BuckeyeBlog

In late February Senator Bill Harris made the observation that Governor Strickland shouldn’t base his budget on hypothetical federal aid. Of course, Governor Strickland disregarded that and factored in a huge chunk of federal money when he presented his budget to the General Assembly. Now, with the legislative wrangling in the U.S. Senate, it seems that all that federal money may not materialize. The governor is saying this would have a “devastating impact” on the state.

The changing nature of the stimulus bill should illustrate the wisdom of Senator Harris’s approach. Congress is still putting together the details of the stimulus bill. No one should cout on a certain amount of money from it since the spending allocations are still in flux.

But Governor Strickland is a pretty canny politician. He can see the angles here and he decided to game the system to make himself look good. Governor Strickland based part of his budget on, essentially, numbers he pulled out of thin air. Now that this imaginary money  may not show up, he’s trying to shift the blame to others. A lot of his desired spending was based on imaginary federal money. Governor Strickland could look like something of a hero by proposing a budget including that spending. But if the federal government doesn’t come through with the money, Governor Strickland has positioned himself perfectly to blame someone else for any cuts. After all, his budget included funding for these programs, right? He can blame those horrible politicans in DC for taking away your favorite government program. In reality, the governor knew the money wasn’t settled. He knew the actual budget would be different from what he proposed. He’s just playing politics. It’s too bad that voices like Senator Harris’s — which stand up for a realistic budget proposal — aren’t to be found in the governor’s office.

Republicans in the General Assembly have a plan that is a good beginning on a much-needed overhaul of state government:

Ohio legislative Republicans yesterday urged Gov. Ted Strickland to embrace a massive downsizing of state government that they said could go a long way toward solving the budgetary crisis.

The plan calls for consolidating 24 cabinet-level departments into 10 or 11 and eliminating 11,448 state jobs, nearly a fifth of the state work force, through attrition, for a projected saving of about $1 billion a year.

Consolidation is good; elimination is better. While they are at it, they can also work on repealing the state income tax. Cutting government and letting Ohioans keep more of the money they earn — the best stimulus plan the state could have.

Gongwer News Service($) reports that Senate President Bill Harris is cautioning Governor Strickland not to count on federal aid when putting together his budget proposal. As Senator Harris puts it, the budget should be based on the “realities of the state economic situation” not on hypothetical federal aid. Imagine that — basing a budget on economic reality. It’s sad that this type of thinking makes the news. The idea that the blueprint for state funding should be based in reality should be the norm, not something that is noteworthy.

Given that Governor Strickland is one of the most vocal cheerleaders for federal “emergency” aid to the states, it would make perfect sense if his budget tried to take that into account. But the size of that aid is unknown. The conditions put on that aid are unknown, as Senator Harris points out. Heck, we don’t even know if the aid will be passed by Congress. It looks likely that the feds will bail out the states, but maybe fiscal sanity will prevail in Washington and Congress will shoot it down.

Senator Harris should be commended for sounding the trumpet of caution on this issue. I hope that when the state Senate begins considering the budget that Senator Harris will continue to be fiscally prudent. As we saw last year, when recessions hit revenues decline. The projected $7 billion deficit will likely deepen. It’s time for Ohio to start looking at the variety of wasteful spending contained in the budget and begin cutting out the fat.

As the Cleveland Plain Dealer reports, the federal government approved (in a roundabout way) Ohio’s expansion of the state government’s health insurance plan for children. Governor Strickland pushed to expand the program to families up to 300% of the federal povery level and the General Assembly gave unanimous approval last year. With the state facing a huge deficit, however, there are questions about whether this is a good use of taxpayer money.

Last year I wrote an article explaining why this type of health care expansion is a bad idea:

it is likely that a large number (perhaps a majority) will either leave or refuse to sign up for private health insurance to use the government program. A few studies have been done recently about how government health care programs “crowd out” private insurance. That is, having a free or essentially free government program leads people to choose it over private coverage. One estimate put this number as high as 60 percent — or, six out of ten children signed up either had or would have had private coverage. Others put the number between 25 percent and 50 percent. …

Unfortunately, for those children who lose private insurance and switch to government health care, they will find that the quality of their care will decrease. Patients with Medicaid often have trouble finding doctors and report they would rather be on private insurance. It makes no sense for the government to set up incentives to move to lower-quality care.

While it may sound like a good idea, the reality is that the kids being covered by this expansion don’t really need it. The vast majority already have coverage and it’s very likely that most of those covered by this program expansion would be used by families that would otherwise have insurance coverage. It’s a bad idea even if the state had a surplus. In a fiscal climate like Ohio is facing today, however, it’s ridiculous that anyone would even entertain it.