Ohio’s New Budget Will Hurt The Poor, $500 Million Needed, Report Criticizes Ohio’s 2005 Tax Cuts

The Center for Community Solutions’ publication, State Budgeting Matters, in its June issue is reporting that in order to balance Ohio’s new 2010-2011 budget, that over $500 million is needed.

The report centers on proposed cuts to the Department of Job and Family Services (JFS), and says that at this time of economic downturn, when child welfare, child support, Medicaid, food stamps, cash assistance, unemployment compensation, and workforce development all need of additional funding, that Ohio’s General Revenue Fund is drying up.

The report says, “The reductions would come on top of three rounds of budget cuts in fiscal years 2008 and 2009, as well as significant reductions to agency spending taken along each step in the budget process. Additional cuts likely will hinder basic operations.”

The Center for Community Solutions is calling for action to increase revenue to the state. It says, “It is time for action.” It criticizes the Tax Reduction Act of 2005, and says, “By design, Ohio’s tax overhaul has reduced revenues in the state treasury over $2 billion each year. It might have seemed to some like a good idea at the time, but the reality today is that Ohio cannot afford these policies”

The report says, “Tax changes made in FY 2005 have reduced the state’s largest source of revenue and its most progressive tax—the state income tax—by 21 percent over the past five years. In addition, the state’s corporate income tax on non-financial businesses has been eliminated.”

The Center for Community Solutions is a nonprofit organization. Its web-site says, “As we near our 100th year of service, Community Solutions strives to be the premier statewide resource for accurate, up-to-date information, analysis that cuts through the clutter, and practical recommendations and tools that can be used to improve health, social, and economic conditions.”

I’ve written about this topic in these 11 prior posts:

  1. Republican Ohio Assembly Candidates Must Be Punished For Ohio’s Decline
    June 23, 2008
  2. Ohio’s 2005 Tax Reduction Law Diminished, By 21%, The Progressivity of Ohio’s Tax Code
    August 6, 2008
  3. Ohio Budget Expert, Richard Sheridan: “Ohio’s Budget Problems Are A Long Way From Being Solved And One-Time Fixes Have Dried Up”
    October 7, 2008
  4. Chris Widener, Republican Senate Candidate, Boasts About Tax Cuts, But How Will He Solve Ohio’s Budget Crisis?
    October 8, 2008
  5. Twelve Tax Loopholes Ohio Should Close To Generate $270 Million Additional Revenue Each Year
    October 15, 2008
  6. Assembly Candidates Should Take Stand: Will Ohio Raise Taxes Or Will Ohio Cut State Services?
    October 25, 2008
  7. Democrat Candidates For Ohio State Assembly Fail To Challenge Republicans On Crucial Budget / Tax Issues
    November 3, 2008
  8. Gov. Strickland Should Seek Revision In Ohio’s 2005 Tax Reduction Law — Before He Asks The Feds For Cash Handout
    December 9, 2008
  9. Ohio’s 2005 Tax Reduction Act Was Predicted, By 2010, To Result In Yearly State Budget Shortfall of Billions
    December 15, 2008
  10. Governor Strickland Fails To Explain Impact Of 2005 Tax Reduction Act On Ohio’s 2009 Budget Shortfall
    January 28, 2009
  11. The Quinnipiac Poll Failed To Ask: “Shouldn’t Ohio’s Most Wealthy Be Taxed More?”
    March 18, 2009
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8 comments to Ohio’s New Budget Will Hurt The Poor, $500 Million Needed, Report Criticizes Ohio’s 2005 Tax Cuts

  • RWE

    Your history of articles leads one to assume that you think higher taxes ( and now, during a time of recession) and the government will solve all these problems. My view is that lower taxes on citizens and commerce will bring more jobs into the region and allow these poor people to have job opportunities. More people working means more tax revenue and less reliance on government.

    I say, get rid of income, payroll and corporate taxes, put people to work. Institute a retail sales tax and then they will share the tax burden as they should. You won’t have one class supporting another. The haves have what they have because they are not afraid of work, taking risk and providing jobs for the have-nots. Why punish them by raising their taxes?

  • Mike Bock

    RWE thanks for your comment. You raise a point that needs more discussion when you write, “The haves have what they have because they are not afraid of work, taking risk and providing jobs for the have-nots. Why punish them by raising their taxes?”

    How our economy and overall system works is a great question — that we should all try to understand. In my judgment, the world you describe, where the haves have what they have because of their overall virtue, is simply not the world in which we live. I took a stab at explaining my view of Why Are We Rich? and the conclusion I arrive at, is that we are rich because of the system in which we live, we are rich because we have found out how to make the system work for us. Many people never are able to figure that out. I made my living by being a public school teacher, but the system has room for only so many teachers, as well as only so many accountants or nurses, or any number of other positions that provide solid, good paying jobs. And now, there are many less good jobs. If you have a good job, the system is working for you, but if you don’t, then, if we operate as a democracy, should you simply be out in the cold? A society so cold hearted is not a society I would vote for. And, yes, I am willing to pay more taxes, if somehow those taxes translate into greater liberty and justice for everyone.

    There were plenty of people in the old Soviet Union who were people of virtue, hard workers with high levels of education, who, nevertheless, lived in poverty — at least in poverty as defined by the U.S. We readily recognize that the old Soviet Union was a bad system, what we don’t want to recognize is that the U.S. is far from being the system it should or could be. We’ve not solved the problem of the working poor, the problem of a lack of good jobs. Even now 23% of college graduates are working at jobs far below their college degrees and more and more college graduates will find that our system simply will not accommodate them.

