In the 2016 Edition of the Mercatus Center at George Mason University’s “Ranking the States by Fiscal Condition,” authored by Eileen Norcross and Olivia Gonzalez, Ohio mostly gets pretty good grades on a variety of fiscal metrics.
From the report: “On the basis of its fiscal solvency in five separate categories, Ohio ranks 11th among the US states and Puerto Rico for its fiscal health. On a cash basis, Ohio has between 4.64 and 6.22 times the cash needed to cover short-term liabilities. Revenues exceed expenses by 5 percent, producing a surplus of $278 per capita. Net assets are 10 percent of total assets, and total liabilities are 54 percent of total assets, for a total liability per capita of $3,579. Total debt is $17.75 billion. Unfunded liabilities are $262.47 billion, and other postemployment benefits (OPEB) are $15.46 billion. Total liabilities are equal to 61 percent of state personal income.”
Zach Schiller of Policy Matters Ohio is skeptical of the report’s conclusions because he said the data isn’t current, according to the Dayton Daily News. Schiller said getting a high national ranking isn’t as important as making infrastructure investments. “You can come up with statistical measures that give you a ranking, but is it meaningful?” he said. “To just look at monetary measures of solvency, to me, is somewhat one-sided.”
Ohio Gov. John Kasich won his first term in 2010, on the cusp of Ohio returning to the light of positivity after years of wading through the slough of despond wrought by the Great Recession of 2007-09 that blistered and belted the Buckeye State—like it did virtually every other state whether their leadership was Republican or Democrat—with the loss of hundreds of thousands of jobs.
In 2010, after the horrible fiscal storm had largely passed, leaving most state patients crippled or limping forward, former one-term Democratic Gov. Ted Strickland was pinned to the wall by citizen Kasich, whose campaign pounded Strickland for the job loses a Kasich administration implied wouldn’t have happened on his watch. Talk is cheap, as are backward looking proclamations about what did or wouldn’t have happened had someone else whose political ideology generally disdains government in general and sees success in spending cuts rather than expansions.
Ohio’s bean-counters, we are told, “know how to manage money.” One pundit’s perspective on the generally good news in the Mercatus Center’s study released last week compared Ohio to nearby states. Ohio’s budget picture is a “lot prettier” some said, adding, “In contrast, Ohio’s cashbox, comparatively speaking, is both full and secure, though the Blame Kasich First crowd will deny that until the day Gabriel blows his horn,” the Cleveland PD wrote.
What was missing in the state fiscal condition report was a look back on why Gov. Kasich, with the help of a super sympathetic Republican legislature, has been able to crow about taking Ohio from an $8 billion hole to a $2 billion emergency fund surplus, a claim Ohio’s lame duck governor made so often in his unsuccessful run for president this year that it just night end up on his tombstone when that day inevitably comes.
The $8 billion dollar figure is, of course, a convection whipped up in an politically inspired estimate from then GOP state auditor Mary Taylor designed to exaggerate what everyone knew was already a bad situation. Whether the real out-of-balance figure was closer to $3 or $5 billion is immaterial now. But what isn’t lost, as records and charts show, is the path to roaring recovery Gov. Strickland put Ohio on, which an honest look back will show involved a little good management itself.
Did Ted Strickland raid available sources of funds, especially the rainy day fund that was created for exactly such dire circumstances? Yes! By raiding the rainy day fund, though, it gave an opportunistic John Kasich a perfect story to peddle about how bad things were at the time. After John Kasich squeaked to a win in 2010, the year Tea Party anger and angst against President Obama and his signature legislative act, The Patient Protection and Affordable Care Act, boiled over so violently that Republicans swept races across the country as they did in Ohio.
Before Mr. Strickland, a former Ohio congressman like John Kasich, left office, he balanced the state budget—as the Ohio Constitution mandates—and reduced the unemployment rate by nearly two percentage points, a fact Gov. Kasich and his handlers are blind to for obvious reasons. In addition, Ohio under Gov. Strickland then delivered John Kasich another $1 billion in state revenue, helping the kid from McKees Rocks, PA, who missed his calling early in life to become a priest, stake his claim to getting Ohio “out of the ditch” by repairing a state he said was “broken” when he entered office.
Ohio had been beaten badly, but it wasn’t broken. In fact, Gov. Strickland set it on a path to being fixed by using state and federal funds to keep it from sinking into a true economic basket case, whose uphill battle to get where it is today would have been longer and harder had Mr. Strickland not used those resources when he did.
The real question Gov. Kasich needs to respond to honestly—which no reporter has asked him to explain—is what would he have done had he, not Ted Strickland, been governor when the floor collapsed?
Would John Kasich have cut income taxes? Would he have slashed government spending? Would he have told Washington he wasn’t interested in billions in federal stabilization funds to keep teachers among other professions on the job, instead of sending them home to apply for state and federal unemployment insurance? Had Mr. Kasich, who took billions in Medicaid funds when he had a chance without thinking twice about it, turned down dollars from DC, Ohio might still be struggling more than other states.
Report authors looking at the $2 billion emergency fund are right to be impressed. They might be less impressed, however, if they knew those funds are there because Gov. Kasich essentially stole them from local governments and public schools in order to balance the state budget and win a good credit rating from New York credit rating agencies. Ohio now enjoys Moody’s second-best rating, Aa1. As Ohio’s economy has ticked up slightly, but not nearly as much as many other states, Gov. Kasich continues to let local governments fend for themselves with tax increases on locals who don’t want public services to slip more than they already have.
His clever excuse now for not returning local government funds to local government is to guard against another economic disaster like the Great Recession, the second worse such period in American history next to the Great Depression of the 1930s. Running for president, Gov. Kasich declared Washington “obsolete,” promising to dismember it and ship many of its parts back to the states. Curiously, what Gov. Kasich said was good for Washington apparently isn’t good for Columbus. He could do the same thing by returning parts of state government—and billions in the process—back to Ohio’s 88 counties like he promised to do for the 50 states were he be elected president next year. So much for that dream.
But we know that John Kasich gravitates to public dollars if at all possible, even though he talks a good game about personal responsibility, balanced budgets, lower income taxes and reducing government regulations as his recipe for good times.
Ohioans can feel relief that the economic storm that raged and ravaged many has moved over the horizon. Ohioans should understand, though, that the good numbers in the “Ranking the States by Fiscal Condition” report are as good as they are because a governor took extraordinary measures to keep Ohio from falling even further into economic collapse.
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