I’m starting to believe John Kasich couldn’t recognize the truth if it was wearing a name badge.  Just two days ago, we discussed how the big three public financing bond rating agencies weren’t impressed with Kasich’s agenda.  The Dispatch reported before the trip that Kasich hoped to impress them with his agenda.

Now, multiple news outlets are reporting that Governor Kasich is declaring victory because the bond rating agencies didn’t lower Ohio’s bond ratings:

“I went to see the ratings agencies a couple Fridays ago,” Kasich told the Rotary Club of Cincinnati at a downtown luncheon. “We are on negative watch, (but) Moody’s has decided not to downgrade us at this point.”

Kasich said he learned of the ratings decision a few hours before his Cincinnati appearance. He said Moody’s was impressed by the passage of Senate Bill 5, “which allows local communities to manage their costs. They are very positive about the fact that we have eliminated the structural deficit. What threatens our credit rating? A continuing declining economy and a disruption of the major reforms included in our budget.”

Read more: Kasich says Ohio to keep Moody’s rating | Dayton Business Journal

And here’s what WLWT in Cincinnati reported:

Kasich said the agencies told him that his reforms and initiatives, including Senate Bill 5, have helped put the state on a more sound footing, but warned that the initiatives must move forward or the agencies’ ratings could slip further.

A campaign is underway to put SB5 to a public vote.

Now here’s everything Moody’s says in its most recent credit rating report regarding the State of Ohio (from State Facilities Bond re: Juvenile Facility Building Fund Projects, 2011 Series A issued April 12, 2011):

The state’s Aa1 G.O. rating reflects a record of strong financial management that has been tested by long-running economic underperformance.  Ohio’s rating outlook was revised to negative from stable on August 24, 2009, because of continuing economic challenges and increased use of non-recurring fiscal measures.  The state’s revenues have stabilized, with moderate growth expected over the next biennium.  The budget is projected to return structural balance in 2013, when excess revenues may be used to rebuild reserves.  The state has moderate debt and unfunded pension liabilities, comparable to similarly rated states.

PROPOSED BUDGET REFLECTS RETURN TO STRUCTURAL BALANCE BY 2013

The governor released the proposed fiscal 2012 and 2013 biennium budget on March 15, 2011. More than two-thirds of state agencies will experience reductions in funding. Total general fund appropriations are expected to increase by approximately 1.1% (from $26.6 billion to $26.9 billion) in fiscal 2012 and 6.4% (to $28.6 billion) in fiscal 2013. Overall state spending, however, is expected to decrease 5.3%, from $62.7 billion to $59.4 billion. While general state aid to districts is budgeted to increase modestly each year, total funding would decline due to loss of federal stimulus funding, which had partially replaced state aid in fiscal years 2010 and 2011, and the accelerated phase-out of the state’s reimbursement to districts to replace the tangible personal property tax.

The budget also proposes $4.3 billion of Medicaid savings and cost containment, largely through the modernization of payment systems, negotiation of better rates with hospitals and controlling costs for behavioral health services. Pension reform shifts 2% of the pension percent of salary contribution from the employer to the employee, which would save the state and local governments an estimated $570 million annually. As in fiscal 2010 and 2011, a debt restructuring is expected in fiscal 2012, along with the privatization of five prisons and the state’s liquor enterprise, representing the bulk of non-recurring revenues in fiscal 2012 and bringing the structural imbalance down from 9% of revenues in fiscal 2011 to approximately 3% of projected revenues in 2012. If the state realizes current revenue projections, the proposed budget projects structural balance for fiscal 2013. The budget is currently under consideration by the legislature and must be enacted by June 30, 2011.

NEGATIVE FUND BALANCE IN FISCAL 2010

The state released its fiscal 2010 Comprehensive Annual Financial Report on January 28, 2010, ending a trend of late CAFRs in recent years. The undesignated, unreserved fund balance in the general fund continued a declining trend of GAAP fund balances, with the first negative ending balance since fiscal 2003, at -$141 million. The state ended fiscal 2010 with a cash balance of $139 million, 28% short of estimates. General fund revenues were $621 million, or 2.4% below projections, primarily reflecting a shortfall in expected federal revenues. The state has also announced that it will adopt multi-year financial planning, an additional improvement to its fiscal management policies.

