“Think about it for a second,” John Kasich urged his Steubenville audience, gathered for the State of the State address a few weeks ago, “because we glossed over it, eight billion in the hole, eight billion in the hole, the largest deficit in the history of the state of Ohio. And people said there is no way we can deal with this.” Actually, a case can be made that the shortfall of the early 1980s, at the end of the James Rhodes era, was larger proportionally. Plus, anyone familiar with Kasich’s earlier work as the House Budget Committee chairman knew he could do it.
Do what? Eliminate the deficit without raising taxes. The governor and his fellow Republicans in the legislature even reduced taxes, by $300 million, as he proudly reminded. They also added $247 million to the state rainy day fund. “It’s pretty staggering,” the governor gushed.
How did he do it? After all, two months into his second year in office, and public fury hardly has been building, no clamor for higher taxes to meet neglected needs. As might be expected, Kasich had an answer: “You know, we did it with reforming and reshaping. … People think I’m this big budget cutter. I’d rather reform, reshape, make it work better.”
That thinking applies favorably to Medicaid, roughly 30 percent of state spending, the governor improving transparency and bringing more coherence to overall decision-making. A less favorable example? The reshaping included the state holding onto big money that in the past has flowed to local governments and school districts.
The budget features steep reductions in revenue-sharing agreements, involving such items as the local government fund, the tangible personal property tax and the public utility property tax. School districts face a double blow with reductions in direct spending, so many now staring at financial distress.
Yet each district has its own story, depending on the make-up of its revenue flow. Here is a shrewd element (politically) about the state budget, localities affected in different ways, say, a library system or a social agency with a local levy less vulnerable than one more dependent on the state. The diffuse impact discourages rallying to a single cause.
By keeping so much revenue, the governor avoided deeper cuts at the state level (though many departments were hit, from higher education to Job and Family Services). Thus, the toughest choices were left for schools, cities and other local entities. Many may opt to seek higher taxes, something the governor might have done by tapping the state’s wealthiest households, asking for shared sacrifice at little, if any, risk to the economy. But for him, that was just no way to deal with it.
— MICHAEL DOUGLAS
Editorial page editor