Today the House-Senate conference committee on the State budget met to begin discussing how to bridge the gaps between the stark differences between the budget the Republican House passed and the Republican Senate passed (the only things they seemed to have in common was an utter rejection of Kasich’s budget proposal across the board and numerous ways to attack the reproductive and health rights of Ohio women).

As is customary, the conference committee begins with an update from both the Administration’s Office of Management & Budget and the nonpartisan Legislative Service Commission on projections about the economy and revenues, which form the underlying assumptions in drafting the budget.  During good economic times, it’s common to expect these updates to reveal “more money” as the economists behind them feel more confident about the direction of the economy and the strength of growth.  During bad economies, it’s often the opposite effect as budget committees get even more pessimistic about revenues.  The Senate’s budget was actually passed using the nonpartisan Legislative Service Commission’s forecast back in February, which was more optimistic than Kasich’s Office of Budget and Management (thus, of course, leaving more revenue to be projected that could be used to fund schools and local governments business tax cuts)

The Republicans were counting on the revised estimates to provide enough projected extra revenue that they might be able to pass BOTH the House’s across-the-board 7% income tax cut and the Senate’s equally economically ineffective “small business” owner tax cut.  Unfortunately, while both the forecasts were, overall, slightly better than the February forecasts, neither gave sufficient revenue projections to make both tax cuts possible.

But for obvious bias reasons, I’m not going to deal with OBM’s projections.  However, the LSC’s updated forecast made a number of points we had been repeating for some time.  The LSC actually lowered its revenue estimates overall over the biennium period of this budget based on a lower than initially forecast economic growth.  The reason for the lower forecast?

In their January forecast, Global Insight correctly anticipated that a deal would be reached to avoid hitting the federal government’s debt limit in March, but they incorrectly anticipated that the federal sequester of funds would also be avoided, or at least that it would quickly be reversed. The federal sequester, involving a reduction of $85 billion in budget authority this federal fiscal year, actually went into effect March 1.

Yes, Global Insight projected a stronger national economy because it predicted that Congress would get rid of the sequester.  When it didn’t, it forced the LSC to reduce its economic forecast for Ohio, thus making it harder for Kasich and the Republicans to pass even more fiscal policies that won’t stimulate the economy, but will enrich the richest of Ohioans.  And here’s how the sequester is going to affect Ohio:

[I]n coming months we will see the effects of furlough days on federal employees located in Ohio, which effects will show up in income tax withholding receipts. The sequester will also show up in terms of spending on goods produced by Ohio’s defense contractors, for example General Electric in Evendale, and the Lima tank plant.

Ironically Evendale and Lima are represented by Congressional Republicans, albeit Congressman Turner opposed the Budget Control Act of 2011 that contained the sequester and made it law.  Chabot did vote for it.  Regardless, it is the policy that is the direct result of Speaker John Boehner’s leadership, and it will hurt Ohio’s economy.

But the LSC analysis makes many of the same points we’ve made about Kasichnomics in Ohio.  How Ohio’s only grown a little over 4,000 jobs in the past twelve month, the unemployment rate has stayed essentially the same since January, and “the 21,300 reduction in the number of unemployed Ohio workers since April 2012 is due entirely to people leaving the labor force.”  In fact, there are few jobs in Ohio today than in April 2012.  The unemployment rate is only .3% lower than it was a year before, and has not been this high since September 2009.

Last year, Kasich said Ohio was under a recovery that was an “economic miracle.”  In an attempt to prevent the Romney campaign from talking Ohio’s economy down, Kasich instead argued that Ohio was leading the nation in an economic recovery that was being hampered by the Obama Administration which was dragging the national economy down.  The presidential debate in Ohio centered around one issue: was Ohio leading the nation due to Kasich’s leadership or was Ohio benefitting from an improved national economy thanks to Obama’s policies?

Well, the LSC settles that in a number of charts that shows Ohio’s job creation has been outpaced by the national rate and the housing rebound is weaker than nationally.  In fact, the LSC analysis projects that income growth and overall economic growth (GDP) will be slower in Ohio than the national rate.  So, clearly, LSC is saying the national recovery is what’s lifting Ohio’s economic tide, not the other way around as Kasich claimed during the presidential campaign.

But none of this is really surprising.  In fact, we’ve covered how Kasich’s first “Jobs” budget for the past two years predicted that cuts in state and local spending (as Kasich advocated in his first budget), would actually be a drag on the economy.  It was covered in this quote in the budget from the Governor’s own Council of Economic Advisors:


In fact, at the time Kasich was promoting his “Jobs” budget in 2011 as an economic cure, he commented to Newsweek:

“If the jobs come in ’13, then God bless them.”- Governor John Kasich (R-OH).

According LSC, we shouldn’t expect a major shift in the unemployment rate anytime soon, either.  By the fourth quarter of 2014 (when voters will be heading to the polls), the LSC projects Ohio’s unemployment rate will only drop by .4%, which is only .1% lower than it was in December 2012.

In other words, the economy will continue to grow both nationally, and to a lesser extent in Ohio, but Kasicnomics has not created an “economic miracle.”   You don’t have to take our word for, the nonpartisan LSC said:

Ohio nonfarm payroll employment reached a low point in February 2010, and since then has recovered by about 182,200 jobs (3.6%) in the three years and two months since then. However, most of that growth occurred in 2010, 2011, and the first few months of 2012; in the past 12 months (April 2012 to April 2013), employment in Ohio has grown by 4,400 jobs (0.1%).

Kasich’s first “jobs” budget didn’t become law until June 2011, so that means the more Kasich’s policies have taken affect, the slower the economic recovery in Ohio has been.  Kasich isn’t getting the jobs done.