REVENUES CONTINUE TO TREND POSITIVE

Ohio has seen better-than-expected performance across most tax sources in fiscal 2011, with tax receipts for the first nine months of the fiscal year $627 million (or 5.4%) above estimates, and 8.3% above receipts for the same period last year. The largest contributors to growth were non-auto sales and personal income taxes. Casino gaming was authorized in 2009. The gross revenues from this gaming are subject to a 33% tax, projected to result in $390 – $520 million in annual revenue largely to be distributed to local governments.

For more information regarding the State of Ohio, see our report published September 23, 2010.

Outlook

The outlook for the State of Ohio is negative, reflecting reliance – though decreasing – on non-recurring measures and likely continuation of sluggish economic performance that will make it difficult for the state to rebuild financial reserves even as the national economy recovers.

What could change the rating – UP:

  • Better-than-expected financial results
  • Rebuilding of reserves and positive audited fund balance position
  • Sustained structurally balanced operations
  • Economic recovery over an extended period

What could change the rating – DOWN:

  • Evidence of financial deterioration, including more reliance on non-recurring measures than projected
  • Failure to reach expected revenues or downturn in revenue growth
  • Failure to achieve budget’s reforms and cost savings
  • Trend of negative GAAP-basis general revenue fund balances
  • Decreased liquidity
  • Worsening state economy, with continued job loss

Kasich Lied There’s no mention of SB 5.  Nothing at all.  Instead, what Moody’s says is that the State’s bond ratings might be negatively impacted if Kasich’s budget “reforms” fail to generate the promised cost savings.  Instead of praising Kasich’s agenda, they express reserved skepticism. 

If Governor Kasich has something from Moody’s saying differently, produce it.  But for the Governor to imply (falsely) that the credit rating agencies endorsed SB 5 and threatened that repeal could hurt Ohio’s credit rating is just one falsehood built on another.  Kasich seems to have a pathological compulsion to lie.  It’s shameless.  It’s also embarrassing how easily it is to disprove.  After all, Moody’s comments aren’t trade secrets.  They’re meant to be public.  They supposed to give guidance to investors.

What Kasich suggests is an endorsement of public policies that the bond rating agencies simply do not do:

“It’s going to be an interesting conversation," said Karen Krop, another senior analyst with Fitch. "Changes in policies and the ways services are delivered are not factors in bond ratings. Balanced budgets are a factor. Prolonged economic growth is a factor.

“When you talk about the privatization of assets, you have to see whether it will actually occur and if it will generate the revenues needed.” [Source: Dispatch 03/25/11]

When John Kasich’s suggests that his budget “saved” Ohio from a lower rating, he’s lying.  Moody’s itself credits Ohio’s “record of strong financial management that has been tested by long-running economic underperformance.”  In other words, it was because of Ted Strickland Ohio’s rating hasn’t dropped, not Kasich.

But John Kasich’s budget didn’t help others avoid seeing their bond ratings downgraded.  Yesterday, the Cleveland Plain Dealer reported that the City of Cleveland’s bond rating was lowered by Fitch:

"The city’s finances will continue to be challenged given future state aid reductions combined with the sluggish regional economy."

The two-year budget proposed by Gov. John Kasich calls for deep cuts in state aid to local governments. Jackson said last week that based on Kasich’s proposal, the city faces budget shortfalls of $37 million in 2012 and $29 million in 2013.

Yep, those credit agencies are just wild about Kasich’s agenda alright…

  • MissGov

    Aren’t these issues that verge on ethics violations?

  • gmild

    I think he was entirely taken out of context. I believe Kasich was talking about meeting with Bill and Sally Moody about their plans to move out of New York to Ohio.

    http://www.ormc.org/hospital_services/Ray_W_Moody_Bio.aspx

    “We are on negative watch, (but) Moody’s has decided not to downgrade us at this point.” They’re obviously concerned about the “climate” in Ohio, but we’ve simply had a rough winter. I’m glad they haven’t entirely ruled out the move to Ohio. We certainly need an upswing in our real estate market. I applaud our Governor for taking the issues directly into people’s homes.

