Bottom line of Ohio’s spending is elusive in shadow budget

Greg R. Lawson Jun 25, 2019

This opinion piece appeared in The Columbus Dispatch.

Finding the bottom line on Ohio’s budget is not as simple as most of us might think it should be. And too often it looks nothing like what we have been told. Recent headlines, for example, trumpeted: “Tax cuts, money for schools, children highlight House-passed $69 billion budget,” when the real budget will see Columbus spend more than $140 billion of Ohio taxpayer money.

“But Ohio has a statutory spending limit,” you might protest. And you’d be right. But that statutory spending cap only applies to the state’s general revenue fund. Over the years, state policymakers have become quite adept at using various arcane rules, accounting tricks and budget gimmicks to move spending line items out of the capped fund and into other, noncapped accounts — creating a perfectly legal but perfectly opaque “shadow budget” that hides what our government really spends and keeps taxpayers largely in the dark.

The general revenue fund is under the direct control of Ohio’s elected policymakers and is capped by law, and for good reason. Voters and taxpayers expect that the state’s “general revenue fund” is what the state budgets and spends. They would be wrong. Typically, less than half of overall state spending flows from general revenues. In fact, the current state budget proposes drawing less than 49% of Ohio’s total spending from the general revenue fund.

For years policymakers have allowed certain spending obligations to accrue from nongeneral revenue sources — such as $10 billion in annual Medicaid costs and another $3.5 billion per year for education. This longtime practice allows vast sums of taxpayer money to be spent without the level of taxpayer accountability that Ohioans demand.

The Kasich administration infamously employed similar fiscal sleight of hand after the General Assembly had rejected the initial Medicaid expansion. The Controlling Board signed up Ohio for the mammoth expansion with all the federal strings attached even though the state’s elected officials had turned it down. Keeping much of the oversized Medicaid spending off the general revenue fund’s books allows Columbus to pretend that state spending remains under the statutory limits.

Continuing this tradition, the Ohio House recently called for moving $250 million of education spending out of the general revenue fund in 2020 and placing it into a nongeneral revenue account — the shadow budget. That move alone drops the general fund appropriations below the phantom statutory cap but still requires taxpayers to fund the new spending.

Such maneuvers create confusion — so much confusion, in fact, that newspapers run stories with headlines declaring a bipartisan “budget” worth a fraction of the real amount. The real budget, lurking in the shadows, shifts programs and expenses from account to account, moves line items from one book to the next and spends taxpayer money well above and beyond the legal limits that voters have been led to believe are there to protect them from government’s excess.

The state treasurer’s online checkbook and the new interactive budget on the budget office website have undoubtedly been helpful as voters and watchdogs try to keep their eye on the fiscal ball, but the shell game that Columbus plays with the taxpayers’ dollar undermines the effort and risks turning the budget process into a sucker’s bet.

Ohio taxpayers deserve to know what their officials really spend, what their government programs really cost and how much value they really receive from the public services they pay for with their hard-earned money. Shadow budgets make a mockery of governmental transparency and political accountability. They make a mockery of democracy as our elected and unelected officials keep to the letter of the law even as they violate its spirit.

The people deserve more transparency and accountability from Columbus. It is time for the General Assembly to subject all state spending to clear statutory limits and shine some light on the darkened corners and deep crevasses of Ohio’s shadow budget.

Greg R. Lawson is a research fellow with The Buckeye Institute in Columbus.