Ohio Building on Past Successes Toward an Even Brighter Future
Because of its wide diversity in population, ethnicity, and industry, the state of Ohio is often considered a microcosm of the country as a whole. Every four years, the Buckeye State takes the national stage as pundits and pollsters predict the outcome of presidential elections, based on how they perceive the residents of Ohio will cast their votes for any given candidate. From this phenomenon sprang the phrase “As Ohio goes, so goes America.”
Ohio is one of the nation’s largest industrial leaders, ranking third in manufacturing employment nationwide. The centers of manufacturing are located in or near Ohio’s major cities, such as Cincinnati and Akron. The agricultural industry currently employs one in seven Ohioans, and thanks to new fracking technologies, Ohio’s oil production doubled between 2012 and 2013, and the production of natural gas has nearly tripled. Ohio currently ranks 18th nationally in oil and natural gas production and is also the 10th-largest coal-producing state in the United States. While certainly lagging far behind the likes of Texas and Alaska, the energy sector in Ohio is a rapidly growing contributor to the state’s economy.
With all of these positive statistics, you would have to wonder why between the years 1995 and 2010, the state shed over $18 billion in adjusted gross income (AGI) to places like Florida, Texas, Arizona, and the Carolinas. Why these states? Because they provided more inviting tax structures and relocation incentives. Florida, Texas, and Arizona, for example, have no state income tax. From a business tax standpoint, Ohio ranked 39th-highest in the country, according to taxfoundation.org’s Business Tax Climate Index 2011-2012.
When Governor John Kasich was elected in 2010, the state of Ohio had an $8 billion budget deficit. Today, the state has a nearly $2 billion surplus. In 2010, the state of Ohio was also ranked the 44th-worst state in which to do business. Today it is ranked 22nd. Ohio’s unemployment rate has dropped from 10.6 percent in 2009 to 6.5 percent. The state is now ranked as the number-five job creator in the country, having produced 175,000 new private sector jobs. So, how were these things accomplished? As the governor would say, it was done by balancing the budget, cutting taxes on small business, increasing workforce training, and introducing statewide pro-growth policies to further reduce taxes and cut costs. During Kasich’s tenure, the state bureaucracy was reduced 10 percent by eliminating the number of sub-cabinet positions and merging redundant state agencies. All of these steps were laid out in the governor’s FY 2012-’13 budget.
So what will this governor do for an encore? Always pragmatic, Governor Kasich is quick to point out there are many reasons for new optimism, but also reasons for caution and reasons to avoid the temptation to be complacent. “Too many Ohioans are still out of work, and our taxes are still too high,” he said.
Though an unwieldy 1,600 pages, Ohio’s FY 2014-15 Budget lays out a blueprint for what is to come. It includes:
- Cutting state income taxes by another 8 percent, or $2.7 billion
- Increasing earned income credits
- Eliminate the Estate Tax
- Reducing state sales tax by .5 percent
- Providing additional financial support for pre-school and K-12 education, utilizing expanded mentoring programs, and thereby ultimately improving college graduation rates
- Improving worker training programs
- Providing $2.4 billion in funds for new infrastructure improvements
- Reviewing and reforming current regulations that are stifling small business
Detractors are quick to point out the burdens that will be placed on lower-income families to offset the reduced revenues from the tax cuts. These include:
- Expansion of goods and services to be subject to sales tax
- Increased taxes on tobacco products, now to also include electronic cigarettes
- Increased taxation of the state’s energy producers
But the state of Ohio is clearly on the right track. There is documented evidence of past improvements, and a well-mapped-out vision for the future. These all bode well for Ohioans, as well as for any future political ambitions of the governor, beyond a successful re-election in November.