Some bounce for Ohio’s job market

The Ohio job market showed some bounce last month, as employment increased to its highest level since October 2002, according to the latest seasonally adjusted payroll numbers issued Aug. 19 by the Ohio Department of Job & Family Services. However, nonfarm wage and salary employment still remains well below where it was when the recession began in March 2001. If Ohio employment were to continue growing at the same rate that it has so far this year, it would take more than four and a half years to regain the job losses since the recession began.

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Blackwell, in Deal with GOP, Now Aims for 2006 Vote

Gongwer News Service

Two days before the filing deadline, Citizens for Tax Reform officially backed off plans to submit petitions bearing more than 500,000 signatures for a proposed Nov. 8 ballot issue to limit state spending, with the group announcing Monday it would instead seek a November 2006 vote on the constitutional amendment.

The development follows weeks of discussions between the amendment’s chief backer and gubernatorial hopeful, Secretary of State J. Kenneth Blackwell, and other Republicans who have urged the official to delay the issue by one year. Key Republicans have argued that a modified version of the plan would aid GOP election efforts in 2006, when half of the Senate seats and all House seats and statewide offices are on the ballot. (See Gongwer Ohio Report, July 22, 2005)

“After consultation with legislative leadership, Ohio Republican Party Chairman Bob Bennett and TEL supporters, the committee decided this issue deserves the widest possible exposure and debate,” Mr. Blackwell, CTR’s honorary chairman, said in a statement. “The 2006 General Election ballot gives Ohio voters that opportunity.”

“I intend to be the GOP nominee for Governor and expect this amendment to be a major element of my platform of fiscal restraint for government and job creation for the private sector,” Mr. Blackwell added.

CTR plans to file the signatures it has collected thus far on Thursday, the day after the deadline for this fall’s ballot.

Along with the potential election-year benefits for the party, Republicans, who control both legislative chambers, all statewide offices and the Ohio Supreme Court, also want to focus their money and other party resources on derailing or defeating the redistricting and elections law changes in the package of constitutional amendments backed by Reform Ohio Now, which plans on filing its signatures with the secretary of state’s office on Tuesday. There has been some concern among inner GOP circles that voters would see the three RON amendments in the same “reform” vein as the Blackwell proposal, thus providing an inadvertent boost to constitutional changes that would: alter the way congressional and legislative districts are drawn with a new focus on competitiveness; create a statewide board to oversee the elections process, and; lower campaign contribution limits.

“This gesture by Secretary Blackwell will allow us to focus our resources this year on defeating the special interest amendments being pushed by pro-Democrat unions and liberal activist groups,” Ohio Republican Party Chairman Bob Bennett said in the news release issued by CTR.

RON backers need to submit signatures from at least 322,899 registered voters, based on the number of voters in the 2002 gubernatorial election, and meet certain thresholds in 44 of Ohio’s 88 counties to qualify for a fall ballot spot.

If RON is successful – a GOP-led group in a preliminary strike has asked the Ohio Supreme Court to block the petition filings – the three constitutional amendments would join a $2 billion research, development and local infrastructure bond package on the Nov. 8 ballot.

The bond issue, a key initiative for Governor Bob Taft, was endorsed last week by the General Assembly. Speaker Jon Husted (R-Kettering) said in an interview that Monday’s decision by Mr. Blackwell would keep the TEL from detracting from the effort to pass the bonds.

“I’m pleased it’s not on the ’05 ballot,” Mr. Husted said. “It will give us a chance to focus on our primary issue…which is the Jobs for Ohio package.”

CTR’s proposed “tax expenditure limit” (TEL) would cap annual state spending increases at 3.5% or the growth in consumer price index and population, whichever is greater. It includes, among other things, language exempting local governments from certain state mandates and a provision requiring unspent surplus revenue to be pooled and returned to taxpayers each year. Voter approval would be required for spending that exceeds the limits.

The Campaign to Protect Ohio’s Future, a group of mostly government program advocates, had formed to oppose the issue this fall. Researchers including Policy Matters Ohio have been critical of various aspects of the plan, saying among other things that Bureau of Workers’ Compensation funds and lottery proceeds could be put at risk under some of the provisions. (See Gongwer Ohio Report, July 26, 2005)

“There are some minor issues, but we are confident that we can negotiate those,” CTR spokesman Gene Pierce said. “We don’t think they are going to be serious.”

