More Fun With Ohio’s Improved Debt Rating (It Was Lowered In Jan. As Strickland Left Office; Also: 2012-13 All-Funds Spending Will Almost Definitely End Up Lower)
… the rating was revised from “negative” to “stable” after Gov. John Kasich signed a new budget the ratings agency says will essentially balance the state’s finances for the next two years. S&P also said Ohio is experiencing a modest economic recovery which has stabilized revenue.
In making the upgrade, the agency also assigned a “AA+” long-term rating to Ohio’s $416.75 million general obligation bonds.
That’s great to know, but as I teased on Saturday, there’s an even better part to all of this.
That’s because a related story reports an event which happened back in January which apparently didn’t get a lot of attention (or it got past me, which has been known to happen). This event, and the July news above which has followed it six month later, blows away every last conceivable shred of a claim by Ohio’s left and Democrats that Ted Strickland was really, really making things better in the final year of his term.
To hear them tell it, Ohio’s improving economy is merely a continuation of all the grrrrrrreat work T-Shirt and Turnaround Ted did in 2010. Why, one deluded BizzyBlog lefty commenter informed me that Ohio’s recovery last year was the best since 1983. Then Uncle Sam’s GDP growth by state report came out. “Never mind.”
Anyway, the super-fun, deal-sealing nugget is contained in the final paragraph of last week’s Wall Street Journal’s story on the S&P upgrade (bold is mine):
S&P had lowered its outlook on Ohio in January, citing the state’s depletion of its budget stabilization reserve. More recently, the state has made progress balancing its budget through the 2013 fiscal year, easing pressure on the rating.
Translation: After four years of Ted Strickland’s stewardship, on his way out the door, S&P told him, “Here’s the final bill for the damage you’ve done, Ted. You’ve left the state in a mess. Don’t let the screen door hit you.”
The cutoff couldn’t be any clearer. Before John Kasich took office, Ohio was rapidly turning into a problem child. A mere six months later (with the usual “don’t get too cocky” caution), Kasich has engineered an impressive enough turnaround to warrant an upgrade from S&P.
Seriously, folks, why would anyone want to go back to the pre-SB5, pre-New Way New Day Buckeye State of 2007-2010 (or for that matter, the essentially blue state governance of the past 15-plus years)?
UPDATE: Addressing another promised follow-up point from Saturday, I followed up on a complaint in a comment at my Pajamas Media column a few weeks ago that the state was still increasing its annual spending under Kasich.
is NOT true (make that “almost definitely not true” — See Update 2) on an “all-funds” basis, which as the name implies encompasses everything, including the proverbial kitchen sink, and is thus the most important measuring stick.
Let’s see what all-funds spending was expected to be for the past two fiscal years (very large PDF found here; go to page A-20):
The two-year all funds total is just shy of $120 billion. No, I don’t know that it was all actually appropriated, but I wouldn’t want to bet against it.
Though I suspect that the final number has changed, in mid-March Kasich’s all-funds number for the next two years was quite a bit lower than that (see Update 2; final all funds came in significantly higher, but it is still quite likely that final FY2012 and FY2013 spending will be lower than FY2011):
Calling it “the jobs budget,” Kasich stressed that his $112 billion, all-funds budget challenged the status quo with his privatization push for prisons, education reform wrinkles, overhaul of Ohio’s Medicaid program and erasing of walls between local governments.
So we’ve got a 7% reduction in the anticipated all-funds spending during the next two years vs. the previous two years. Although I intend to get firmer numbers (actuals for the past two and finalized for the next two) in the next few days, it looks like there’s enough of a margin, in the absence of contrary evidence, to declare that the 2012-2013 all-funds budget is lower than 2010-2011.
UPDATE 2, July 20: Based on what I’ve been able to learn, the state spent about 3% less than the amount indicated above on an all-funds basis in FY2011. The final all-funds budgets for FY2012 and FY2013 came in slightly less than the FY2011 budget listed above. If similar amounts or more go unspent in those two fiscal years — and I am told that this is what usually happens — each will come in lower than the FY2011 actual.