  • santoshama

    To Moody’s, “negative watch” on a state’s rating is like the legendary Monty Python scene with John Cleese and “just one more mint”. Just one more negative economic event (such as a natural disaster, major plant closing, significant disruption in the economy, massive layoffs, etc.) will trigger an automatic downgrade. Ka-boom! Kasich is feeding us two mints: (1) passage of SB5 with the significant instability that will bring to labor-management relations in the state and (2) the massive layoffs from local government and education budget cuts in the executive budget.

    Sensible budgeting, sustained revenue performance and strong fiscal management will remove this status, although it is always harder to exit “negative watch” status than it is to slide into it. Despite the fact that the state has been enjoying revenue performance well in excess of projections for 13 months running, Kasich’s use of one-time money and his ambitious cost savings targets stopped Moody’s from removing this status–something they might well have done as the economy continued to show strong recovery. I’m not a great fan of rating agencies (see http://dealbook.nytimes.com/2011/04/13/vows-of-change-at-moodys-but-the-flaws-remain-the-same/), but as Modern points out, if Moody’s had been so delighted with either SB5’s passage, or the Governor’s big budget plans, or both, they would have removed “negative watch” from our bond rating.

    So no more mints. Repeal SB5.

  • Fotogirlcb2002

    he needs to give up the stroking of the private sector for SB5!!
    Its going to vote more than likely and his ideas arent doing a thing for us.
    In fact he uses that local community farce way to much — lots of communities are talking with the unions of fire and police etc about budget concerns and they have always had that freedom. I have no idea where folks get these ideas from except for him. The state unions do NOT go into communities and make contracts for the local fire and police and public workers.The locals do that for themselves — Columbus, Middletown, Butler County all recently had talks with their folks and without arbitration….
    I am so sick of his 1/2 truths.
    It rained today wonder if that was sb5’s fault.
    When all the local communities do however find the need to increase local sales taxes, raise water and sewer fees, and whatever else they can find to bring in a few dollars–one thing will be made clear–Kasich will let you know he didnt do it !!
    A trickle down from his wonderful ideas and budgets.
    Wonder if Sb5 will get blamed IF Honda or the other car parts places have to lay off because of Japans woes?
    Maybe he can ask his new pal –Rush– for some advice.

  • Anonymous

    Anyone who’s read Atlas Shrugged would find Kasich an ironic fan, what with his thwarting modern passenger rail ways and all.

  • Anonymous

    Anyone who’s read Atlas Shrugged would find Kasich an ironic fan, what with his thwarting modern passenger rail ways and all.

  • And these are the same rating agencies that just got whacked for improperly rating real estate derivatives based on what the investment bankers told them to do.

    Got it.

  • Anonymous

    Ohio will “save” more money selling off it’s prisons than the Administration claims (through faulty math filled with double counting) SB 5 saves them.

  • Anon

    Rgtmwlly is an IDIOT! Nice to know that extremist RW talking points are represented here. Must get boring in the echo chamber listening to yourself.

    This is really about the current batch of scapegoating courtesy of the Koch brothers (and other evil rich people) and their Kochsucking devotees. I have two questions: when will Rgtmwlly and his friends become the next scapegoat?

    Who cares about the bond rating agencies?
    I know why, because they are paid to lie by and for evil rich people. It will make it easier to buy our state at pennies on the dollar…..

    So once again we are reminded that the Rethugs don’t work for us although we pay their salary. They work for evil rich people. This makes it way easier for the corporate and evil rich people takeover of “we the people” from the top and the bottom. I guess Rgtmwlly won’t be happy until there is no govt for us and there is complete anarchy. Rgtmwlly must like the wild west right where it didn’t work for anyone except robbers and bandits or and evil rich people right? Nice to know Rgtmwlly and your RW extremists are on the side of crooks who continue to rob us.

