Hidden in Plain Sight: Massive Privatization Power Grab

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A good friend of the site and veteran budget watcher spotted something very interesting in the budget bill, which appears to be a dramatic expansion of executive power at the expense of the Ohio legislature (not unlike the provision allowing the securitization of liquor revenue without competitive bidding or Controlling Board approval).

Our friend authored the following guest post, which we reprint in its entirety:


Tucked between pages 261 and 266 of Sub. H.B. No. 153 are six pages with 200 lines of budget language that make the OBM Director the most powerful person in the State of Ohio.  He can contract out any state service to any “qualified” bidder in order to “more efficiently and effectively” provide those services.  Period.  That’s it.

So, Ohioans.  When you voted for John Kasich, did you know that you also voted to allow one Cabinet Director the sole power to sell off any state operation to the bidder he alone deems “the most qualified”?  No public scrutiny.  No legislative oversight.  No requirement that the contractor provide services at a lower cost.

There is no requirement that the bidder be current on their taxes, be a company in the state of Ohio, employing Ohioans.  There is no requirement that they operate a safe workplace or pay a legal wage.  There is no prohibition on campaign contributions by the bidder to any campaign.  There is no prohibition on outsourcing.

So let’s get this straight.  A campaign contributor, who operates a call center in El Salvador paying workers $2.50 a day, who is behind in paying taxes can get a lucrative state contract for providing phone assistance to Ohio’s unemployed, if Tim Keen thinks they are most “qualified”.

Not since Boss Tweed have we seen state government put up for sale like this.  Oh, and that’s not all.  It also exempts any contractor from paying taxes on gross receipts (that’s the CAT tax!) or on income “derived from providing public services” levied by the state or any subdivision. In other words, they will be exempt from all state and local taxes.

Can you spell FIRE SALE?

Here is what Ohio’s people need.  Accountability.  We can’t depend on an appointed political hack to make these decisions in a smoke-filled room.  We need an open, transparent way to monitor whether the state is getting the best deal for its money.  These deals need to be evaluated to assure that Ohio’s taxpayers are getting the best value for the money we are forking over to throw state employees out of work and enrich private corporations.  Why do I say that?  These contractors won’t pay any taxes!!   Honestly, private operators of state services should not be able to walk away with taxpayer’s hard-earned money, without paying the taxes that every other business in Ohio has to pay.

When the Strickland Administration securitized the state’s tobacco receipts for $5.5 billion, they did so using a public authority, whose RFPs required the lowest cost, most responsive bid from every party to the transaction.  The Authority’s deliberations were open to the public, and were attended by media and followed assiduously by statehouse legislative finance staff.  This is the model that should be used to assure that we don’t sell off Ohio’s assets in shady backroom deals to John Kasich’s best contributors.

Ohio Budget Watch is here to shine the spotlight on budget provisions like this so there is time for legislators and the public to ask questions and demand changes before it’s too late. We certainly hope in these cases that the General Assembly will elect not to forfeit its constitutional authority, handing the executive branch unlimited power to operate without scrutiny or accountability, as seems to be the desire of the administration.

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  1. I sent a letter to the Plain Dealer, who has been a Kasich cheer leader regardless of his destructive policies, asking them why they have not covered this clause in the bill. I don’t expect them to print it or respond but it’s disgusting they have completely ignored an item that will have such a devastating effect on jobs and tax revenue for our cities and state.

    • Well to play devils-advocate, the bill is over 3200 pages and came out the same day as substitute-SB5 and the new Kasich school funding spreadsheets, so it probably competed for reporters’ attention. You almost wonder if the administration did it that way on purpose.

    • Judy,
      If possible post a copy of your letter here and on your facebook page if you have one.

      • Sorry, I used the online form at the PD and didn’t copy it to a file.

        In the letter I asked them how they could have missed this clause and went on to explain where I found it. I also mentioned what I see as the devastating consequences from this clause. Any company from any state or country can run our services and own/manage our assets meaning more jobs and tax revenue leaving the state. Also lack of oversight will equal abuses putting citizens’ safety at risk.

        I cannot give the Plain Dealer a break for missing this information, going over this bill cover to cover is their job. Informing the citizens of their region is their job. I’ve been reading their coverage of Kasich since day one, they have blatantly skewed it in his favor especially when analyzing SB5. Their senior editor, Kevin O’Brien, is a Rush Limbaugh clone. The publisher is a proud GOP supporter.

