Prepare to be surprised. 

Today the free-market/conservative think tank Buckeye Institute released their analysis of Kasich’s budget.  And while it had the praise you’d expect, it also unflinchingly refused to whistle past the graveyard that Kasich is hoping the Tea Party activists don’t realize:  Kasich’s budget doesn’t lower the “cost of government,”  like he claimed all week.  In fact, State government spending will never be higher (except for local governments, K-12, and higher education.)

When it comes to keeping government spending in line with changes in population and inflation, Governor Ted Strickland is the only Governor to present a fiscally conservative budget.

As detailed in Six Principles, from 1990 to 2009, state general revenue expenditures increased by 131 percent and 41 percent after adjusting for
inflation. After a brief respite in 2010 and 2011 (kudos to Governor Strickland), Governor Kasich’s proposed General Revenue Fund budget continues that nineteen-­?year pattern of spending increases greater than inflation. In fact, his two-­?year increase of almost 12 percent would be the second largest increase from 1990 to 2013. How can spending increase with an $8 billion deficit and Ohio’s weak economy?

The answer: the 2012-­?2013 budget forecasts revenues to exceed expenses by $8.58 billion. This approach continues the failed practice that got Ohio into the fiscal mess it is in today.

More after the jump

On agency consolidation as a means to save money:

We would, however, caution Governor Kasich on over-­relying on savings achieved by programmatic consolidation and other “streamlining” efforts.

Many a politician has sought such savings only to find them illusory or stymied by the bureaucracy. Vigilance will be required to make these savings happen.

On the hit to local government and the tax implications:

Because of this total [State/local]  tax burden, we had encouraged Governor Kasich to hold a tax reform summit with representatives from local governments to come up with a solution to Ohio’s tax burden.  ur belief is that eliminating a tax “here” that pops up again over “there” simply rearranges the chairs on the deck of the Titanic. We need a thoughtful discussion on how to restructure our governmental units and
taxes in Ohio to make us competitive with other states.

Instead, Governor Kasich’s budget makes deep cuts in funding to local governments and keeps revenues projected to go to local governments. Because of a few solid reforms in procurements and other areas, as well as the projected savings from passage of Senate Bill 5, Governor Kasich’s budget presumes that local governments will have the flexibility to adjust their budgets accordingly.

We are not as hopeful.

On privatization/securitization:

Finally, not surprisingly, we remain strong advocates of privatization. That said, we caution Governor Kasich not to rush headlong into privatizing Ohio’s assets when capital markets are weak.  Ohio taxpayers have made billion dollar investments in those assets and deserve to see a strong return on their investments.

As events unfold in Japan and the Middle East creating greater instability and market turmoil, Governor Kasich may need to delay his privatization plans so Ohioans can get a better return for their assets.

Sounds like the Buckeye Institute is signaling that this may not be the right time to consider leasing the turnpike (the budget will contain language giving Kasich authority to enter into a lease), securitizing liquor profits to create a funding source for JobOhio, or privatizing the Ohio Lottery Commission.

The Buckeye Institute also chides Kasich for balancing his budget on anticipated estate tax revenues, a signal that Kasich has abandoned his campaign pledge to repeal the estate tax.  The Buckeye Institute concludes that because Kasich’s budget “solves” the projected $8 billion deficit by apparently relying on the magic revenue fairy to allow the State’s revenues to grow through economic growth enough without raising taxes to balance the budget, it does not, as the Administration claims put the State on a path to a fiscally sound and restrained government.

Told ya so?

Buckeye Institute Analysis of Governor John Kasich’s 2012-2013 Budget

 

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