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

Gongwer News Service - September 8, 2006

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.

Print Friendly