    Our nation has potential for the production of almost unlimited wealth — every citizen should be able to count on economic security and count on a good future. Our system is far from producing what it should be producing. We need to improve our system. It is too simplistic to blame the victim, blaming his or her plight on a lack of virtue, when the blame, in fact, lies in a poorly functioning system. Many people of virtue are suffering and in my judgment it is the proper role of government, in a democracy, to help those citizens who need help. And, beyond that, the proper role of government is to help design and implement a better economic system that will more nearly produce at the level of quality it is capable of producing.

  • Stan Hirtle

    RWE describes the race to the bottom where communities either lower taxes or spend taxes on businesses to lure them from other places, or perhaps give them legal advantages that allow them to get rich, such as lack of consumer, environmental or labor law protections. Ultimately that is a no win situation for communities, lathough great for businesses. However much you give away, someone else will give away more. So the idea that Ohio can tax cut its way to regain manufacturing prosperity is nonsense.

    Hard work and ability can be a part of success but good luck, corruption and gaming the system in your factor are also factors. Risk taking, we are finding out with the economic downturn, is not necessarily a great thing if it doesn’t work out.

    An underlying question is how many of what sort of skills do we need, how many professors, how many hedge fund managers, how many doctors and teachers, how many factory workers, how many low paying jobs like the fast food, hotel and nursing home jobs that the lower classes do, and how big a share of the community’s wealth should each of these groups get. One problem is that globalization makes the “we” greater and brings in low wage workers abroad for whom a low wage is still a step up. At the same time the “we” gets smaller because the concentration of great wealth gets larger.

    One interesting observation from Ehrenreich’s best seller “nickled and dimed” shows how Walmart workers actually work hard and are pretty highly skilled to operate within Walmart’s system. They just don’t get paid for it, and she shows why that is. Meanwhile the owners of Walmart are among the richest people in the country. That is a question of gaming the system.

    Other issues are that one class does support another now. We have a class war and the rich are winning. Plus taxes make the infrastructure of society work. A sales tax, including the so called “Fair Tax” does not raise enough money to support the infrastructure. We might do better if the society, like individuals, had reserves for hard times, taking from the past rather than borrowing from the future, but the political will to do that is lacking. In addition the size of the economy grows and shrinks as people are laid off, their homes taken in foreclosure and the net wealth turned into debt. Things like unrepayable consumer debt, mortgage derivatives that magnified unrepayable consumer debt, and Enron stock inflated by creative accounting aka cooked books are in fact phony wealth, so that the economy in good times has not been as good as advertised. Even though technology continues to grow we need an economy that is more sustainable and less imbalanced.

  • Eric

    It’s not enough to blame Republicans (even when you can make a good case).

    Please try to explain the spending priorities of the Strickland administration and House Democrats. The left-of-center think tanks and policy groups were AWOL when asked for responsible efficiencies–like Deming, Baldrige, and six sigma–and lack influence on an administration determined to pander to electoral constituencies.

    Anyone have suggestions on where additional tax dollars will matter most? And how to convince the Governor?

  • truddick

    Let’s refer to reality rather than theory.

    The truth is that tax cuts have been tried for years and they don’t work.

    On the contrary; when governors Celeste and Gilligan–and when President Clinton–raised tax rates on those most able to pay, their budgets balanced with sufficient funds for government to do its job–and the state/national economy improved thereafter.

    While the anti-tax/anti-spend crowd, when they got their way, saw the economy slide downward–most recently, of course, in the aftermath of the Bush years.

    And finally, I insist that those who think a single sales tax will somehow be fair, simpler or productive are failing to appreciate the regressive nature of such a tax, as well as missing our legislators’ capacity to make anything exponentially more complicated than it has to be.

  • Stan Hirtle

    Anyone who has spent much time on this blog has heard of Deming and Bladridge, but I had never heard of “six sigma” before this post. I looked it up in Wikipedia and found that, except for the use of martial arts belt levels that I’m sure is popular with macho business people, found it pretty incomprehensible as to what it actually does, let alone how it would apply to government, as opposed to say Motorola who makes things like televisons. Can you explain further how this helps deal with the revenue shortfalls caused by the economic downturrn?

  • Eric

    “General Electric is one organization that has had great success with Six Sigma, attributing its use to billions of dollars in savings within the first five years of implementation. With a strong presence in Greater Cincinnati, GE joined Strive early on and helped adapt Six Sigma to help drive improvement in our educational system. Strive Six Sigma guides service providers in looking critically at common strategies and in collecting the necessary data to track success.”

    Even closer to home is this example of results-based accountability in public service.

  • Eric

    Anyone have suggestions on where additional tax dollars will matter most? And how to convince the Governor?

    Can you explain further how this helps deal with the revenue shortfalls caused by the economic downturrn?

    Given the choice of not spending money to help the truly needy versus spending government/taxpayer money to help win reelection, I lean toward not spending money.

    My preference would be to spend money that truly helps needy people, but watching the fiasco with Governor Strickland’s education reforms convinces me this administration can’t get its priorities straight.

    I’m not eager to play bad cop and ask how additional money will be used, but I’ve met folks who are lined up in Columbus for tax dollars and am not impressed with their track records.

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