MOUNT VERNON — With the announcement Tuesday that Betty Montgomery has dropped out of the race for Ohio’s governor, Attorney General Jim Petro and Secretary of State Kenneth Blackwell remain as Republican contenders.
Both candidates agree that state spending, which has increased 71 percent since 1994, must be curtailed. Petro’s plan includes restructuring state government, including going from 23 cabinet-level positions to nine; and addressing the tax structure, Medicaid costs and education.
Blackwell’s plan includes lowering Ohio’s tax rate to a single rate, eliminating the estate tax, repealing the sales tax increase, returning the rate back to 5 percent, and eliminating the CAT, if it is enacted. He also calls for streamlining government through privatization of some functions.
Both candidates also offer a solution to curtailing spending through an amendment to the state’s constitution. Blackwell’s amendment, Tax Expenditure Limitation (TEL), limits state spending to 3.5 percent or the rate of inflation, plus the increase in population.
The TEL has been compared to a Taxpayers Bill of Rights (TABOR) enacted in Colorado in 1992. TABOR is also a constitutional amendment that limits the growth of revenues or expenditures based on a formula of inflation plus population. According to the Center on Budget and Policy Priorities, under TABOR there has been a systematic and dramatic decline in public services.
In a conference call last fall, David Bradley, political analyst for CBPP, said “It should be a warning to any state considering a TABOR. It has hurt Colorado in very concrete ways.”
He said there have been dramatic and severe cuts in K-12 education, higher education, Medicaid and public health. He also said making it a constitutional amendment creates inflexibility, leaving the state unable to react to changing circumstances.
Another arguement opponents have against TABOR is tying the formula to inflation. According to Bradley, inflation is determined through the consumer price index, which is the cost of goods purchased such as housing, transportation, food and beverages. In contrast, governments’ main expenditures are for items such as health care and education, which have grown at twice the rate of the overall CPI.
In regard to a constitutional amendment, Jean Pierce, campaign chairman for Blackwell, said curtailing spending through a constitutional amendment is “totally appropriate for the importance of the issue.”
“It’s written in the state constitution that the budget be balanced, so we’re not raising any new issues,” he said.
He also said one of the things not discussed about TABOR is that seven or eight years after enacting TABOR, Colorado passed an amendment that exempted expenses for K-12 education from the program.
“K-12 was sucking up all their funds,” said Pierce. “They effectively blew up their own system. It forced them to rob from other spending programs. We think it’s unfair to say that one part of state services can grow and not the other. More restraint, more fiscal structure is needed.
“We’re not shutting government down, we’re just saying it shouldn’t grow faster than the ability to pay.”
Pierce also said what’s not commonly talked about is that during the eight years TABOR was left intact, Colorado was one of the nation’s leaders in job growth.
In regard to how TELs or TABOR affects the amount of money available for Medicaid services, Pierce said two studies showed that $1.5 billion in Medicaid costs could be eliminated if Medicaid were permitted to cover in-home assisted living. In order to to allow that coverage, Pierce said “the Legislature has to bite the bullet and do what’s right for the taxpayers in this state.”
“Ohio is only one of two states that says nursing home pay rates is legislated,” he continued. “In most areas it’s price and market driven, rather than having nursing home operators set their fees by legislation.”
Petro’s amendment, Citizens’ Amendment for Prosperity (CAP), limits the amount of general fund revenues the state may collect to 5.5 percent of the total personal income earned in the state.
“This is a budget framework that has been successful in 19 other states,” said Petro campaign chairman Bob Paduchik. “Through the first year alone, it would save $1 billion.”
Paduchik said if actual state revenue exceeds the estimated revenue, that money would be directed to a rainy day fund.
“It’s revenue-based control,” he said. “If more money comes in above the cap, it would go into a rainy day fund. Half of that would be used for higher education; the other half would be indeterminate.”
If revenue collections exceed the revenue limit by more than 2.5 percent, the CAP requires the state to return that money to taxpayers in the form of an income tax credit. For example, if revenue exceeds estimates by 4.5 percent, the first 2.5 percent would be placed in a rainy day fund and the remaining 2 percent be returned as a tax credit.
“One of the troubling things with Ken Blackwell’s TEL amendment is a requirement that any school levy or ballot issue would need to pass with a majority of electors of each subdivision,” said Paduchik.
In other words, he said, to pass, extend or renew a levy, it would require 50 percent of registered voters — not simply 50 percent of those voting — to pass it. In an election where only 50 percent of voters turned out, no levy would pass. Locally, voter turnout has been around 30 to 35 percent.
“You would need 100 percent turnout and you may still be unable to pass the levy,” he said. “That is very, very troubling for school districts.
“There’s $27 billion difference between Petro and our plan,” said Pierce, adding that according to the Buckeye Institute, if Petro’s plan would have been applied between 1994-2005, $12 billion more would have been spent. “Ours would have saved $15 billion. His plan really isn’t a cap at all, it’s just a smoke screen.
“The reason for this [TEL amendment] is that state spending increased 71 percent from 1994-05 fiscal year. It’s on a pace to double every 13 years. That’s just unsustainable. We just can’t handle that type of growth.”
Petro says the proposed TEL actually allows state government to grow annually by at least 3.5 percent, the cost of inflation.
At this time, Petro is expected to attend a meeting Thursday sponsored by the Knox County Republican Party. Held at the Memorial Theater, the purpose of the meeting is for the party to endorse candidates for various offices on the 2006 ballot. It is unknown whether Blackwell will attend. If not, a Blackwell representative will be present. The community is invited to attend the meeting, which begins at 7 p.m. A reception begins at 6:30 p.m.
