By Marc Kovac
The race for governor pits a Republican who wants to decrease the size of government, increase access to job-training programs and cut residents’ tax burdens against a Democratic incumbent who says he’s already done those things.
One wants to privatize the Ohio Department of Development, replacing the public agency with a nonprofit board of handpicked executives. The other says that move would lead to conflicts of interest and state-issued bonuses to private individuals.
And then there’s the $8 billion question — that is, how exactly will the state’s next chief executive deal with a looming budget hole, the result of using federal-stimulus and other one-time monies to maintain agency work and services over the current biennium?
Neither Gov. Ted Strickland nor his challenger, John Kasich, are offering many specifics on their plans for handling that issue.
But the two have spent recent months trying to persuade voters to rely on their past actions in elected office as a gauge for how they will tackle budget shortfalls and policy issues as Ohio tries to rebound from a national recession that stalled business investments and job growth.
“I’ve dealt with extremely difficult circumstances, and I have made very difficult decisions,” Strickland said of his time in office. “... I think I’ve acted responsibly, and I think I have managed the affairs of this state responsibly during a very, very difficult period of time economically.
“Going forward, I will continue to exercise the same kind of good judgment and priority-setting that I have in the past four years.’
Of his background, Kasich said, “I’ve written 13 budgets — I was budget committee chairman, and I spent 10 years of my life trying to balance the federal budget.
“... I went through every single program of the federal government. If it worked, we made it better. If it didn’t work, we got rid of it. If we could combine it, we combined it.”
He added, “We had a $3 trillion 10-year projected deficit [when I started]. When I left in 2000 after laying down the balanced budget act, which I was the chief architect of, we had a $5 trillion surplus.”
Strickland and Kasich are the two major-party candidates on the ballot. Others running in the gubernatorial election are Dennis Spisak (Green Party), Ken Matesz (Libertarian) and David Sargent (write-in candidate).
Strickland is quick to point out the accomplishments of his first term.
He pushed for education reform, signing into law an evidence-based model that proponents believe will provide the resources schools need without relying on ever-increasing property taxes.
He worked with lawmakers to finalize law changes to make the state more attractive for emerging advanced and renewable energy industries, including a recent solar project in southeastern Ohio projected to create hundreds of jobs.
He spearheaded an expansion of the homestead tax-exemption to cover more senior and disabled homeowners.
And he’s mostly continued the tax reform timetable implemented under the prior Republican administration.
Strickland also says he’s reduced the size and scope of government, cutting the state’s work force by about 5,000 employees and eliminating more than 200 business regulations.
“Some of my agencies are operating with about 70 percent of what they had available to them in prior budgets,” he said.
Strickland also points to difficult decisions he has made to ensure a balanced state budget. He asked for and accepted federal stimulus funding. He attempted a plan to place lottery- controlled slot machines at horse-racing tracks, only to have the move blocked by a court challenge.
With the backing of the Ohio Chamber of Commerce and other business groups (the same ones that are now backing his opponent), Strickland froze the final year of a phased-in income-tax reduction.
Kasich has been critical of some of those actions, saying the latter amounted to a tax increase at a time when state government should be cutting such costs to its citizens and businesses.
The governor has called such characterizations of his decisions as “simply inaccurate” and “not grounded in fact.”
“Mr. Kasich says a lot of things that I disagree with, obviously,” Strickland said. “I think he’s talking irresponsibly. He says he doesn’t want federal assistance.
“He says he’s going to begin reducing the state income tax.
“He says he’s going to immediately eliminate the estate tax.
“And he has signed a pledge that he will never support any increased revenue. ... I just think Mr. Kasich is flat-out wrong.”
Kasich declined, when asked to respond to Strickland’s critique of his ideas, focusing his comments instead on several policy proposals he plans to implement if elected in November.
Those initiatives include:
Revamping Ohio’s regulatory environment: “Between the paperwork and contradictory directions from people inside the government, it’s become very, very difficult in Ohio for small businesses to be successful,” he said. “... We need to protect health and safety, but it should not be inconsistent with economic growth and job creation.”
Controlling workers’ compensation costs: “They gyrate and skyrocket, and they are unpredictable,” he said. “That system needs to be stabilized.”
