Since introducing his budget, Governor Kasich has already been traveling the State claiming that this budget is necessary to “put us on a path to economic growth.” (Source: Cleveland Plain Dealer) Implied in that statement is that Ohio isn’t already on a path for economic growth.
In order to draft a budget, one of the first things you’ve got to figure out is how much revenue you’re going to have. For government, that means you need to make some economic assumptions as to what is going to happen in the economy since your revenues are derived from income taxes that… well, require people to have income.
So in February, the Governor’s Council of Economic Advisors met to give the Administration its economic forecast for the upcoming biennium in order for the Administration to project what will likely occur on the revenue side of the State’s budget. The Council of Economic Advisors is compromised of private sector economists from the leading financial industries with offices in the State.
And here’s what they predict. Ohio will continue with the modest economic growth similar to the same we saw as the leading economic indicators showed as being positive for the “past eleven months.” So right off the bat, Kasich knows he needs new economic advisors. These guys are insisting we’re already on the path of economic growth without his budget. (Except that Kasich’s own “Jobs” Budget predicts BILLIONS in new revenue growth as the economy continues to grow over the next two years.
But what about the unemployment rate? The recession “officially” ended in 2009. In Ohio, the unemployment rate peaked around the end of 2009 through early 2010. During the course of 2010, under Governor Ted Strickland, Ohio ended with an unemployment rate that was 1.1% lower than it was just a year before (10.6% to 9.5%).
Our rate was just .1% higher and in November tied the national unemployment rate. Ohio’s unemployment rate had not been at or below the national unemployment rate since October 2002. Unknown to the voting public in Ohio, the same month they voted Strickland out, he had positioned the State to have bring our unemployment rate to level of achievement we hadn’t seen since 2002.
So what does Kasich’s budget based on his private-sector economist predict will happen in Ohio’s economy? The good news for Kasich, the “jobs” candidate, is that Ohio’s unemployment is predicted to steadily decline as the nation’s unemployment rate declines. The economists make a forecast through 2013, which is about when Kasich will have to start his re-election campaign. And he’s going to need all the help he can get.
Because Kasich’s budget and his economist predict that the rest of the nation will outpace Ohio in dropping their unemployment rate. Over the next three years, Kasich’s private-sector economists, and thus his own budget, predicts that Ohio’s unemployment rate will drop from 9.4% in 2011 to 8.5% by the end of 2013. After three years in office, Kasich’s “Jobs” Budget predicts Ohio will go from being essentially tied with the national unemployment rate to .6% higher than the national rate!
In other words, not much of any drop this year, and over most of Kasich’s term he’ll see less of a drop in the State’s unemployment rate than Ohio saw in the last year of Strickland’s term right after the recession, and the nation’s unemployment rate will outpace Ohio’s in dropping.
Income growth, while consistently positive, is projected to substantially lag behind the nation as well. Shortly after receiving this economic forecast, Kasich was quoted in Newsweek last month saying:
“If the jobs come in ’13, then God bless them.”- Governor John Kasich (R-OH).
To repeat, Governor John Kasich’s “Jobs” Budget assumes that Kasich will do worse over three years in lowering Ohio’s unemployment rate than what Governor Strickland did in the year after the recession.