying everything from China as you work at your minimum wage job.

You want to fix Ohio ? Here's the only way - attract new businesses to Ohio by making Ohio an attractive place to do business. That means low business and corporate taxes, even if the word 'corporate' does induce a howling Pavlovian response of outrage from mind-controlled liberal robots. Ignore their drooling, because new business means new jobs, which will renew the middle class and increase revenue to the state for government services. THAT is how we pay our teachers, police, and firefighters better, not by taxing the hell out of an increasingly strapped citizenry in a lousy economy. The liberal class warfare rhetoric is for losers. Prosperity is JOB ONE. Somebody should tell the unions that we are ALL struggling now. It's not just them. They should be happy they have decent jobs. A lot of us DON'T. When we return to prosperity, that's when they will too. We're all in this together.

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