Wednesday, August 04, 2010
GUEST COLUMN: "Why Ohio’s Economy is Struggling" by Mike Wilson
Whether you look at unemployment (10.5% - 43rd), or state GDP per capita ($35,381 - 33rd), our position in absolute terms and relative to other states is bad and getting worse. The reality of these statistics is that the citizens of Ohio are hurting. While going door-to-door, I’ve met with the long-term unemployed who are barely scraping by, and I’ve met with parents whose children moved out of state after college to seek jobs.
From 1990 to 2000, 720,200 jobs were created in Ohio. From 2000 to 2009, 544,100 were destroyed. This means that only 176,100 private sector jobs were created over a 19-year period - barely 9000 per year in a state of over 11 million people. The unfortunate truth is that it doesn’t have to be this way.
Ohio has tremendous built-in advantages as a state. We have world-class universities, a well-educated workforce, robust rail, highway, air and water transportation, and a legacy of innovation that is the envy of the country. Entrepreneurs like Thomas Edison and the Wright Brothers were a huge part of what made Ohio great. Today in Ohio, however, Edison and the Wright Brothers would be punished for their success with excessive taxation and burdensome regulation.
We see the proof of this in the news when venerable Ohio companies like NCR (founded in Dayton in 1884) and US Playing Card (founded in Cincinnati in 1867) leave for other states and take their jobs with them. We didn’t lose these jobs to overseas competition. We lost them to Georgia and Kentucky. In the case of US Playing Card, they moved their headquarters only about 15 miles across the river – just barely enough to escape the suffocating anti-business atmosphere of Ohio.
Governor Strickland offered NCR tax breaks totaling $31.1 million in an effort to keep them in Ohio. While that unfortunately wasn’t enough, what it shows is a recognition that the tax climate in Ohio matters and it is so out of whack that a $30 million incentive is insufficient to keep a company here.
In the 2011-12 Ohio budget, we are faced with an estimated shortfall as high as $8 billion. We are in this situation because our political class has failed. During the good times, we spent the windfall in tax revenues. When tax revenues declined in the current recession, the Strickland administration and House Democrats led the charge to increase spending by 9.3% in fiscal years 2009-10. The less we had, the more they wanted to spend.
This reckless spending was financed mainly though one-time funds including federal “stimulus”, debt restructuring and drawing on the state’s rainy day fund. The remainder came from $1.2 billion in additional fees, and a $900 million tax increase passed in December that was retroactive to the beginning of the year – thus violating the cardinal rule of not raising taxes in a recession.
In the next budget, we need to take steps to restore Ohio’s competitiveness, and we need to get government off the backs of our job creators – small businesses. To do so, government needs to tighten its belt - something they have utterly failed to do so far. In 2009, the average state employee made more than the average private sector employee in 87 of Ohio’s 88 counties and that’s before accounting for the lavish benefits and gold-plated pensions received by state workers.
The failure of our leaders in Columbus have driven jobs out of our state and created the 7th highest state and local tax burden in the country. It has made Ohioans poorer. Using budget gimmicks to avoid taking responsibility instead of fixing the problem is the same old politics that everyone is tired of. We need new leaders willing to take on the entrenched interests and balance our budget with spending cuts, not tax increases. It’s why I signed the Taxpayer Protection Pledge and why I encourage my fellow candidates and representatives to do the same.
Ohio may be in terrible shape, but the right leadership can make it great again. The current leadership has failed. That is why I am running for State Representative.