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Published: Saturday, 4/6/2013

Kasich’s budget: Keep the good stuff, ax the bad

BY DAVID KUSHMA
BLADE EDITOR
Gov. John Kasich waves after giving his State of the State address in Lima in February. His proposed budget before the General Assembly includes progressive proposals as well as negative ones. Gov. John Kasich waves after giving his State of the State address in Lima in February. His proposed budget before the General Assembly includes progressive proposals as well as negative ones.
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Smile when you say so, but parts of the state budget proposal Gov. John Kasich has sent the General Assembly look positively (gasp) progressive. Not to worry, though: Mr. Kasich’s fellow Republicans who run the legislature are undergoing no comparable evolution.

The governor wants greatly to expand enrollment in Ohio’s Medicaid program under Obamacare. He wants oil and natural-gas drillers finally to pay a reasonable tax to extract our state’s nonrenewable resources.

And his plan to cut the rate of the state sales tax while broadening its base is defensible and even somewhat appealing in theory, although his administration has mostly botched its explanations of how his new tax on services would work in the real world.

Some things haven’t changed. Mr. Kasich offsets the positive elements of his budget with his call for more unnecessary income and business tax cuts, which would make the wealthiest Ohioans even richer while giving poor, working-class, and middle-income families little or no net tax relief. The evidence that Ohio’s tax structure is impeding job creation is more asserted than proven.

Similarly, the governor’s effort to change Ohio’s notoriously unconstitutional system of public-school funding won’t do what he says it will do to improve the fairness and adequacy of state aid to schools. To the contrary, it appears to confer unjustified advantages on wealthy districts and on charter and private schools, at the expense of hard-pressed urban districts such as Toledo’s.

Still, Governor Kasich deserves credit, a year before his re-election bid, for acknowledging that his tax cuts must be paid for somehow. Many Republican lawmakers display no such mastery of basic arithmetic. They are embracing the tax cuts while rejecting the more responsible aspects of the governor’s program.

They’re evidently less afraid of incurring the displeasure of their own party’s governor than they are of attracting primary election challenges next year from Ohio’s even more extreme GOP right. “No tax” and “No Obamacare” fit better in campaign ads than nuanced discussions of policy.

Yet on Medicaid and the severance tax, the governor is right. Medicaid expansion would provide health insurance to an estimated 456,000 more poor Ohioans, including 25,000 in Lucas County. That would make them less likely to seek expensive emergency-room care when they get sick, and to stick Ohioans who have health coverage with the bill.

Washington would pick up almost all of the tab for Ohio’s expansion. The expansion would create tax revenue, economic activity, and jobs. And if we don’t do it, our tax dollars will pay for expansion in other states.

But some GOP lawmakers oppose the expansion because of their knee-jerk contempt for Obamacare. So Governor Kasich, with the cooperation of the Obama Administration, is examining a compromise under which private insurers would provide the expanded Medicaid coverage. That approach is risky.

Private insurance costs more than Medicaid. That could mean that fewer Ohioans would get coverage under the expansion, or that the coverage would offer fewer benefits, or that low-income recipients might have to share more of its costs. That shouldn’t happen, and one way to keep it from happening is for the governor to stick to his original proposal.

Same deal on the severance tax. Mr. Kasich seeks to impose a 4 percent tax on oil extracted from shale wells; the current tax is a ridiculously low 20 cents a barrel. The new rate still would be lower than the taxes levied in Texas, Michigan, West Virginia, and the current fracking wonderland of North Dakota. The Ohio tax on natural gas from shale wells would rise to 1 percent from a similarly negligible level.

Instead of allowing mostly out-of-state producers to continue to collect windfall profits by exploiting Ohio’s resources, the state could use money from the severance tax to meet the infrastructure and regulatory costs — safety and environmental — of the hydraulic-fracturing boom. Other revenue could help restore some of the drastic, recession-induced state budget cuts of the past two years.

The oil and gas industry doesn’t want to pay higher taxes, of course. The industry has a powerful lobby in Columbus that tends to favor Republicans. GOP lawmakers don’t want to offend these patrons and campaign contributors, so they look for an excuse to repudiate the governor’s proposal. Is any of this a surprise?

As Mr. Kasich encounters resistance from Republican lawmakers, you wonder whether he feels a twinge of remorse over the awful legislative redistricting plan he helped ram through last year as a member of the GOP-controlled state Apportionment Board. Instead of reflecting the relatively even partisan division among Ohio voters, the gerrymandering virtually ensures GOP domination of the General Assembly for the next decade (state lawmakers also rigged Ohio’s U.S. House delegation in favor of Republicans).

Aside from its affront to small-d democracy, the reapportionment plan creates so many legislative districts that lack real partisan competition, the vote that counts is often the primary rather than the general election. Party primaries are more likely to attract candidates from the ideological extremes. That’s why so many GOP lawmakers appear to fear potential Tea Party challengers in their districts more than they fear their governor.

But Mr. Kasich doesn’t get all the blame for this state of affairs. Last November, Ohio voters had the opportunity to replace the winner-take-all partisan redistricting system with one that would have placed the process in the hands of an independent, nonpartisan citizens’ commission. And we opted for the rotten status quo, big time.

When the legislature returns this week, Governor Kasich’s budget might benefit from addition by subtraction. Forget about the income and business tax cuts, and — at least for now — the sales tax swap. Use the revenue from the severance tax increase to start to undo the damage that cuts in state aid have done to local schools and governments and to human services.

And hold firm on the Medicaid expansion, governor. If you show lawmakers your backbone, you might encourage some of the invertebrates in the General Assembly to grow their own.

David Kushma is editor of The Blade.

Contact him at: dkushma@theblade.com or on Twitter @dkushma1



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