 |
For a more prosperous, equitable, sustainable and inclusive Ohio |
Guess who pays when private employers in Ohio offer low wages and shabby benefits? Policy Matters finds that state and federal government pick up the slack when private companies don’t provide workers enough to adequately take care of themselves and their families.
The Toledo Blade
Gov. John Kasich promotes privatization as a way for state government to save money and deliver public services more efficiently. But a credible new study suggests the Kasich administration has yet to make a compelling case for selling five state prisons to private contractors.
The liberal advocacy group Policy Matters Ohio examined purported savings over the past decade from private operation of two state prisons. It concludes that the state’s methods for calculating seemingly robust savings from the experiment were “riddled with errors, oversights, and omissions of significant data” and were “potentially tainted by controversial accounting assumptions.” Once those errors were corrected, the study says, the actual savings were far less.
The Ohio Department of Rehabilitation and Correction concedes that previous computations of cost savings were inconsistent and imprecise. A department spokesman says the Kasich administration is using a more accurate method based on actual operating costs of established prisons.
The state posted bids for the purchase and sale of the five prisons before the new accounting method came on line. The administration insists updated calculations still show Ohio’s two current private prisons are meeting their legal mandate to produce savings of at least 5 percent over what it would cost the state to run them.
Even so, the new study raises doubts about the cost-saving claims associated with prison privatization. Before the state sells more prisons to private entrepreneurs, the administration must show a compelling fiscal rationale and, just as important, resolve concerns about private prisons’ effectiveness and safety.
The $2 billion in cuts to Ohio’s primary, secondary and higher education proposed in House Bill 153 for the FY2012-13 budget may have a larger impact than just the direct jobs cut and the weakening of education in Ohio. This report shows that the indirect and induced impact could also affect educational suppliers and businesses that provide goods and services to those workers who will be laid off due to budget cuts. A more balanced approach, including attention to both the revenue and the spending sides of the budget would have a less detrimental effect on jobs in Ohio and leave the economy in better shape.
Ohio’s new budget preserves $7 billion in tax breaks and keeps in place tax cuts exceeding $10,000 a year for the wealthiest 1% of Ohioans. It also cuts over $2 billion from schools and over $1 billion from local government, and slashes state spending for libraries, mental health and children’s services, while proposing selling the state liquor profits, five state prisons, expanding charter schools and vouchers, and proposing a semi-privatized state for higher education institutions called ‘charter’ universities. We’ve heard it called a “slash and sell budget” and a “pass the buck budget” and both seem right, as it will certainly result in more unequal services across communities and higher local taxes. Here are (just some of) our initial analyses:
Local Government Fund - The state seizes more than $440 million in local government funds, and more than $560 million in replacement funds for local government tax sources eliminated or reduced through state action. This will result in cuts to basic services delivered at the local level from policing, to fire protection, to snowplowing, to recreation. Expect longer waits, fewer hours, weaker services and higher local taxes as a result.
Education - The two-year budget slashes more than $2.3 billion from education compared to the 2010-11 budget while putting potentially hundreds of millions more into charters and vouchers. The proposal would drop state funding for schools below 2003 levels by 2013 and push more of the funding burden to local taxpayers.
$7 Billion in Breaks - While shredding schools and local governments in the above ways and more, the budget does not examine even one of the 128 tax breaks that cost the state more than $7 billion, preference some businesses over others, and continue crazy credits like the one to hire a lobbyist without paying a sales tax or to pay a pittance in tax when purchasing a timeshare for a private jet.
And Break some More - Amid disingenuous cries that “we’re broke”, is a continued push to add new breaks for the very wealthiest. Two new proposals would give special favors to those who need them least. The capital gains cut would save middle-income taxpayers $2 a year on average while the top 1% would pay more than $6,500 less. The estate tax grab would hurt local government and preference the wealthiest heirs – more than 90% of Ohioans would never owe the estate tax after they die.
Want to share? - Policy Matters has presented some of our budget findings all over Ohio but until we master time travel, our tiny staff can’t be everywhere at once. Want to present these issues yourself? Check out our budget power point.
Want to make your voice heard? - Come to the Ohio state capital this Tuesday, April 5 at a rally for a balanced approach that includes revenue.
That’s all!
