Ohio budgets billions more than it needs to

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As the Ohio General Assembly debates the state’s biennial budget, a new report says the state is spending too much.

Gov. John Kasich’s proposed budget increases spending by $5.4 billion, “representing a trend of unsustainable public-spending growth” the 2015 Piglet Book says.

And taxpayers will end up paying nearly $1.8 billion of that increase.

The House-passed budget isn’t much better, with taxpayers footing the bill for $1.7 billion in increased spending.

Greg Lawson, a policy analyst with the Buckeye Institute for Public Policy Solutions and a co-author of the report, said now is good time to look at historical spending growth, especially with tax reforms included in the budget proposals.

“The governor wants to get rid of the income tax – and we agree with that,” Lawson said. “Our difference with him is how we get there. The solution to eliminating the income tax is to reduce spending in a strategic way over a period of time so we don’t have to look at increasing taxes elsewhere to offset that reduction, like the governor’s budget does.”

Lawson and co-author Tom Lampman say policy recommendations in the report could save taxpayers $2.6 billion in the 2016-17 budget.

One recommendation is to limit spending growth to not more than 3 percent, taking into account inflation and population.

“Some people question if it should grow even that much,” Lawson said. “But I’m a realist. Before you can run you have to be able to walk and we have yet to walk in terms of keeping spending at that 3 percent level.”

Ohio’s spending over the past 20 years was 17 percent over the rates of inflation and population, the report says.

But if the state loses population, should the spending decrease accordingly?

“A very cogent case can be made that that should happen,” Lawson said.

Overall, Ohio hasn’t lost population, “but in theory, if we do, we absolutely should reduce spending,” he said.
The second recommendation is to end corporate welfare, saving taxpayers $212.9 million.

The Piglet Book specifically names the Horseracing Development Fund, Agriculture Market Development fund and TourismOhio as examples of corporate welfare.

“You’re using a government entity to impose and collect taxes within an industry and then the government is paying to produce ads to promote the industry,” Lawson explained. “You don’t need the government to do that for you. If you want to spend that money, you can hire an advertising firm and pay them out of pooled resources from within the industry.”

Lawson said this type of “user tax” is better than using General Revenue Funds directly, but still is not something government should be doing.

“Why does it need to be funneled through a government entity? Just keep the government hands out of it and hire someone to do it for you,” he said.

It’s also duplicative.

“Attractions and areas have their own advertising budgets. Look at the Rock and Roll Hall of Fame or the Hocking Hills area. There are numerous entities and chambers of commerce that do advertising all the time,” Lawson said. “Let thousands of marketing ideas bloom. It doesn’t need to be cycled through and have the government spend money on it.”

The third recommendation is to end government advocacy and philanthropy, saving nearly $55.7 million.

The Ohio Arts Council, the report states, receives $20.9 million in income and sales tax revenue to distribute to artists and galleries, making the state the “arbiter of taste and culture.” It says Ohioans are “more than capable” of choosing what artists to support “without the government’s guidance.”
Lawson said there were a lot of examples they could have highlighted but they tried to be pragmatic.

“We understand that changing minds on this is not something that is likely to occur overnight,” he explained. “It comes down to the core functions of government and if you decide something really is a core function, then how are you going to sustain the growth in funding that it will require?”

He says it really is about jobs and the quality of living in Ohio.

“The expanding scope of government makes cutting spending harder,” Lawson said. “As long as we keep spending like we are, when the next recession hits we’ll end up cutting a lot more of government in order to meet the budget, or we’re going to have to raise taxes and eliminate all the reforms we’ve made to date.”

Lawson said the recommendations are intended to put Ohio’s budget in the best position to weather future recessions so that the current economic growth can continue.

“We’re still not where we should be in terms of job growth,” he said. “We have some systemic problems we have yet to address and we cannot address those if we simply keep spending.”

Lawson also had a recommendation for Ohioans.

“Keep your eyes on government,” he said. “This book is just a snapshot of what is going on. We’re spending more than we need to – at all levels of government.”

But, Lawson warned, it will be a tough road to follow.

“There are a lot of people on both sides of the aisle who get it, even if they don’t always agree on the specifics,” he said. “At least there will be a dialogue and an effort at making the big-picture reforms so we can be freer and have a more prosperous Ohio.”

Gov. John Kasich’s office did not respond to a request to comment on the report and the recommendations.