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Wonder how Ohio got into this mess? Here’s how

A record number are on food stamps and tax revenues have plummeted.

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By Laura A. Bischoff, Staff Writer 6:41 PM Saturday, July 4, 2009

COLUMBUS — Ohio’s glory days are long gone and its gloomy days are upon us.

But take heart Ohioans: You’re not as bad off as Michigan.

“That should be on a license plate. We don’t have ‘in the heart of it all’ anymore,” said Ned Hill, dean of the college of urban affairs at Cleveland State University. “We should have one that says ‘Thank God for Michigan.’ ”

While the whole country is in an economic recession, times are particularly tough for Ohio and Michigan, which depend heavily on the auto industry.

Ohio’s unemployment rate in May stood at 10.8 percent, above the national rate of 9.4 percent (the national rate ticked up to 9.5 last month) but well below Michigan’s 14.1 percent. And let’s not even talk about California.

So the good news is Ohio isn’t at the bottom of the barrel. The bad news is you don’t have to look real hard to see the barrel’s bottom from here.

Consider these sobering statistics: The state’s monthly unemployment rate is the highest it’s been since 1983, the number of Ohioans on food stamps is at a record 1.5 million and food pantries are facing such exploding demand they’re rationing staples.

Gov. Ted Strickland blames the state’s $3.2 billion budget gap on a convergence of economic conditions, including a troubled auto industry, a credit squeeze, record foreclosures and drops in housing values.

“All of these things taken together have created a set of circumstances, as I’ve repeatedly indicated, that are unlike any perhaps we have ever faced in this state and country,” Strickland said. “And certainly unlike anything we’ve faced for the last 70 years or more.”

Statistically, 646,000 Ohio adults are out of work, but the number could be greater depending on who’s counted. The state has lost 414,500 jobs over the last 10 years, with 299,800 of those jobs disappearing in the last two.

Unemployment claims are coming fast and furious. New claims were 171 percent higher during the third week of June than during the second week of June 1999, the last time the state’s economy generated job growth, according to George Zeller, an economic research analyst in Cleveland.

When people don’t work, they don’t pay income taxes and they buy fewer big ticket items. As a result, the two workhorses of state revenues — the sales tax and income tax — have been bringing in less money to run Ohio government.

And that’s a big reason Ohio has a budget crisis: Its revenues have fallen off a cliff.

By the end of May 2009, Ohio’s general revenue funds took a 10.7 percent dive over the same period in 2008 — a larger drop than anything seen in at least 52 years, according to the state tax department. That means the state received $1.9 billion less in revenue.

The budget picture, however, isn’t painted entirely by economic conditions.

Ohio instituted a 21 percent income tax cut, beginning in 2005, and Gov. Strickland expanded the homestead property tax exemption program so that all homeowners over 65 or disabled would qualify. Without those tax breaks, the state would have had an extra $6 billion for the two-year state budget.

“The tax cuts were sold on the basis that they would cause growth,” Zeller said. “Of course, no growth resulted. Ohio’s streak of subpar job growth below the U.S. average was extended to 159 consecutive months despite the tax cuts. Other research has shown definitively that other measures of economic growth were not improved after the tax cuts were enacted.”

Ohio isn’t the only state facing a fiscal meltdown. Collectively, states were anticipating $121.2 billion in budget shortfalls, according to the National Conference of State Legislatures. California is looking at a $24 billion budget gap — that’s almost as much as Ohio’s general operating fund spends in an entire year.

Once an economic powerhouse, Ohio has seen job-rich industries die off or scale back — rubber in Akron, steel in Cleveland and Youngstown, autos in Dayton and Toledo.

In 1969, 43 Ohio companies made the Fortune 500 list. This year, only 27 fell in the top 500 and NCR Corp., which is number 446, plans on leaving the state soon.

“The things that made us great have vanished and they haven’t been replaced,” said state Sen. Jon Husted, R-Kettering.

So with fewer jobs and opportunities, Ohio is losing talented people who are moving out of state.

“Growth begets growth. Decline begets decline,” Husted said. “And those things have been years in coming.”

The only good news for Ohioans is that same decline occurred at a slightly higher rate in Michigan.

Contact this reporter at (614) 224-1624 or lbischoff@coxohio.com.

Find the latest political headlines on our Web site at SpringfieldNews Sun.com/ohiopolitics

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I wonder what true number of unemployed are there in Ohio? See they base there facts on how many people file for unemployment, when in reality what is true number of people between the age of 18 to retirement that are unemployed. I bet you that number would be scary. Could anyone answer that?

Travis Aker
4:28 PM, 7/6/2009

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Especially when its unfair that we here in Ohio have to pay property taxes to pay for our schools,which still to my knowledge is unconstitutional. We need find a different way to fund the Ohio schools.

Travis Aker
9:43 AM, 7/6/2009

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Ohio problems didn't come from the UAW,it comes from lack of leadership from our political leaders. Ohio hasn't created jobs in 10 yrs since 1999, thats even before the recession. We rank worse than any other state in the United Staes as far as job growth. But yet they used the stimulus money to repair roads,instead of creating jobs. They should have been more prepared in what would happen to the industry.

Travis Aker
9:38 AM, 7/6/2009

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It is amazing the levels of pious thinking and speaking...with little truth behind the message. I am against big government spending and urge everyone to not forget the president who authorized the big spending. This happened before Obama was elected President just seven months ago. Please, stay true to your moral high-road, if this is what you stand beside. By being critical of a man who has spent so little when it is compared to our actual debt. Help us God to open our hearts & free our minds.

Honest Em
9:34 AM, 7/6/2009

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Speaking of "food stamps", I know people who seem perfectly content to never get off them.. with no pride in being independent of the Govt. That is just one example. I also know a girl who basically bragged about "getting to file for bankruptcy". What?! That is not something to be proud of! It is great to have help when you need it, but Govt spending is way out of control, and many citizens are fine with it. Eventually, we will lose our freedom and independence... being prisonors of the Govt.

pathetic country
3:01 AM, 7/6/2009

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