A new study ranks Ohio 24th among the states in long-term budget planning. It offers the sensible recommendation that the governor’s office and lawmakers should plan beyond the state’s two-year budget cycle when they make tax and fiscal policy.
The nonpartisan Center on Budget and Policy Priorities, which compiled the report, gave Ohio positive marks for its regular review of pension funding, the quality of fiscal analysis available to lawmakers, and the state’s monthly tracking of income and expenses.
But it called on state officials to apply a longer-term focus to budget forecasting and the fiscal impact of the laws they enact. It urged them to look at what maintaining current state services will cost in the future. And it recommended a formal process for managing the tax breaks the state provides.
The fiscal effects of proposed legislation are now analyzed for just two years. That analysis should extend to five years, the center recommends.
The executive-branch Office of Budget and Management and the Legislative Service Commission now come up with separate revenue forecasts for the state budget. The center sensibly proposes that these forecasts should be reconciled, to prevent lawmakers from picking the forecast that best fits their bills.
And while the state publishes the list of tax breaks it offers every two years, there is no regular review of these expenditures, notes Wendy Patton, an analyst with the liberal advocacy group Policy Matters Ohio. That absence of review allows tax breaks for such things as the sale of manufacturing equipment and sales tax exemptions for corporate jets to continue from year to year without state scrutiny of their continued value, or lack of it.
The administration of Gov. John Kasich wants to spend a projected $2 billion budget surplus on bolstering the state’s rainy-day fund and cutting income taxes further, mostly for the wealthiest Ohioans. Better long-term budget forecasting could make a stronger case for using that money to help restore state aid to public schools and local governments that was slashed during the recent years of the Great Recession.
An administration and legislature that are bent on changing Ohio’s tax structure should be able to tell Ohio taxpayers what will be happening longer than two years down the road.