Cogeneration, sequestration, taxation, unionization

Policy Matters Ohio - April 3, 2012
   
Talkin’ taxes – Gov. John Kasich wants to slice state income taxes, again. One of every four dollars cut under his proposal would go to the most affluent 1 percent of Ohioans, according to this analysis. Most of us? We’d be lucky to get enough each year to buy a tank of gas. Republicans have balked at the governor’s plan to couple income-tax cuts with stronger taxes on gas and oil drilling (aka fracking), but we figured it would be a good idea to remind Ohioans that our income tax plays a crucial role in helping the state meet vital needs. It’s also the only major state tax based on ability to pay.
 
Don’t waste it – Ohio’s electric power industry wastes an estimated $17.6 billion a year because of inefficiencies. According to our report on combined heat and power, also known as cogeneration, billions could be saved by capturing and recycling energy waste for use in the manufacturing sector. CHP has the added bonus that it could prevent tons of pollution from entering the air we breathe – increasing CHP’s share of total electric capacity by 10 percent would be equivalent to taking 2.3 million cars off the road. Kudos to Gov. Kasich for making CHP a priority in his energy plan; unfortunately, his approach would remove incentives for using wind and solar power, so we recommend a CHP carve-out that would not get in the way of investment in other renewables.
 
Bring it back – Policy Matters research assistant Tim Krueger helped Board member Susan Helper and Brookings Institution fellow Howard Wial write a new Brookings report that details how policy choices, not uncontrollable market forces, have caused the decline of American manufacturing and the loss of millions of jobs. The authors say the U.S. should promote “high-road” production that has skilled workers making innovative products, and that public policy should promote this goal at the local, state and national levels.
 
Federal forecast – Many state public services depend on U.S. help, so we recently looked at how the federal Budget Control Act of 2011 will impact those services in Ohio. The Ohio Legislative Service Commission projects that the mandatory federal budget cuts – aka sequestration – will take $312.6 million from our state next year. Ohio schools, already hit by massive losses, will lose $126 million; eight more years of similar cuts are pending.
 
Closer look – The governor’s “mid-biennium review” contains significant change for Ohio schools, including an effort to boost reading skills for Ohio youngsters. Sounds good, but it doesn’t look like there’s sustainable funding to help achieve many of the new goals, according to our first take on the proposal. Piet van Lier also wrote an op-ed for the Cleveland Plain Dealer, both praising and critiquing Mayor Frank Jackson’s school plan. Many liked the op-ed but one reader critiqued it then said of our staff photo: “I don’t think I would fear the men from Policy Matters. They appear quite tame. On the other hand I would not want to cross one of the women. They look like they would kick my a** up and down the street just for the h*** of it.” Thanks, we guess.
 
JobWatch – Ohio’s unemployment rate fell slightly in February to 7.6 percent, the lowest since November 2008. While this is welcome news, it will take nearly four years at the recent rate to get back to pre-recession employment levels.
 
Testify – David Rothstein told a U.S. Senate subcommittee what can go wrong when prepaid debit cards are used to provide unemployment compensation, food assistance and other public benefits. The risk, particularly with Ohio’s Reliacard, is that poorly understood fees will divert money low-income families need to survive, and could displace things like savings accounts. Zach Schiller presented some impromptu testimony at the Ohio Statehouse, and gave Gov. Kasich’s bank-tax plan a thumbs-up for closing bank tax loopholes. But he doesn’t think the money should go back to the banks – instead we should use that $30 million to provide foreclosure counseling or to demolish or rehab vacant homes.
 
Under fire – The attack on Ohio workers continues, with a So-Called Right to Work initiative gathering steam. Amy Hanauer got out in front of a flimsy report that claimed that such anti-worker laws help state economies. Her pre-emptive response got solid media attention. The state’s public radio news bureau, Business First and the Dayton Daily News all relied on our work for a strong opposing viewpoint.
 
Thanks from Amy Hanauer and the Policy Matters team.
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