Recalling the debate over last year’s same-sex marriage ban, Mr. Pierce added, “Everybody said there was going to be a million lawsuits and we’ve had one.”

Campaign to Protect Ohio’s Future spokeswoman Jenny Camper said the delay could aid TEL opponents in getting the word out about the harmful implications of the issue.

“Whether they do it in 2006 or in 2005, it’s a flawed proposal,” Ms. Camper said. “It is just fraught with problems and ambiguities and we plan on spending the next year educating Ohioans about the problems in this amendment.”

Speaker Husted said he didn’t want to debate the quality of the TEL proposal, instead pointing to the recently passed, relatively austere biennium budget bill as evidence that fiscally prudent government policy could be accomplished without constitutional restraints.

All through the budget deliberations, the speaker maintained that a TEL was unnecessary.

“What we’re talking about in the TEL is what we did in the legislature this year, which is to control spending,” Mr. Husted said Monday, noting the bill entailed extensive Medicaid and tax system changes designed to reduce costs and promote the state’s economy well into the future.

Mr. Blackwell’s move prompted ridicule from Scott Pullins, president and CEO of the Ohio Taxpayers Association. “Blackwell says he is a friend of taxpayers, but nothing could be further from the truth. Every time he gets involved, Ohioans get shafted,” he said in a statement.

Noting CTR’s prior failed effort at an early repeal of a temporary sales tax hike, Mr. Pullins suggested a pattern at work with the secretary of state’s initiatives. “Blackwell has used the threat of this constitutional amendment to cut a secret deal to benefit his campaign for governor,” he said.

CTR voluntarily filed a finance report recently showing the campaign had raised and spent more than $300,000 to collect signatures for the effort, with most of the money coming from a newly formed issue advocacy group called Ohioans for Responsible Government. (See Gongwer Ohio Report, August 5, 2005) Mr. Pierce said ORG, which has contributed $225,000 of CTR’s total, according to campaign finance reports, did not have a problem with the delay.

Along with the TEL, proposed statewide initiatives for a new school finance system, casino gambling, a statewide smoking ban and universal health care still remain in the planning stages for 2006 and beyond.

Catalyst Cleveland

by Stephanie Klupinski

Ohio Secretary of State Kenneth Blackwell recently postponed plans to put a TEL, or Tax Expenditure Limitation, on a statewide ballot this fall. If approved, the proposal would restrict spending by state and political subdivisions to either 3.5 percent or the sum of the annual rates of consumer inflation and population growth, whichever is more. Blackwell, candidate for governor in 2006 and spokesman for the TEL, says he plans to put it on next November’s ballot. This fall, voters in Colorado where the first TEL law passed in 1992 will decide whether to start allowing government to spend surplus
revenue. A bipartisan group, including Colorado’s Republican governor, supports the proposal. Meanwhile, TEL ideas are catching on in more than 20 states, where activists are working to enact similar legislation. Catalyst Associate Editor Stephanie Klupinski talked with Zach Schiller about Policy Matters Ohio’s recent analysis of the proposed amendment.

The Policy Matters Ohio report suggests that, if approved, this proposed amendment would lead to a reduction in state funding for public education. Why?
This amendment, if it passes, will override [every]thing else in the Ohio Constitution. …What is clear is that this limitation will become overriding state policy over everything that the state considers important or constitutionally has protected. People involved in
education are familiar with the clause in the [state] Constitution which talks about “thorough and efficient system of public schools.” …That right will take second place to [this] constitutional amendment. …So anyone who harbors hopes down the line that we will see a better system of school funding has to be very skeptical that that will come about. …This proposal would have a major effect on state and local spending. It would reduce the amount.

But the TEL formula does allow for increases in spending, right?
The economy grows not just by population plus inflation, it also grows by productivity. …This proposal does not acknowledge the possibility that as living standards increase, government maintains its share of that growing economy. So over time, [the formula] does not capture growth. You are going to see an inevitable shrinkage in the role of government in the economy, which is the goal of the proponents.

How much shrinkage are you talking about?
If this proposal had been enacted in Ohio and had gone into effect in 1995, a [Center on Budget and Policy Priorities] study looked at what would have happened. It found that by 2003, Ohio’s spending at the state level would have to have been cut by $2.7 billion a year, or roughly one-sixth of the overall spending by the general revenue fund. …What it meant for K-12 education was a cut of roughly $900 million a year, [which] you could accomplish by laying off 15,000 teachers or reducing the school year by 12 days. The point is that this is not something that would have a salutary effect on our
education system.