  • Tarfam325

    How is adding 1.67billion dollars to the budget balancing it? How is increasing his staff’s budget by 8%, moving friends from other states to take his jobs at an additional $300,000+ and raiding the Local Government Fund to further cripple localities and then claim SB 5 will fix it, when all it will truly do is add hardship to local communities be good for Ohio? How will cutting local school budgets only to TRIPLE funding for failing FOR-PROFIT schools help Ohio? How will cutting our budgets for police and firefighters help Ohio? It amazes me how people believe these decisions and under-handed tactics and lies are truthful just because they have strong party preferences or believe they are busting unions! There is
    SB5 may appear to help the state’s budget on paper, but all it is really doing is stealing from localities, destroying local budgets and further crippling hard working families. Notice, while your legislators claim that everyone must do their part to sacrifice in these hard times, they have INCREASED spending, INCREASED their own budgets, INCREASED tax breaks to HUGE corporations, INCREASED funding to For-profit schooling and special interest groups who supported them in their campaign? You cannot “cry broke” and ask others to sacrifice when you are stealing funds and increasing spending at the same time! This budget just DOES not add up!!!

  • Anon

    K-suck lies…..no news here, nothing to see move along.

    K-suck lies by making it harder for local governments to balance their budgets.
    K-suck lies by stealing our tax dollars then giving them to the evil rich. I don’t pay state taxes to support Bob Evans, Diebold, American Greetings and the other evil rich welfare queen extortionists. I pay taxes so that I can go to the library and fill in the pot holes and little kids can go to school like I did.

    What do the confused “free marketeers” have to say about us supporting people who don’t need help but are the current bunch of robbers? They made their money by robbing us.

  • Annekarima
  • Annekarima
  • dlw

    How? Seriously, how will SB5 help the budgeting process? And in what way is the store being given to public employee unions… and how does SB5 stop that?

  • Anon

    dlw……It is extremist RW talking point #101. This is the strategy of divide and rule. You get some non-rich people brainwashed by the RW radio, blogs, Fixed news…….new set of scapegoats created. Lather, rinse, repeat.

    Of course public employees didn’t create the budget mess but why have the facts interfere with a great lie oops I mean story. Did unions have anything to dowith it….NOPE! Never have the facts get in the way of a good story.
    We have a budget mess because people aren’t working and paying taxes because evil rich people wrecked the economy. On purpose or accidental wrecking (but I think it was on purpose). This is how evil rich people get non-rich people to vote against their own self interests (“we” unfortunately have a short memory and for getwho caused the problem…..in order to dismantle our govt by use of our govt. This is why they (TGOP) can only talk about money or freeodm. They hate people especially non-rich Americans and punish us for not being rich. The TGOP are the best overseers that money can buy.

    Truly, everyone needs to be paid more except for the people who caused the mess, people at the top, but I wouldn’t even bash overpaid people in entertainment because they actually work. The others (the bank robbers) don’t produce anything but deals (to rob people). That should be the new refrain “We’re underpaid”. People working and making good money would fix a multitude of ills…but never let the facts get in the way of a lie (a good story). The TGOP ARE GOOD AT CRAFTING STORIES. But they are not on our side; they don’t work for us; we need to remember that.

  • The unions have stepped up and offered concessions when times are tough……what corporation has offered to pass up an expensive tax cut until things are better?

  • Rgtmwlly and his friends will catch on when they’re faced with either paying ever higher local taxes or watching their neighborhood become like an Alabama trailer park because Kasich defunded everything to hand out tax cuts to corporations and those already wealthy.

  • Anon

    Perhaps (Kochsick)….the bone near the anus.

  • Anon

    Thanks Linda

  • Anonymous

    Oh h0w do I hate thee let me count the ways……….

  • dlw

    I just wanted to see if he’d respond with something other than false headlines and ridiculous talking points. I didn’t actually think he would… not surprisingly the spouters of talking pts can never follow up with actual information and boy do they get annoyed when you actually ask questions. They don’t get the concept of gathering info and using their brains to make an informed decision. They just drink the kool-aid and expect everyone else to do the same.

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