New budget deficit projection requires independent review
Given that Republican Gov. John Kasich and the GOP majority in the House and Senate are using the $8 billion deficit number in the biennium budget to impose deep spending cuts across the board, word that the shortfall between revenue and expenditures could be significantly lower demands a nonpartisan, transparent evaluation of the projection. The biennium budget has passed the GOP-controlled House largely in the form submitted by Kasich and it is now being considered by the Republican controlled Senate.
The $8 billion figure was the foundation of the governor’s campaign last year in which he accused the Democratic incumbent, Ted Strickland, and the Democratic controlled House of mismanaging the state’s finances. Ohio voters, reeling from the national economic recession that began in late 2008 during the administration of Republican President George W. Bush, decided that Kasich offered a better solution to the crisis.
When he presented his biennium budget, the $8 billion deficit was the justification for making cuts in spending. The Local Government Fund, which funnels state dollars to county, city and other local governments, will be slashed by 25 percent in the first year and 25 percent in the second year. In addition, school districts will take a hit, as will social service agencies and nursing homes.
In other words, the Republicans are delivering pain and suffering because of their projected deficit. But, the latest estimates show that the real shortfall could be between $5.9 billion and $6.1 billion. If proved to be true, it means there could be more money available for necessary services that are now at risk.
Tim Kean, the governor’s budget director, acknowledged to the Cleveland Plain Dealer that “conceptually, I agree” that the so-called “structural imbalance” is turning out to be something in the $6 billion range. But Kean disagreed with the way the newspaper applied the various revenue projections and budgetary assumptions.
Given that ProgressOhio, a liberal policy group, is challenging the Republican biennium budget on the grounds that it is based on faulty numbers, an independent, transparent analysis is required. The political climate in Ohio today does not lend itself to the traditional Legislative hearings. An outside view of the budget would serve to not only cut through the political flak, but would reassure Ohioans that the sacrifices they are being asked to make are justified.
Business tax cuts
There’s another reason why a budget analysis is required: Gov. Kasich and the Republicans in the General Assembly have not only dismissed any talk of boosting revenue through a tax increase, but are now toying with the idea of cutting business taxes further. Kasich argues that such cuts would result in Ohio businesses reinvesting in the state, thereby creating jobs.
That may well be, but for now local governments, especially those in regions that have struggled economically even during the good times, are taking it on the chin.
In the city of Youngstown, for instance, the expected revenue shortfall from the cuts means that the administration of Mayor Jay Williams is unable to fill important positions, such as city planner. Police and fire protection must always be a priority in an older urban community.
It’s one thing for the governor and Republicans in the Legislature to preach sacrifice when the budget deficit is $8 billion; it’s another when the shortfall is less than what they have projected.