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Richard Sheridan Urges Ohio Adopt One Year Budget, Tells Assembly To Cut Strickland’s Big Increases

Posted on March 23, 2009 by Mike Bock

It is always interesting to read Ohio budget expert Richard Sheridan’s analysis. Sheridan writes for The Center For Community Solutions. In the March issue of State Budgeting Matters, Sheridan advises the state legislature to change its usual practice of creating a two year budget and, this year only approve a one year budget. And he urges the Assembly to trim Strickland’s proposed budget increases.

Sheridan notes that, because of the federal infusion of money, Ohio’s budget is getting a big boost that he fears will not be sustainable. Sheridan calculates that Governor Strickland’s budget proposal is 7.2% higher for 2010 than for 2009, and 5.2% above that for 2011.

This big increase in spending technically violates a 2006 State Appropriation Limit (SAL) law that limits budget increases to only 3.5% each year (unless the sum of the inflation rate plus the rate of population change is greater). Exceeding the SAL limit, according to the 2006 law, can only be exceeded by a 60% vote in the Assembly. Regardless that Strickland’s budget proposal greatly exceeds the 3.5 % limit set by SAL, because the new federal money is excluded from the SAL calculation, Strickland’s budget proposal does not violate the SAL law.

Sheridan is worried about what will happen at the end of the biennium, after the state budget has been greatly increased, and predicts that in order to maintain what Strickland proposes tax increases will be needed.

Sheridan urges the Assembly to approve only a one year budget, for one reason, to better monitor the Rainy Day Fund. He writes, “In the FY 2010 budget that the legislature adopts, it should consider not spending the state’s Rainy Day Fund money, as the governor proposes, but rather continuing to save it for possible use after the federal economic stimulus money dries up by FY 2012 when the state will have to find ways of maintaining the spending levels they authorized based on the use of non-recurring federal stimulus moneys. It may be that some or all of the Rainy Day Fund money will be needed in FY 2011, but by adopting a one-year budget legislators would be able to postpone that decision until there is greater certainty about when there will be a national economic recovery and what its fiscal implications for Ohio will be.”

Sheridan notes many double digit increases in certain programs and agencies proposed by Strickland, and urges the Assembly to modify these increases. He writes, “Legislators should also carefully review the spending increases proposed by the governor that are not required by the conditions of the federal economic recovery legislation, especially the line items proposed for double-digit percentage increases.”

Here are some of the increases in the budget proposal that Sheridan notes:

Administrative Services IT Security Infrastructure 25% increase, $257,520
Risk Management Reserve 116.80 % increase, or $3,000,000
State Printing 16.88% increase, $2,488,073
Agriculture Animal Disease Control 11.93% increase, $385,678
Consumer Analytical Lab 48.44% increase, $410,014
Commerce Labor & Worker Safety 26.83% increase, $451,077
Controlling Board Emergency Purposes 1,000% increase, $4,000,000
Strategic Business Investment Division 25.92% increase, $1,210,703
Ohio Main Street Program 141.47 % increase, $336,875
Education Personal Services 16.40% increase, $1,711,994
Policy Analysis 109.40% increase, $552,053
Educator Preparation 133.10% increase, $1,159,111
Health Free Clinics 223.68% increase, $431,737
Infectious Disease Protection & Surveillance 695.65% increase, $1,237,929
Help Me Grow 174.72% increase, $23,213,895
Hispanic/Latino Affairs Personal Services 108.85% increase, $171,137
State Library Board Ohioan Library Support 131.19% increase, $163,744
Natural Resources Real Estate & Land Management 17.77 % increase, $301,833
Division of Forestry 13.71% increase, $832,627
Public Defender Multi-County: State Share 13.71% increase, $595,962
Trumbull County 89.09 % increase, $202,695
Rehabilitation & Correction Community Nonresidential Programs 32.50% increase, $5,378,435
Mental Health Services 10.13% increase, $7,438,958
Rehabilitation Services People with Disabilities 42.03% increase, $5,545,290

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Grassroots Group, CODEPINK, Scolded For AIG Disruption, “Pink Ladies” Seek Peace and Social Justice

Posted on March 20, 2009 by Mike Bock

Interesting article in Salon, March Madness on Capitol Hill, by Mike Madden, tells how the chair of a House Committee investigating AIG, Paul Kanjorski, angrily scolded the “Pink Ladies” who were holding signs in protest. This is the first I’ve noticed the Pink Ladies, though they’ve been around now since the start of the Iraq War. The “Pink Ladies,” from a group called CODEPINK, are in the news because of their protest at the AIG hearing.

These signs angered Congress

The Madden article implies that, for members of Congress, their outrage at the AIG bonuses is all a show, but that outrage at the “Pink Ladies” was real. The subtitle of the article is, “Now that everyone knows about AIG’s bonuses, Congress decides to get angry about them.”

Madden says the genuine anger was reserved for the protesters because they dared to “disrupt their (Congress) choreographed show of outrage with some off-message signs in the background.”

