How Ohio pulled $4 billion from communities and redistributed it upwards

Daily Kos

How Ohio pulled $4 billion from communities and redistributed it upwards
by akadjian

Monday night Ohio Governor John Kasich delivered his state of the state speech.

He cribbed the biblical Reagan "city on a hill metaphor" to describe Ohio:

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As an Ohioan, I'd like to tell a different story.

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It's not a story about a person or administration because you have to go back further than that to see the pattern.

You have to go back further than that to see how a state gets budgeted back to the stone age.

The pattern is simple but takes place over a long period of time: shift tax burden, create deficit, blame government, defund government, repeat.

And unfortunately, it's a story that's not just happening in Ohio, but at a national level and in many states across the nation because it's being pushed by influential corporate groups like the American Legislative Exchange Council (ALEC).  

The story begins in 2005 ...

2005

The Ohio General Assembly passed House Bill 66 promising to improve economic conditions for Ohioans.

H.B. 66 eliminated the corporate income tax and reduced state income taxes by 21%.

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The promise was jobs and growth.

Impact of H.B. 66

Who benefited from the tax cuts? According to an editorial in the Toledo Blade:

Most Ohioans got little benefit from the tax overhaul. Middle-income Ohioans receive, on average, a refund of $182 a year. The income tax cuts most benefit the wealthy — Ohio’s top 1 percent typically get $10,000 a year in state tax relief — while services that low-wage earners especially rely on get cut.

Did H.B. 66 work? Did it create jobs?

In April 2013, Policy Matters Ohio looked at the data to see how Ohio was performing versus other states.

The report is not great.

From 2005 to 2013, we’ve had a 4.4% decline and have lost 238,000 jobs. Over the same period, despite the recession, the nation managed a 1.2% increase. Ohio missed out on pre-recession growth and has been slower to recover. Overall, Ohio ranked fourth-worst in the nation.  

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Nine years after the 2005 tax cuts, we trail the rest of the nation on growth and jobs. In the recent Gallup well-being index, Ohio ranked 46th out of 50 states in 2013.
The story doesn’t end with the 2005 tax cuts though. In 2010, Ohio elected a new governor and state legislature.

The 2010-11 “Jobs Budget”

After winning election in 2010, Governor John Kasich introduced his “jobs budget”: H.B. 153. He claimed there was an $8 billion deficit and proposed massive cuts to local governments and schools.

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Casino money was dangled before local communities as a way to make up the difference, ... it hasn’t.

{Cincinatti example}
Since 2000 alone, according to the city report Striving for Structural Balance: Assumptions and Options, full-time employees in recreation have been cut by 43%, transportation and engineering by 62%, IT solutions by nearly 75%, public services by 43%, finance by 43%, and the city manager’s office by over 40%. The cuts have impacted city pools and parks, economic development services, fire and police, traffic and parking, just about every service you can think of that government provides.

The city also sought to privatize its parking meters to bring in increased revenue, a plan that has since been shelved. Other fees will likely follow however.

Now imagine a similar scenario playing out in cities and towns across Ohio. Increased fees, increased local property taxes and decreased services. Or click here if you live in Ohio to see the effects and impacts on your county.

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The 2005 tax cuts reduced revenue with the assumption that the economy would grow and Ohio could bring in more money from a lower rate. However, the economy didn’t grow. It crashed. Quite simply, by 2010, the recession and the 21% cut combined to create the state deficit.  

Where Did the Money Go?

In the 2012-13 budget, Ohio paid for an estate tax cut which dropped revenues by another $333.8 million a year. The state also increased funding to charter and private schools by $567 million.

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As Kasich’s own Budget Director Tim Keen said:

I fully realize that it’s kind of counter-intuitive that we’ve closed an $8 billion shortfall and yet spending is growing.

Indeed.

Some might even say there wasn't an 8 billion deficit.

In 2013, the state government claimed the cuts to schools and local governments worked. No one is talking about a deficit and suddenly the state has a surplus. So we can restore funding to schools and local governments then, right?

Nope. You can probably guess what's coming.  

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Do you see the pattern?
•    Shift tax burden
•    Create deficit
•    Blame government
•    Defund government
•    Fund additional tax changes
•    Repeat

Cuts to schools and government services are being used to pay for the tax changes groups like ALEC desire.

It looks very similar to what’s happened at the national level with the sequester. Create deficit, use crisis to change tax code. Deficits or where the money will come from are rarely brought up when talking about tax changes.  

The American Legislative Executive Council (ALEC) is pushing similar changes across the country with 2013 successes in: Alaska, Florida, Idaho, Indiana, Iowa, Kansas, New Mexico, North Carolina and Wisconsin among others.

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More:
http://www.dailykos.com/story/2014/02/26/1275645/-How-Ohio-Pulled-4-Billion-from-Communities-and-Redistributed-It-Upwards?detail=email

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