Not a Lexis+ subscriber? Try it out for free.

Tax Law

JobsOhio, Taxes and Budget Surpluses: One Man’s Meat, Another Man’s Poison

In an astounding 2-year turnaround, Ohio Gov. John Kasich's administration has turned a gaping $8 billion Ohio biennial budget deficit into an estimated $408 million surplus for fiscal 2013. The surplus estimated excludes an anticipated $500 million windfall to the state from JobsOhio, the controversial nonprofit corporation that the Kasich administration set up as a privatized agency for economic development in the state.

JobsOhio - Round Peg in a Square Hole?

JobsOhio was conceived to drive greater speed and efficiency in helping the Ohio economy to grow, as Kasich thought the need for a change to be compelling in view of the state's dismal business and jobs outlook when he began his gubernatorial term. Not surprisingly, JobsOhio has faced a flurry of legal and constitutional challenges from the political left, mainly questioning the integrity of a private entity's stewardship of public interests and related themes. Whatever the merits of these challenges, the new agency has weathered the storms, and it looks like it's sufficiently viable to remain a permanent fixture.

State profits in liquor sales will be the new agency's ongoing funding source, and this is the reason for the still-to-come $500 million up-front payment, which has been pending litigation. So the state will get the money sooner or later, which will bring the surplus close to $1 billion. Wow!

Oh Goody... A Surplus! But Who Gets the Bacon?

But even beyond the specter of private outfits getting into the mix of "public" work - unthinkable to Dems in the Statehouse - the Dems ask: Isn't it appropriate to distribute these much needed funds where they are sorely needed? After all, they say, $1.4 billion of this surplus was built on budget cuts imposed on struggling local school systems and local governments. The Dems make a good argument for this.

But the answer is NO! - Absolutely not! In the interest of taxpayers and reducing state income tax rates in particular, Kasich is compelled to circle the wagons in these uncertain times and hold on to the $1 billion booty. Right or wrong, reducing tax rates and the size of state government is Kasich's mantra, whatever the collateral damage. Let's not forget - This is what he explicitly promised when he ran for office, and Ohioans elected him to do just that.

But this also explains state Senate Dem leadership's beef with Kasich as a results-oriented "scorched earth" nemesis. Still, it's hard to argue with results, which have been faring better on the state level since Kasich started at the helm. Business activity is up, tax revenues are above estimates, and state unemployment is lower than the national average. In fairness, these are the results that matter not just to Kasich, but to many constituents. That said, it's just as easy to point out that these are the kinds of numbers governors are graded on, especially people like Kasich, whose long-range political aspirations likely extend well beyond Ohio's borders to the national stage.

All Eyes on Ohio

As the national election drama scene unfolds, Kasich and Ohio will take center stage at the GOP convention and the rest of the campaign. For better or worse, in the minds both of those who love him and those who hate him, Kasich's chemistry perhaps best fits the stereotype of a GOP leader. This is why his role in shaping the Republican image is a key element in the mix of factors that will affect voter sentiments and election results in November.


Discover the features and benefits of LexisNexis® Tax Center

For quality Tax & Accounting research resources, visit the LexisNexis® Store