Madden writes, “By around lunchtime Wednesday afternoon, the chairman of the House subcommittee on capital markets, Rep. Paul Kanjorski, a Democrat from just outside Wilkes-Barre, Pa., had heard enough. His committee had spent nearly four hours looking into the havoc that AIG’s derivatives traders had wreaked on the global economy — and into the company’s payment of $165 million to those very same derivatives traders after the government had dumped billions of tax dollars into saving the firm. But after sitting quietly through most of the testimony, Kanjorski finally lowered his brow, raised his voice, and tore into the people who had upset him the most throughout the hearing.”

The people who had upset Kanjorski the most, according to Madden, wasn’t the people from AIG, it was the ladies dressed in pink. What an accusation: The Pink Ladies upset Kanjorski more than the 165 million bonus money paid to the people who caused the financial mess at AIG.

I found the web-site, “CODEPINK.” It explains, “While Bush’s color-coded alerts are based on fear and are used to justify violence, the CODEPINK alert is a feisty call for women and men to ‘wage peace.’”

CODEPINK evidently has chapters around the nation. The site says, “CODEPINK is a women-initiated grassroots peace and social justice movement working to end the wars in Iraq and Afghanistan, stop new wars, and redirect our resources into healthcare, education, green jobs and other life-affirming activities.”

A You-tube record (below) shows Kanjorski’s exasperation with the “Pink Ladies.” One You-tube viewer responded, “It’s about time someone in Congress did something to restore dignity to the proceedings. Code Pink members are idiots!” Another responder defended the ladies and mocked Kanjorski exasperated command to the group, “You’ve tried my patience.” The comment says, “Well Congressman, I think YOU have tried the TAXPAYERS patience.”

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The Quinnipiac Poll Failed To Ask: “Shouldn’t Ohio’s Most Wealthy Be Taxed More?”

Posted on March 18, 2009 by Mike Bock

It’s interesting to read the questions used in opinion poll of Ohio voters just released by Quinnipiac (KWIN-uh-pe-ack) University. The poll seems to show that Ohio voters are firmly against increases in state taxes. But a key question on the poll is missing: Shouldn’t the rich in Ohio be taxed more?

Everyone seems to want to forget the fact that in 2005 our Republican governor and Republican Assembly pushed through a big tax reduction that drastically cut business taxes by over one billion each year, and cut personal income taxes by about $2.5 billion each year. In light of Ohio’s raging financial crisis, it seems strange that there has not been more discussion about the impact of these Republican tax cuts.

The big thing that everyone seems to forget about Ohio’s big tax cuts, is that the lion’s share of the benefit was allocated to Ohio’s highest incomes. A whopping 26% of tax benefits were gobbled up by the top 1% of incomes — incomes in excess of $340,000. In other words, Ohio is scrimping on its budget, cutting programs for the poor, in order to allocate each year an additional $600,000, or so, to incomes in excess of $340,000

You would think that Ohio’s Democratic Governor, Ted Strickland, would use the current budget crisis to revisit the lopsided tax cuts of 2005. Regardless that there may be little chance that Ohio’s Republican dominated Senate (21R -12D) would agree to change the 2005 Tax Reduction Law, I am disappointed that Strickland has not attempted to better educate the public about the need for Ohio to redeem the progressivity of its income tax system. (See my post: Ohio’s 2005 Tax Reduction Law Diminished, By 21%, The Progressivity of Ohio’s Tax Code)

The results of the Quinnipac University poll, I’m sure, will be used to argue that Ohio voters are opposed to raising taxes. But, the answers you get always depend on the questions you ask. Quinnipac doesn’t ask any questions about whether, or not, voters support revising the 2005 Tax Reduction Act to modify its huge windfall for the wealthy.

According to Quinnipac, 56% of Ohio’s voters would rather cut state services rather than raise taxes — and 42% of all Democratic voters agree. The Quinnipac question: “To balance the state budget next year, if you had to choose, which would you prefer – raising taxes to keep state services at their current level or Cutting state services to keep taxes at their current level?”

I would like to see the poll results of this question not asked by Quinnipac: “The 2005 Tax Reduction Act reduced Ohio’s income taxes on top 1% of incomes (those exceeding $340,000) by 26%. Because of the 2005 Tax Reduction, every year Ohio gives $600,000 in tax reduction to these top incomes. Do you support reducing this tax break for Ohio’s most wealthy?”

This idea seems so rational and fair that I’ve got to think that a big majority of Ohio voters, if asked such a question, would give a resounding “Yes”

Peter A. Brown, assistant director of the Quinnipiac University Polling, analyzes the results of the poll. He says, “His (Strickland’s) support is weakest among those with lower incomes, less education and younger voters, who made up the Democratic coalition that elected him governor and Barack Obama President.”

Brown’s analysis of this poll confirms my less scientific observation that a lot Democratic voters have caught on that their Democratic governor, by failing to articulate a policy of tax justice, by supporting the Republican 2005 Tax Reduction Law, is too Republican in his fiscal policies. Because of Strickland’s failure to articulate and advance a Democratic viewpoint on tax fairness, increasingly, our Democratic Governor is a big disappointment to a lot of Democrats.