Can voters elect to override the caps?
Overriding the cap will prove to be very difficult. It looks like it will have to be done annually. You even could have a school district passing a bond levy for a particular budget and then finding later on that it can’t spend the money because …at that time, the spending, including the bonds, would rise above the cap [and] every local
school district will have its own cap of 3.5 percent or population plus inflation. Or if it’s going to be over [that amount], they will have to have voter approval to spend the money, even though they’ve already voted to collect the levy or the bonds.

Proponents argue that TEL laws provide transparency in fiscal decisions and help limit the growth of government and wasteful spending. Is the upside that this could lead to more efficient spending?
There’s nothing in the proposal that requires greater efficiency. It’s just a meat ax. …Nothing in the proposal helps identify inefficiency or waste or tax loopholes. …The very people who it is taking the authority away from, the elected officials, it’s going to be those same people’s decision what the spending is. While it may act as if it
will generate greater efficiency, there is no particular reason that it will.

The Toledo Blade

by Erika Blake 

Ryan Cook had lots to consider when he was contemplating where to pursue a college degree in mechanical engineering.

Of course, there was the choice of degrees and the cost of tuition. But Mr. Cook ultimately decided on the University of Toledo because of its proximity to his home – allowing him to save on boarding costs – and his ability to keep his job at a company that helps him pay for school.

The cost of higher education and its financial burden on Ohio families is the focus of a study to be released today by Policy Matters Ohio, a nonprofit research group based in Cleveland. The study concludes that tax cuts Ohioans received in the recently approved state budget don’t begin to cover expenses like the rising cost of tuition.

“I think it’s wrong,” said Mr. Cook, 18, of the growing tuition bill he faces. “They raise the price every year. But no matter what, it’s going to happen.”

In its report, “College Bound: Taxes and Tuition in Ohio,” Policy Matters Ohio states that by 2010, an Ohio family of four with a 2003 median income of $69,478 and one child in college will have gained about $247 annually or a total of $1,237 from recently approved state income tax cuts. But the same family will have paid an additional $1,975 in tuition hikes, the report said.

Wendy Patton, policy liaison for Policy Matters Ohio, said the point of the study was to show that when officials plotted the state’s priorities, they should have focused more on how much money families are spending in other areas – such as higher education – over the meager savings they may get from the tax cuts that were implemented.

“When state spending goes down, tuition goes up,” Ms. Patton said of public universities. “So the state has a role to play in tuition costs, and it’s not just putting caps on it.”

According to Policy Matters Ohio, the state’s per capita spending for higher education has dropped steeply each year and now is lower than at any point since 1984. In response, public universities have raised tuition costs.

A separate study released earlier this year by the National Center for Higher Education Management Systems ranked Ohio’s public universities 49th nationwide in terms of college affordability. Michigan, at 39th, didn’t fare much better.

Locally, both the University of Toledo and Bowling Green State University raised tuition 6 percent this year, the highest allowed under a state-imposed cap.

At UT, tuition alone for full-time, in-state undergraduate students is $7,491 annually. Students at BGSU’s main campus pay $8,560 per year.

The amount of Ohio’s budget focused on funding higher education peaked in 1978 at 17.7 percent and has fallen each year since, the report said. In fiscal 2005, higher education was allotted 11.7 percent, or nearly $2.5 billion.

Mark Rickel, spokesman for Gov. Bob Taft, said that tuition costs have been on the governor’s agenda and he has responded with various programs such as expanding the Ohio College Opportunity Grant program to reach an additional 11,000 students. The grant helps qualified families pay for college.

Other state programs include disseminating information about schools and grants as well as programs that focus on high school students, Mr. Rickel said.

Jamie Abel, spokesman for the Ohio Board of Regents, which oversees higher education in the state, said just as the economy is cyclical, so is financial support from the state for nonmandated entities such as institutions of higher education. As the state pays less for higher education, students and their families are forced to pay more.

According to the Policy Matters Ohio study, college students in Ohio now pay about 49.4 percent of their education costs compared to 39.5 percent in 1991.

