It’s difficult to blame Americans, particularly Cincinnatians, if they’re tired of hearing about government budgets. Budgets are supposed to give elected officials at all levels of government a chance to show off their strengths and agendas, but recent issues have mostly raised questions about whether these people are actually capable of leading to begin with.
Locally, much of the political conversation has been consumed by the city manager’s parking plan, which would lease the city’s parking assets to fund economic development and help balance local budgets for the next two fiscal years. In response to the controversial plan, local officials from all sides of the political spectrum have put forward their own plans that avoid giving up control of the city’s parking assets and attempt to prevent widespread layoffs, particularly to Cincinnati’s public safety departments.
But one issue that rarely gets attention in all these conversations is how the city actually got to this point. How did Cincinnati, which has been experiencing growth and momentum in the past few years, arrive at such a grim budget forecast? To be sure, some of the problems are entirely self-inflicted — City Council has been unable to pass a structurally balanced budget in years — but recent developments have pinned part of the problem on a certain state politician: Republican Gov. John Kasich.
A recent report from Policy Matters Ohio confirmed what Ohio’s liberals have been saying for years: During the Kasich administration, local government funding has plummeted. The report found funding for cities, municipalities and counties dropped from nearly $3 billion in the 2010 and 2011 fiscal years — the years budgeted by former Democratic Gov. Ted Strickland — to about $2.2 billion in the 2012 and 2013 fiscal years — the first two years budgeted by Kasich. The governor’s most recent budget proposal would ensure the continuation of the downward slide, with local government funding dropping down to slightly more than $1.5 billion in the 2014 and 2015 fiscal years, according to the report.
The report’s conclusion is that new revenue from the state’s casinos and an expanded sales tax would not be enough to overcome cuts in the Local Government Fund, utility tax reimbursements, tangible personal property reimbursements and the termination of the estate tax. The estate tax is a particular culprit here; by itself, the tax — popularly dubbed the “death tax” by Republicans who seem to attach mortality to every policy they oppose — would have provided $625.3 million to local governments in the 2014-2015 budget, but it was repealed in 2011 by the Republican-controlled Ohio legislature and Kasich.
For Cincinnati, the lost funds have serious consequences: When presenting his 2013 budget proposal, City Manager Milton Dohoney Jr. said the state funding reductions cost Cincinnati $22.2 million in revenues for the year — almost enough to make up for the entire $25.8 million deficit being closed by the parking plan.
At a federal level, much of the recent conversation has circulated around sequestration, a series of across-the-board discretionary and defense spending cuts that officially kicked in March 1. There’s still much debate about who’s to blame for the cuts and how federal legislators actually allowed the deadline to pass for cuts that are, by design, intended to be really stupid (the cuts were originally passed to act as an incentive that would spur the federal government to replace ridiculous cuts with a much more reasonable long-term deficit reduction plan). But why the cuts are stupid bears some reflection.
When discussing federal budget problems, Democrats and Republicans mostly acknowledge that the short-term budget outlook isn’t a problem; instead, problems lie a few years and even decades into the future — when rising health care costs and expanding entitlement programs are set to reach unmanageable levels. It’s programs like Social Security, Medicaid and Medicare that need reform in the long term, not short-term discretionary spending that encompasses already-weak science research and education budgets.
The irony is sequestration’s short-term cuts may actually hurt deficit reduction by damaging the economy. In congressional testimony on Feb. 26, Federal Reserve Chairman Ben Bernanke said as much: “(B)esides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions.”
In other words, it’s possible the government’s purposely bad budget plan won’t even achieve its sole purpose. It’s no surprise Americans are fed up with political nonsense.
CONTACT GERMAN LOPEZ: [email protected] or @germanrlopez