GOV. John Kasich labels his new spending plan a "jobs budget" that he says will transform Ohio for growth while addressing what he calls state government's gravest fiscal crisis "in our lifetime."
But the two-year, $55.5 billion general fund budget Mr. Kasich proposed Tuesday seeks to close the state's $8 billion revenue gap largely by shifting the problem to local governments and school districts. While he demands sacrifices from poor, disabled, and elderly Ohioans who depend most on basic public services, he wants to maintain unbalanced tax cuts that the state cannot afford just now. As lawmakers consider the governor's proposal, they must resolve to improve it.
Mr. Kasich's plan would slash the Local Government Fund by 25 percent in the fiscal year that begins July 1, and by an additional 25 percent the following year. The state would reduce other payments to local governments and school districts, just as they face the end of federal stimulus aid administered by the state. It would divert more public-school aid to voucher programs and charter schools.
Schools would get a modest increase in basic state aid, and the poorest districts would get more help. The governor's budget would continue to limit tuition increases at state colleges and universities. It properly offers incentives to school districts and local governments to share services, and to teachers whose students meet achievement goals.
But what the budget offers with one hand, it often takes away more with the other. Local governments and schools face a net loss of hundreds of millions of dollars over the next two years. That is a recipe for higher local taxes, further slashes in local services, layoffs, or all of these things.
The governor's budget cuts state aid to mental health programs, public libraries, children's hospitals, environmental protection, and medical schools, as well as payments to health-care providers.
At the same time, Mr. Kasich insists on maintaining the final phase of a state income tax cut. The $800 million cost of the cut to the state treasury over two years would be better applied to preserving essential public services, state and local. If anything, the state needs to revisit the personal and business tax cuts it enacted in more-prosperous years of the past decade, especially as they benefit the wealthiest Ohio taxpayers.
The governor's plan to lease the state's wholesale liquor distribution network is sound in principle. State government has more important jobs than bartender. But in unloading this long-term asset for a projected $1.2 billion, state officials must ensure that they are making the best deal for taxpayers, not merely plugging an immediate budget hole.
Similarly, Mr. Kasich's plan to sell five state prisons for an anticipated $200 million will remove direct state oversight of these facilities. Private operators must not be allowed to turn a profit by slashing inmate care or rehabilitation programs.
The governor's call for expanded options for low-level offenders, as a means of reducing prison populations, is well taken. But a simultaneous proposal to lay off parole investigators would seem to work at cross purposes with that goal.
A proposal in the budget to permit oil and gas drilling in state parks merits deep skepticism. Mr. Kasich will have to show how his administration will reconcile proper environmental protection of these public assets with his general disdain for government regulation.
Balancing the state budget amid a persistent economic slump would have required deep spending cuts in any event. Mr. Kasich's proposal is not quite as painful as many Ohioans had feared, and the governor himself had warned. It makes a useful start on rationalizing the costs of state and local services.
But the budget still needs a better balance of revenue sources and spending reductions, and of shared sacrifice among all taxpayers. Governor Kasich and lawmakers of both parties now must work together to achieve that balance.
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