John Kasich’s Ohio budget forecasts that spending in the state will fall from 120.3 billion in Ted Strickland’s last budget to 119.5 billion this year.
This is a drop of $800 million or essentially an unchanged budget (a drop of 0.6% for the mathematically inclined).
With all the cuts proposed in the Kasich budget, this lead me to a simple question: Where are the proposed savings going?
You would think this information would be relatively easy to find, but surprisingly, it's not readily available.
Here's my attempt to understand the Kasich budget.
Where are the cuts?
* The Local Government Fund - Cut $555 million (25% in the
first year, 50% in the second)
* Reimbursement fund payments to local governments and schools - Cut $1.3 billion
(money moved into the state's General Revenue Fund (GRF))
* Not replacing $1.8 billion in federal stimulus funds
* Medicaid funding - Cut $1.4 billion by reducing payments to nursing homes and hospitals
* Cuts in other agencies - Cut $400 million
* Library cuts -$160 million
* Primary and secondary schools - Cut 12.1% in 2012 and 7.6% in 2013
* Higher education cuts - Cut 13.1% each year
The Columbus Dispatch has the best graphic I've found to illustrate the Kasich cuts.
What are the privatizations?
* Privatizing five state prisons - Raises $50 million
* Leasing of the state’s liquor distribution network to JobsOhio. - Ran a profit of
$228.8 million in 2010. The yearly profits will now go to JobsOhio, Kasich's privatized
Ohio development organization.
Where is it going?
So if overall spending isn't changing, yet all these cuts are being made, where is the money going?
* Repeal of the estate tax - $333.8 million loss of revenue (2009 statistics). This money
only goes to people with estates worth more than $338,333. This money used to go to
local governments and schools.
* InvestOhio - $100 million each year in tax credits to people who invest in Ohio
small businesses. The credit is good for 10% of their investment and tops out at $1 million
each year.
* Bonuses for rich school districts - a special $17 bonus payment per student
for school districts that were rated either “excellent” or “excellent with distinction”.
Not an incentive, this primarily goes to wealthy schools which are already doing well.
* General Revenue Fund shift - $1.3 billion moved into the General Revenue Fund
from state and local schools
* Funding for charter and private school vouchers -Estimated $500 million increase.
(Note: More charter schools also can be created because of changes in sponsorship
rules, but the additional cost is not yet known because the funding is provided per pupil.
Last year, charter schools got about $720 million and three different voucher programs got
a total of more than $100 million. Based on these numbers I'm a estimating $500 million
increase)
Does it add up?
Now supposedly, Kasich increased spending from the General Revenue Fund from $50.5 billion to $55.6 billion over 2 years.
This is an increase of $5 billion. This is also supposedly the largest increase in state spending in Ohio's history.
This is the information that I was able to find. But it doesn't add up.
First, where are the increases in the GRF going to?
Some seem to be going to Kasich's JobsOhio private development effort, some to charter/private school vouchers, and some to wealthy school districts. Does that add up to $2.5 billion a year? Where are the rest of the spending increases?
Second, how can Kasich claim to be closing an $8 billion gap when he's increasing spending by $5 billion and only making about $6 billion in cuts.
"I fully realize that it's kind of counter-intuitive that we've closed an $8 billion shortfall and yet spending is growing." - Kasich's Budget Director Tim Keen
Counter-intuitive ... is that what you call it?
What's really going on here?
It sure looks like a shell game where the money is being shifted around.
Kasich's strategy is:
1. Cut funding to local governments and schools and force them to either cut services or
raise taxes.
2. Privatize state-owned businesses sacrificing long-term revenue for short-term payments.
3. Shift the savings to private companies to bribe them to stay in Ohio or move to Ohio. See
Wendy's, Diebold, Bob Evans, and OmniCare.
4. Shift the savings to wealthy school districts and to privatization efforts.
When you look at it closely, Kasich's strategy sure looks a lot like "trickle down" theory. Give to the wealthy and somehow it will "trickle down".
It doesn't look like any jobs are being created (according to estimates by Innovation Ohio and the Columbus Dispatch, 50,000 jobs will be lost), but it sure looks like Kasich donors make out well.
And by the way, with people making less money, Kasich's rosy revenue projections are already coming up short. I can already guess what the response will be, get ready for more cuts.
Why isn't this information in the news?
Your guess is as good as mine. Though if I had to guess, it's because the "news" doesn't want to anger state businesses. So they largely stand on the sidelines and simply repeat what each side says.
Most articles tend to be like this Cincinnati Enquirer piece or this Columbus Dispatch piece, which, instead of taking an objective look at what the budget looks like, where the cuts are and where the money is going, presents the Republican talking points and then the Democratic response. With the Republican talking points typically headlining.
They also only present pieces of the puzzle which is why it's so difficult to actually track down this information.
When you actually look at the whole picture, Kasich's plan is pretty clear: it's typical conservative trickle down theory.
Other Sources
* Ohio Legislative Service Commission Budget in Brief
* "Schools, local governments take hit in Gov. John Kasich's budget proposal,"
Cleveland.com