May 1, 2014

Ohio Primary Issue 1: The 1851 Center for Constitutional Law Say Vote ‘No’; I Agree

Filed under: Ohio Economy,Ohio Politics,Taxes & Government — Tom @ 9:00 am

From the 1851 Center for Constitutional Law (HT to an emailer; bolds are mine):

Ohio Taxpayers Beware: State Issue 1
Proposed Constitutional Amendment would further increase already-historically-high state spending, result in tax increases

Columbus, OH – The 1851 Center for Constitutional Law today took action to educate on and warn Ohio taxpayers of State Issue 1, which will appear on the May 6, 2014 primary ballot.

State Issue 1 proposes to amend the Ohio Constitution “to fund public infrastructure capital improvements by permitting the issuance of general obligation bonds.” Essentially, the state seeks to borrow and spend money it does not currently have to address roads, bridges, wastewater treatment systems, water supply systems, and other infrastructure spending. State legislators voted, at the end of 2013, to place State Issue 1 on the May 6, 2014 ballot through passing Joint Resolution 6 (“SJR 6″).

There has been very little public debate on the issue leading up to the election, and many citizens are largely unaware of the details of proposed amendment. Accordingly, in its Policy Briefing on State Issue 1, released today, the 1851 Center explained the following:

  • The proposed constitutional amendment explicitly authorizes its new spending to be paid for through taxation, and if enacted, would almost necessarily result in a tax increase.
  • The proposed amendment would mandate an additional $1.875 Billion in spending at a time when Ohio has just implemented a state budget that is the largest in its history, and growing significantly larger each year. (In 2013, Ohio’s state government spent a record $27.4 Billion. In 2014, state spending is set to rise by an astounding 10.3 percent, to $30.2 Billion).
  • The proposed amendment would undermine Ohio’s constitutional balanced budget requirement and debt ceiling by unbalancing the Budget and exceeding the current debt limits; and by circumventing the budget process, the passage of State Issue 1 would likely create perverse political incentives that could further escalate state spending in the future.
  • Passage of Issue 1 will not “create jobs” because there is no evidence that government spending projects like this create jobs, rather than simply rearranging their location in the economy: while government spends more, Ohioans will have less disposal income, and will spend less to facilitate job creation.

“Given recent spending increases at the state level, passage of State Issue 1 is likely if not certain to increase taxes, undermine Ohio’s balanced budget requirement, further expand already historically large state spending and indebtedness, create perverse political incentives and cronyism, legitimize the notion of state spending as a viable means of job creation, further clutter an already bloated-beyond-recognition section of the Ohio Constitution, and redistribute wealth from poor and middle-class Ohioans to wealthy out-of-state investors,” said Maurice Thompson, Executive Director of the 1851 Center.

“Those considerations are sufficient to cause us to consider Issue 1 a poor reason to amend the Ohio Constitution – - Ohioans’ foundational compact with government.”

Ohioans appear particularly unaware that the proposed amendment specifically obligates the use of taxes to pay for the spending, meaning that spending must either be cut elsewhere, or taxes on the public will necessarily increase over time to pay for the spending.

The proposed Section 2s(D) explicitly contemplates that that the additional $2 Billion in spending will be paid for through “the full faith and credit, revenue, and taxing power of the state,” “excises, taxes, and revenues so pledged,” and “the levy, collection, and application of sufficient excises, taxes, and revenues to the extent needed for that purpose.”

A state debt study released in early 2014 by State Budget Solutions – - a national think tank – - concluded that even without the passage of Issue 1, Ohio already maintains the nation’s 4th-highest state debt per capita, second highest debt as a percentage of gross state product, and second highest debt as a percentage of spending.

The Center’s Policy Brief is here.

This should be an obvious “no” vote. I particularly resent the idea that the issue is on the primary ballot — a move that reeks of cynical politics.

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1 Comment

  1. For myself, before I would vote for another bond issue, I would like to see the schedule of outstanding debt already on the books of the state.
    .
    If it were shown that the state is decreasing its debt over time, rather than increasing it, I would likely be more favorable to renewing a current bond.
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    But, without such a case, not for me, thank you.
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    Comment by Dan Marks — May 5, 2014 @ 10:16 pm

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