Back in 2003, under the late, unlamented Taft Administration, there were reports about how Ohio was going to run a one billion dollar deficit on its two-year budget. Now, its five years later, and a new Governor, but there are still such reports about how Ohio is in fiscal trouble. There are reports on how this budget crunch is going to impact on local governments.
Surprisingly absent from all these reports, however, is the fact that in 2005 the GOP-controlled General Assembly, in a fit of tax-cutting mania, decided to cut the taxes of all Ohioans by 4.2% each year for five years. In 2005 alone, this meant that the State lost revenue of around $340 million. Over a five year period this works out to a revenue loss of around two billion a year, according to the group Policy Matters Ohio.
Of course, like most Republican tax cuts, this one was geared to help the top. This is from the analysis prepared by Policy Matters Ohio:
The 1 percent of Ohio taxpayers who make at least $274,000 a year with an average income of $643,000 would save an average $8,464 a year if such a change were implemented. This group would receive 23 percent of all the tax savings – more than half again as much as the total amount received by the bottom 60 percent of Ohio taxpayers, who each make less than $43,400 a year. Taxpayers who make less than $16,000 – the bottom 20 percent of taxpayers by income – would save an average of just $12 a year.
While an across-the-board cut may appear to affect taxpayers equally, in fact the most affluent taxpayers would save much more of their income than lower- and middle-income taxpayers. The top 1 percent of taxpayers would save 1.3 percent of their income, while the middle 20 percent would save only 0.5 percent, and the bottom 20 percent just 0.1 percent. That’s because richer Ohioans pay steeper rates under the state’s graduated income tax.
Yet, the media acts like the current fiscal crisis in Ohio is caused by "bad forecasting" and higher fuel prices, to quote from the Cleveland Plain Dealer article linked to above. Now, those things very well may be having an impact, but here is another thought: When you cut the revenue stream of the state by around two billion a year during bad economic times in the state, you are going to have big fiscal problems.
We suspect that the news media is covering this angle because Governor Ted Strickland isn't talking about it. We suspect that Strickland isn't talking about it because he wants to get re-elected in 2010 and because the Democrats are within four or five votes of taking back the Ohio House. Those of us over 50 remember full well the way the Republicans used the so-called Celeste tax increase in 1984 to take the Ohio Senate.
The fact that Strickland isn't talking about the effects of the 2005 tax reduction by the GOP doesn't mean, however, that the media can't talk about it. It also doesn't mean that Democrats in local government positions can't talk about it. We suspect that Republican local officials will try to ignore the role the Ohio GOP General Assembly had in making this problem. We shouldn't let them.