The Policy Matters Team
The share of revenues supporting education, infrastructure, health and well being of America’s civic society has been supported more by individuals and families and less by corporations over time. This is true on both the national and the state level. As an epic struggle over fiscal resources emerges at all levels of government, this deserves a closer level of scrutiny. In this issue brief, Policy Matters Ohio looks at trends on the national and state level and gives recommendations for turning this trend around at the state level. …
Since the first private prisons were opened in Ohio in 2000, Ohio law has required that any private operator produce savings of at least 5 percent compared to what it would cost the state to operate the same facility. This April 2011 report, written by journalist Bob Paynter for Policy Matters Ohio, finds that cost calculations performed over a number of years by the state have not reliably demonstrated the savings required under the law. A demonstration of lower cost is not sufficient reason to give over this most sensitive government function to private, profit-making companies. But now, with the Kasich administration proposing to sell five state-owned prisons, Paynter’s findings undercut the primary rationale that has been given for doing so.
Testimony to Senate Finance Committee
________________________________________________________________
“Why the rush to sell Ohio’s assets?” – Op-ed in the Toledo Blade by Zach Schiller
Private Prisons Found to Offer Little in Savings New York Times
Northeast Ohio needs new ways to help families — especially the most vulnerable among
us who have the least — build assets so they can grow and protect their incomes.
Asset-building strategies can be simple: a program that guides tax filers to buy savings
bonds with their refunds, another that enables a college education savings account to be
created in a child’s name when she enters kindergarten, or another that directs a portion
of a struggling family’s income from public assistance directly into an automatic savings
account.
A new coalition called Ohio CASH, a broad and diverse set of community partners, will
support groundbreaking research and pilot programs that help families save. This new
vision requires a comprehensive approach, linking together financial products and
services, housing, community development, taxes and education. Promoting products,
services and public policies that create and protect the assets of those with the smallest
base enables them to reduce their economic vulnerability.
Creating ways to help families build assets doesn’t just help them, it also builds the wider
economy. Companies, for example, that set up direct deposit into savings or retirement
accounts for lower-paid workers have less turnover. The returns flow to the employers
and to the investors in those companies.
With our economy in a slow recovery from job loss, stagnant wages and home
foreclosures, asset building is a low-cost, proven tool for economic development.
But this work requires leaders who are willing to convene, connect and advocate for
quality products and services. The city of Cleveland and Cuyahoga County could take
three cost-effective steps to help families build assets:
Bank On: Cities around the country are forming public-private partnerships known as
“Bank On” programs to dramatically increase the number of households with checking
accounts. Cleveland banks also offer saver accounts through Ohio and Cleveland Saves.
According to the Federal Deposit Insurance Corp., more than 25 percent of Northeast
Ohioans are un- or under-banked. New accounts should be low-cost and easy to manage
to encourage new clients. Partnering with the banks and credit unions in this region is a
logical step. Potential customers await.
Direct deposit: Employers and employees benefit from direct deposits. It reduces
transaction costs to employers, and employees get paid a few days earlier. Studies show
that employees receiving direct deposit save more, pay bills on time more regularly and
have more secure finances. Additionally, employees do not need check cashers, which
charge higher fees, to get their money. Cleveland and Cuyahoga County can lead the
way by requiring direct deposit to all city and county employees.
Connect: The county has wisely invested in free tax preparation for low-income families,
helping 8,000 families receive more than $15 million in federal credits. But annually,
millions of dollars more in federal tax credits and public benefits go unclaimed.
Opportunities like Ohio’s Save NOW and individual development account (IDA) programs
are underused. That’s income that could flow to family budgets and into this region’s economy.
Recently, 100 local community leaders gathered to hear Andrea Levere, president of the
national asset-building think tank, the Corporation for Enterprise Development. Her
remarks illuminated just how far behind we are in the area of asset building. This is why
the hosts, Policy Matters Ohio and Neighborhood Progress Inc., are launching the Ohio
CASH Coalition.
Its work will help the region, as Levere envisions, rebuild its middle class through smart,
innovative and easy programs using investments, tax credits and deductions, public
assistance and savings plans for education, retirement and housing. For decades, such
assets helped workers move, and stay, in the middle class. The last three decades,
combined with the downturn of the Great Recession, turned asset building instead into
concentrated wealth for the wealthiest. Working families fell behind.
The CASH Coalition’s efforts will help these families find creative and painless ways to
save and nurture their incomes into a base that could be used for emergencies or
education. As they add to their household wealth, they will take steps toward economic
stability.
Their families will gain — and so will the entire region.
Full Article (PDF version)
A Balanced Approach to Federal Debt Reduction
Follow the Money: Declining Corporate Contribution to the Public Good
Ohio’s income tax is based on ability to pay, so the rate goes up as income increases. People of low income pay a lower tax rate than people of higher income because they have less money to pay for the necessities: food, shelter, clothing, transportation to work. By comparison, a flat income tax asks the poor to contribute the same share of income as the wealthy. …
 |
 |
 |
 |