Widening the reach of Ohio’s job-training programs: “If there’s a state where we need to train people, it’s in Ohio.”
Spinning off the existing Ohio Department of Development into a nonprofit controlled by a board of individuals appointed by the governor. Kasich believes the board would be able to respond more quickly and effectively when companies are considering expanding or relocating in the state.
(Strickland rejects that idea: “A CEO’s primary fiduciary obligation is to their investors, not to the people of Ohio or the state of Ohio,” he said, “So I don’t know how a CEO could really function without having a serious conflict of interest. What if there’s a company that wants to come in and set up a competing operation against one of the individuals that’s on that board?”)
But the centerpiece of Kasich’s campaign is his pledge to reduce Ohio’s tax rates, including the eventual elimination of the income and estate taxes.
Neither will be accomplished overnight, instead requiring careful consideration and — first and foremost — cuts.
“We need to reduce taxes, and we need to reduce the size of government,” Kasich said, adding later, “If we think that raising taxes is going to get us out of this ditch, we’re dead wrong.”
Strickland and Kasich appear to agree that raising taxes now would have a devastating effect on households and businesses.
But Strickland is leaving that option on the table going into the next budget cycle.
“You never know what may happen,” the governor said. “... I think raising taxes under the circumstances could have the effect of depressing the recovery or even resulting in what’s referred to as a double dip.”
But he added, “I’m obligated constitutionally to maintain a balanced budget. And I certainly, as governor, will meet that obligation, as I have in the past.”
In recent days, Kasich repeated his no-tax pledge.
“We’re driving people out,” he said of the need to reduce taxes quickly. But he added, “All things in its time. You can’t just kill taxes without downsizing. ... This is a goal, and it’s a process. You don’t just slash things.
“It is a consistent effort — lower overhead, lower taxes, generate more revenue.”
No answers (yet)
The next governor, whether a re-elected Strickland or newly elected Kasich, will have to deal with a purported $8 billion gap in the next state budget.
Both televised debates between the two candidates included questions seeking specifics on how they would fill that hole, and Statehouse reporters have asked repeatedly for answers to similar questions.
Neither candidate, however, will say what he plans to do.
“You don’t release it chapter by chapter,” Kasich said.
“The governor’s budget person can’t even tell you how far we’re in the hole. So until I know the revenues, I can’t give you some partial picture of what I’m going to do.”
“I don’t know that it’s going to be $8 billion,” Strickland said of the budget gap. “But it’s going to be a huge challenge.”
Kasich has mentioned cost-cutting in the state’s Medicaid spending, determining the real value of state-owned assets and pushing more shared services among schools and local governments as a partial means of dealing with budget issues.
“How many superintendents do we need in one county?” he asked. “How many principals, assistant principals, curriculum advisers, outreach community people. ... ? We need to share.”
The governor already has called for additional federal funding for the next biennium. That would fill part of the shortfall.
“I will continue, as I have, to advocate for additional federal resources until the effects of this recession lift,” Strickland said. “I think that’s reasonable [though] I don’t think that the state of Ohio or any other state should expect [federal stimulus] on an ongoing basis.”
And without federal help? “It will require massive, massive reductions in state government — in the state government that I contend has already been reduced,” Strickland said.
“The fat has been squeezed out of this budget. Now, is it possible to further cut? Absolutely, you can always cut more. Is it possible to cut while continuing to provide the services that the people of this state expect from their state government? I don’t think so.”
Strickland also said he has taken steps to pinpoint ways to reduce spending in the areas that account for much of the budget: Medicaid, education and prisons.
He’s asked outside groups to study the state’s Medicaid, K-12 and justice system policies to find cost savings. The chancellor of higher education is heading a comparable study of the state’s university system.
Strickland and Kasich agree on the need for prison-sentencing reform, an issue that has stalled in the Republican-controlled Ohio Senate.
“We want to make sure that people are confined,” Kasich said. “... We have to take a look at that. It’s common sense. ... But you don’t want to over-confine somebody that costs the taxpayer a fortune when we could have them in a better setting where we’re safe.”
“I can tell you, we have too many people in prison, it’s costing us too much money,” Strickland said. “It’s an irrational system we have in place. [Nonviolent offenders are] staying for nine months, and we’re training them how to be a better criminal, quite frankly.”