Dawn Rhodes, associate vice president of finance and planning at UT, said there are different components mixed into a school’s decision to raise tuition. When the state pulls back its funding in support of higher education, she said, universities have to look at ways of replacing those dollars.

“If the state would invest more in higher education, we would have more people with higher paying jobs, which would increase our tax base and increase the dollars for state priorities,” Ms. Rhodes said. “No one likes to increase tuition and no one does that just for the sake of doing it. We understand that it places a hardship on our students and our students’ parents.”

BY THE NUMBERS
By 2010, an Ohio family of four with a 2003 median income of $69,478 and one child in college will have gained about $247 annually or a total $1,237 as a result of tax cuts in the recently approved state budget. But the same family will have paid an additional $1,975 in tuition hikes.
Source: Policy Matters Ohio

The Hannah Report

Policy Matters Ohio, a non-profit, non-partisan policy research institute with offices in Cleveland and Columbus, has released a study, “College Bound: Taxes and Tuition in Ohio.” It finds that by 2010, an Ohio family of four with 2003 median four-person family earnings of $69,478 and one child in college will have reaped, on average, about $247 annually from income tax cuts for a total of $1,237, but will have faced tuition hikes totaling $1,975. The income tax savings defray just 63 percent of the increase in tuition and three percent of total tuition. Tax savings are diminished in two years by the loss of the college tuition deduction.

Average-income four-person families and average-income households with college-age children in Ohio will both find that tax cuts enacted in the 2006-2007 biennial budget will not cover tuition increases resulting from that budget, according to the new report. “Ohio’s policy makers have chosen to provide tax cuts instead of more adequately funding higher education,” said report author, Policy Liaison Wendy Patton. “That decision results in a net loss for families with kids in college.”

Nationally, Ohio ranks 49th in affordability of college, 46th in state higher education operating appropriations per student, 37th in increase in higher education spending between 2000 and 2005, and 40th in percent of people over age 25 with a bachelor’s degree, according to various sources cited in the report.

The income tax cuts enacted in the 2006-07 biennial budget will cost the state $5.670 billion by 2010, College Bound also finds:

• Since the year 2000, per capita higher education spending has dropped steeply each year and is now lower than at any point since 1984.

• As a percent of the Ohio budget, higher education spending peaked in 1978 at 17.7 percent. The percentage of the budget devoted to higher education has fallen each year since 1996, to 11.9 percent in 2004 and an allotted 11.7 percent in 2005 or $2,470,800,000.

• Despite declines in state investment and meager population growth, from fall 1998 to fall 2003, higher education enrollment grew 11 percent, from 544,991 to 604,826.

• While higher education spending plunged, other parts of the budget soared. For example, between 1990 and 2005, adjusting for population and inflation, corrections spending more than doubled. Since 2000, corrections spending has fallen by about three percent so perhaps that upward trend will continue to level off.

• On average, it cost an Ohio family 35 percent of total income to send a student to a public university in 2004; 25 percent more than the U.S. average. For a family in the lowest quartile (average income $12,826), tuition at the least expensive public institution consumed a staggering 22 percent of income, 58 percent more than the U.S. average.

• In 1991, families paid for 39.5 percent of college education costs; by 2004, they paid
49.4 percent.

• Ohio colleges and universities have raised tuition. Average tuition (weighted by enrollment) for a four-year public university in Ohio is $7,478 in 2004-05 and will increase by between $450 and $500 a year for each of the next five years, to $9,902 by the 2009-10 school year.

It should also be noted that another nonprofit research group, the Education Trust, finds that Ohio ranks 34th in bachelor’s degree attainment.

Higher education can improve individual and collective well-being. Workers with a bachelor’s degree have much higher wages, lower rates of unemployment, higher labor force participation and higher lifelong earnings than those without such degrees. Yet Ohio ranks 49th in affordability of college, 46th in state operating appropriations per student for higher education, 37th in level of increase in higher education spending among the states between 2000 and 2005, and 40th in the nation in terms of percent of people over age 25 with a four-year bachelor’s degree.

The income tax cuts enacted as part of Ohio’s biennial budget for 2006-07 will cost the state billions of dollars – $3.645 billion by 2009 and $5.670 billion by 2010 – some of which could have been used to make college education more affordable. For middle-income Ohio families, modest income tax reductions may not compensate for increased costs incurred because public funding for critical services declines. College Bound examines trends in higher education spending and compares tax savings to costs for families with college-age children.

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