SIDEBAR: Of course, most local elected officials are extremely supportive of this proposal because they see more state money flowing to their jurisdictions to cover the costs of roads, sewers and other infrastructure projects. That their constituents are the source of the funding for these projects seems to be missed, however.
One of the sources of funding for this new spending is 'excess Ohio Turnpike revenue.' In my on-air discussion with Husted yesterday on NewsTalk 1370 WSPD, I asked him why any 'excess revenue' isn't going toward reducing the tolls. I really didn't get an answer, other than it was a great question and one that would have to be debated as the proposal goes forward.
The tolls for the Ohio Turnpike, which runs across the northern portion of the state from Pennsylvania to Indiana, have been a source of contention for those who live along the roadway for a long time. Failed promises to remove the tolls once the road was paid for, raising tolls in order to keep up with expansion and maintenance, truck traffic on local roads from those avoiding the cost, and other issues all combine to make the northern portion of the state feel animosity over just about any discussion of this thoroughfare. And then there is the state law which limits Turnpike revenue usage to projects within one mile of the toll road.
Politicians in Columbus may get more than an earful over this portion of the funding, in addition others. They're already seeing opposition from the anti-smoking groups over another source: using $230 million from the state’s anti-smoking efforts, leaving $40 million in what was expected to be a $1 billion endowment. Ohio Tobacco Prevention Foundation Executive Director Mike Renner has questioned the legality of the state taking this money.
Additional sources of funding to avoid borrowing include liquor sale profits and future general tax revenue transfers. Husted's explanation was that this is not a 'perfect' agreement, but it is better than borrowing. And he's right on that point, but he misses the bigger picture.
The overall business climate of the state is not a result of a lack of government spending.
Ohio has, for several decades, tried to 'stimulate' the economy (though elected officials didn't use that term) through targeted subsidies to politically popular industries, more infrastructure spending and other various programs designed to keep people and businesses in the state. Such efforts have not been anywhere near as successful as hoped. In fact, during all these efforts, the state's standing compared to others has fallen - except in the tax burden. Recent changes in the tax structure have helped somewhat, but not enough. And that's because government is continuing to spend.
Despite the fact that government spending hasn't worked, this stimulus package is just more more of the same, even if it's based upon borrowing only $400 million (instead of the original $1.4 million) to do so. As Dr. Samuel Staley of The Buckeye Institute said of the original proposal:
"Restoring Ohio's economic vitality will be difficult. ... the key will be in creating a policy environment where broad-based entrepreneurship and business investment is welcomed and nurtured.
Ohioans already spend nearly four months working off the cost of local, state, and federal government services. With the new debt the governor wants to heap on, taxpayers are destined to add another month working for the government. This leaves fewer and fewer dollars to fuel economic growth in the private economy. That's a recipe for driving away entrepreneurship and private investment, not keeping or nurturing it."
Husted has indicated that this new plan will allow the state to spend money more quickly than the original one would have permitted. Perhaps that's part of the problem: elected officials looking at government spending to 'quickly' do something, even if those 'somethings' will not have the desired effect of actually changing the economic environment in the state. Quick fixes might be 'quick' but are rarely a true 'fix' to the problem.