Friday, September 8, 2006

Statutory State Spending Limit Won't Help Economy, Report Says

 

Gongwer News Service


The measure to limit government spending the General Assembly passed in May is unlikely to foster economic growth in Ohio, according to a study released this week.

The Policy Matters Ohio study found no correlation between the size of a state's public sector and private sector growth. "In order to have a meaningful discussion about our future, we must break the grip of this false dichotomy," the report says.

Comparing per capita gross state product in all 50 states, the study found that states with growing public sectors generally experienced more rapid private sector growth than states that reduced their public sectors.

The study is critical of the so-called State Appropriations Limitation (SAL), which caps state spending increases at 3.5% a year. "Ohio will not receive any economic rewards for arbitrarily restraining its public sector, nor will our economy be punished if the state budget exceeds the new 3.5% annual spending limit."

The measure (SB 321) was part of an agreement the Republican-led legislature struck with Secretary of State Ken Blackwell, the GOP gubernatorial nominee who had championed a proposed constitutional amendment calling for a similar but more rigorous restriction on both state and local governments. (See Gongwer Ohio Report, May 23, 2006)

 

 

 

Gongwer News service  9/8/2006      Report No. 173, Volume 75

 

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Policy Matters Ohio is a non-profit policy research organization founded in January 2000 to broaden the debate about economic policy in Ohio. Our mission is to conduct high-quality research promoting decisions which benefit our whole community. Given the challenges of a rapidly-changing economic system, rising wage inequality, new issues in education and changes in the way work is organized, it is imperative that Ohio workers have a voice in the economic debate.

 

Policy Matters provides real-world analysis focused on issues that matter to low- and middle-income workers in Ohio. Our findings are accessible to the public, the media, and policy makers. We hope to strengthen democracy by providing Ohio's citizens with the essential tools to participate in the public discussion on the economy. We believe this will result in economic policies that better reflect the public interest.