Guest Column

State budget is gold mine for rich, shaft for all others

9/1/2013

To hear Gov. John Kasich tell it, Ohioans and their communities are doing swell. He and his legislative allies have balanced the budget, cut taxes, and created thousands of new jobs.

The governor calls it the “Ohio miracle.” Just two more miracles, and he’ll qualify for sainthood. But before we fit the governor for a halo, let’s examine his claims.

That Governor Kasich has balanced the budget is hardly surprising, since the Ohio Constitution requires it. About tax cuts, there’s one small detail the governor forgets to mention: Under his policies, the rich get the gold mine and everyone else gets the shaft.

His new budget includes a 10 percent, across-the-board cut in the state income tax, and a 4.5 percent increase in the state sales tax. The think tank Policy Matters Ohio found that on average, the richest 1 percent of Ohioans will net a yearly tax cut of more than $6,000.

Middle-class taxpayers who earn $51,000 a year will see a whopping cut of $9. And some of the poorest Ohioans will see their taxes go up.

It gets worse: To pay for these tax cuts, Governor Kasich and his Republican allies will now means-test the homestead exemption. That exemption used to allow all seniors, regardless of income, to reduce the taxable value of their homes by $25,000.

The governor is ending the state’s 42-year commitment to defray the cost of local tax increases. Beginning in November, new levies for schools, public safety, and other local government services will cost taxpayers 12½ percent more.

Meanwhile, middle-income seniors will lose their homestead exemption. So for whom has Governor Kasich cut taxes?

As for job creation, the economic recovery that began in Ohio in 2010 under then-Gov. Ted Strickland continued after Governor Kasich was sworn in. But most of the job gains during Mr. Kasich’s tenure occurred during his first 18 months in office.

More recently, job creation has been dead in the water. The U.S. Bureau of Labor Statistics reports that in June, Ohio lost 8,400 jobs; only two states did worse. From July, 2012, to July, 2013, Ohio’s job-creation rate ranked 46th in the nation, and was 51 percent below the national average.

The new budget includes a 50-percent tax cut for some business owners that Governor Kasich and Ohio Senate President Keith Faber (R., Celina) claim will help small business “big time” and create jobs in the “immediate future.”

But an analysis by the Cleveland Plain Dealer found that 80 percent of Ohio’s businesses will get just $372 a year. No business will receive enough to hire even one minimum-wage worker.

A small minority of business filers — again, the top 1 percent — will rake in more than $7,000 a year. Many of them are one-person shops, such as lawyers or hedge fund managers, who don’t want or need to hire more workers.

Others are passive investors in out-of-state companies who have no influence over hiring decisions. That’s bad news for workers who need jobs, but great news for wealthy “job creators” who get to stuff more money in their pockets.

As bad as Governor Kasich’s policies have been for regular Ohioans, they’ve been even worse for communities.

Partly to pay for the huge tax cuts that favor the rich, the governor and his allies slashed the state’s Local Government Fund in half. Local communities will get $1 billion less than they were getting when Mr. Kasich took office.

By eliminating the estate tax — which applied only to the richest 8 percent of Ohioans — the state has taken another $625 million away from local governments.

Coupled with the $500 million Governor Kasich and his allies have cut from schools, these losses have resulted in an unprecedented number of new-money levy requests, all across the state.

Chillicothe City Councilwoman Beth Neal may have summed it up best: “There is no Ohio miracle. There is a Chillicothe disaster.”

Folks in northwest Ohio could easily say the same.

Dale Butland is communications director of Innovation Ohio, a progressive think tank in Columbus.