Ohio’s record rainy-day fund spotlights spending priorities

A record $1.48 billion now sits in Ohio’s rainy-day fund, but lest anyone think the surplus is only about good fiscal stewardship, surf the Internet and you’ll find a site dedicated to Gov. John Kasich’s re-election bid next year that touts the change in the state’s economic fortunes.

Make no mistake about it: Republican Kasich, who is completing his first four-year term in office, will be running on the economy — just as he did in 2010 when he defeated Democrat Gov. Ted Strickland.

Then, the former congressman and national talk show host accused Strickland and the Democratic controlled House of Representative of mismanaging the state’s finances. Ohio voters, reeling from the national economic recession, not only elected Kasich, but turned over every statewide office and the Ohio House and Senate to the Republicans. They haven’t been shy about using their one-party dominance of state government to pursue a conservative social and economic agenda.

In their first biennium budget of $55 billion — the two-year fiscal period ended June 30 — Kasich and the GOP began the process of restoring the rainy day fund by slashing more than $1 billion from the Local Government Fund, which funnels state dollars to county, city and other local governments.

They also cut funding for schools, causing a major increase in the number of districts to come under state-declared fiscal caution, fiscal watch and fiscal emergency.

The governor defended the cuts by saying that the public sector must come up with new ways of delivering services taxpayers expect for their money.

But, as representatives of police and firefighter unions pointed out in May as they urged the governor and the General Assembly to bolster the Local Government Fund, the number of local government employees has decreased by more than 29,000 over the past three years, while the ranks in state government have gone down a mere 2,200.

Like Democrats in the Legislature — they have largely been marginalized — the safety forces unions contend the approach taken by the Republicans has caused undue hardship at the local level.

While Gov. Kasich will use the $1.48 billion in what is formally called the Budget Stabilization Fund as proof of his good fiscal stewardship, his critics will argue that he and the Republicans have robbed Peter to pay Paul.

The $61 billion-plus biennium budget provides $200 million less for local governments than the just completed two-year spending plan, and does not make school districts whole.

Spending priorities

Thus, the debate next year will center on spending priorities. The governor and his Republican colleagues will argue that giving small businesses a cut in their income taxes will trigger investment and job-creation.

Democrats and their union allies will counter that slashing state funding for local governments and public education means forcing officials to choose between a reduction in services or seeking more money from the taxpayers.

If the state’s rainy day fund, which was bare when Kasich took office, were rebuilt solely from new revenues generated by an expansion of the economy through job-creation, the governor and Republicans would have a persuasive case to make in next year’s election.

However, the hardships caused at the local levels by deep cuts in state spending will give Democrats something to talk about.

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