John Kasich Boasts of Ohio Recovery, but Reality Is More Nuanced
Posted March 13, 2016 in Selected Press
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The way John Kasich tells it, he inherited a troubled state that was hemorrhaging jobs, saddled with a huge budget shortfall and in desperate need of a rescue.
Five years later, he says he has turned Ohio around. That story is a cornerstone of his bid for president, as he tells voters he can bring his Ohio success story to the rest of the country. “Let’s take some Ohio to Washington to help the entire United States of America,” Mr. Kasich said at a cavernous auto glass plant near Dayton on Friday.
Ohio has indeed gained several hundred thousand jobs since Mr. Kasich took office, and he turned an imposing budget gap into a surplus while also cutting income taxes, all accomplishments that back up his boasts.
But a closer review of his record shows the reality is more complicated. Other states recovered from the recession more quickly than Ohio did. He closed the budget shortfall in part by cutting aid to local governments, forcing some of them to raise their own taxes or cut services. And increasing sales taxes helped make the income tax cuts possible. “Ohio was in intensive care, and Governor Kasich came in and really stabilized the patient,” said Rea S. Hederman Jr., the executive vice president of the Buckeye Institute for Public Policy Solutions, a right-leaning group. “But we’re still a sick state, economically speaking.”
On Tuesday, when Ohio holds its primary, his own constituents will have the opportunity to render their judgment about his management of the state. The race is expected to be close: Two recent polls gave Mr. Kasich an edge, though Donald J. Trump topped him in several earlier surveys. Mr. Kasich has acknowledged that a loss would end his campaign.
To highlight his turnaround story, Mr. Kasich has been traveling the state on what his campaign calls the “Kasich Works” tour, visiting businesses meant to show off the state’s prosperity, like the plant of auto glass maker Fuyao Glass America. The Chinese manufacturer is at a shuttered General Motors factory, a success story for Mr. Kasich and the private nonprofit corporation he created to lead job-creation efforts, called JobsOhio.
Mr. Kasich, a former congressman, took office in January 2011, on the heels of the Great Recession. The state had lost about 350,000 private-sector jobs during the administration of the Democrat whom he defeated, Ted Strickland. “When I wake up every morning,” Mr. Kasich said in his inaugural address, “I’ll say my prayers, I’ll hug my family, and I will focus on Ohio’s economy.”
Mr. Kasich’s campaign emphasizes his experience dealing with fiscal issues, including his time as the chairman of the House Budget Committee, and his town-hall-style meetings often feature a debt clock as a prop.
Ohio, like other states battered by the recession, found its budget in a difficult spot. Mr. Kasich faced a $7.7 billion shortfall for his first two-year budget, though that gap ended up somewhat smaller because of more favorable revenue projections. The eventual spending plan amounted to $120 billion over two years.
As he campaigns, he likes to talk about taking an $8 billion shortfall in Ohio and turning it into a $2 billion surplus. The surplus he refers to is Ohio’s rainy day fund, which held all of 89 cents when Mr. Kasich came into office. After deposits made during Mr. Kasich’s time as governor, the fund now has just over $2 billion. “Ohio, at a certain part in the downturn, effectively had no reserves,” said Nick Samuels, a vice president at Moody’s Investors Service. “Now they’ve rebuilt them to quite strong levels. That takes some action by state leaders to actually do.”
But Mr. Kasich’s budgeting decisions were not without consequences, with his cutbacks in aid to local governments forcing spending cuts and tax increases in communities..
On Tuesday, voters in Toledo will be asked to approve an increase to the city’s income tax, and the mayor of Cleveland has also called for an income tax increase. An analysis by The Plain Dealer of Cleveland last week found that more than 70 cities and villages had lost at least $1 million a year because of Mr. Kasich’s actions on budgeting and taxes, including the local funding cuts and eliminating Ohio’s estate tax.
Parma, a Cleveland suburb of 80,000, has lost more than $3.7 million, according to the analysis. To make its budget work, Parma closed swimming pools, held off buying police cars and instituted a $12-per-month garbage fee, said its mayor, Timothy J. DeGeeter, a Democrat. Lorain, which has 64,000 residents and was found by the analysis to have lost more than $2.9 million, raised its income tax and has left positions unfilled.
“There are buzzwords that people like to hear: ‘I balanced the budget,’ ‘I cut state income taxes,’ “ its mayor, Chase Ritenauer, a Democrat, said. “It all sounds good until you get into the communities and you see how much they’re suffering.” He said the cuts to local communities were unnecessarily steep, especially given the sum of money that is now in the state’s rainy day fund. “You have a broken arm,” he said. “How do you fix the broken arm? You put it in a cast. Instead of putting it in the cast, the governor got the machete out and cut the arm off.”
Timothy S. Keen, Mr. Kasich’s budget director, said that when Mr. Kasich drew up his spending plan, “A lot of hard choices had to be made.” He added that for most local governments, the reduction in state aid amounted to only a small portion of their budget, and that the cuts were “something that they should be able to manage.”
Campaigning in Ohio this weekend, Mr. Trump tried to undercut Mr. Kasich’s economic boasts by saying Ohio simply “got lucky” by striking oil, a reference to the hydrofracking boom in Ohio and other states with shale rock formations.
But the extraction of oil and natural gas from shale has accounted for only a tiny sliver of the new jobs under Mr. Kasich’s watch, and a tax on the oil and natural gas industries accounts for a minuscule fraction of the state’s tax revenues.
Mr. Kasich likes to cite the absolute number of private-sector jobs created during his tenure: about 400,000, according to the federal Bureau of Labor Statistics. That number, for the period from January 2011 through December, ranks eighth in the country, though Ohio is also the country’s seventh-most populous state. Other metrics are less favorable. During Mr. Kasich’s time as governor, Ohio’s private-sector jobs have grown by 9.3 percent — which ranks 22nd in the country. The state trails three of its neighbors, Michigan, Indiana and Kentucky.
Amy Hanauer, the executive director of Policy Matters Ohio, a liberal research organization, said Mr. Kasich had managed to craft an illusion that Ohio’s economy, under his watch, had outpaced the nation’s. “It’s like somebody who’s five-two telling somebody who’s six feet tall, ‘I’m going to make you as tall as me,’ ” she said, “and having the person who’s six feet tall buy it.”
But Mr. Hederman, from the right-leaning Buckeye Institute, said Mr. Kasich had made considerable progress given Ohio’s challenges as a state that relied heavily on manufacturing.
“By Ohio standards, Governor Kasich has a good economic record,” he said. “The key phrase is ‘by Ohio standards.’ ”
Original Article: https://www.nytimes.com/2016/03/14/us/politics/joh...