  2. Not being a legal eagle myself, I have a question I’m hoping someone could answer. If SB 5 ends up getting repealed, doesn’t it make a lot of things in the budget –particularly this clause– impossible to carry out? Union contracts protect agencies from being subject to a “fire sale” of sorts without approval or other political wrangling right?

    • In many cases, you would be right, but another clause in the same sections excludes all of these deals from all collective bargaining results, wage restrictions, safety restrictions and other such impediments. So the contract clauses would be null and void.

  3. Wow! On first take, “any state service”, would appear to mean that the Kasich administration would be allowed to contract out anything, including any services provided currently by state agencies/employees. Am I correct or am I overreaching?

    • You are correct and that’s exactly what he and the GOP want. They’re practicing Milton Friedman’s economic theories on us…you know…like they did in South America to profoundly tragic consequence.

  4. The bill language strikes me as being derived from ‘model legislation.’ On a quick read-through, it seems pretty coherent and, as pointed out in the post, very broad in the powers granted. But (for example) note lines 8287-8288, where the bill mentions “a suit in equity.” Since Ohio officially does not have “equity” actions, I doubt that LSC would have used the term, if not “copying” from a draft presented to them. I suspect ALEC model legislation.

  5. The ALEC Budget Plan kit says it all. And, the fact that Kasich was a founding member of ALEC says even more.

  6. Anyone who believes that ALEC has not been involved in Ohio Legislation or similar legislation in other states isn’t paying attention. ALEC has a library of template legislation available to conservative lawmakers on a whole host of topics. It’s no coincidence that waves of similar legislation just happen to appear at the same time across the nation. I first noticed it with the rush of tort reform that happened years ago across the country.

    Seitz is parsing his words. Certainly, the Ohio version of SB 5 wasn’t lifted word-for-word from any ALEC sample legislation, but the basic tenants are there. The same holds with similar legislation in every other state that is out to bust public employee unions.

    This Kasich group is dangerous and without regard to the ong-term consequences of what they do. Kasich is giving away the store to the private sector.

  7. Ok, now let me see. Kasich and his lords in waiting take our jobs and deliver them to whoever they please. Maybe to the low bidders in other countries? Does this mean the Internal Revenue Service is out the money it could collect if the jobs stayed in Ohio where they belong? And does it mean Ohio also loses the tax revenue it would collect if the jobs stayed in Ohio where they belonged? And so on….and so on…and so on….I understand who is making money here, but somehow I think the government got that wrong end of the stick?

    • Yes. This means they can outsource every state service they choose and yes it means that both jobs and tax revenue from those jobs will be leaving the state.

  8. No different than Obama’s Czars…. What’s the big deal?

    • Obama’s advisors do not have any power to sell U.S. assets to any foreign country or sweatshop operator they please. So…it’s quite different. And you know it.

  9. Where is the Cleveland Plain Dealer and why are they missing something that should be front page news and the subject of an investigational series. They had better do it before Kasich sells the State Highway Patrol to Blackkwater.

    • Alnaazaam-iaformktion found, problem solved, thanks!

    • Pittsburg Bart to Oakland xth Street I see you every morning you get on the Bart at that Pleasanthill station, you get off from the downtown Oakland xrh street give up, you are about x’x”, brown hair, white guy, You always have on a Black P Layer, with jeans, a Blue Northface bag! You always go up the escalator in front of me, and we exchange eyes, if you read this you realize who you are single women looking for sex ! 3 minute dating

    • Wie gesagt habe ich die Avengers noch nicht gesehen und kann daher nicht sagen ob er sich gebessert hat, aber bei Thor fand ich ihn irgendwie absolut Lame und nicht überzeugend.. Könnte aber auch am Charakter gelegen haben den er gespielt hat..

    • “and delivers lyrics with simple substance”My dude , when you’re right, you’re right. However I think this was an attempt to be introspective but it kinda just fails. I don’t get the idea of simplifying your substances because the tempo is slow. But where he loses me, is him trying to fool me into thinking that he’s saying something deep.“I walk up in the world and turn the lights off, and confidence is a stain you can’t wipe off”….What? But hey it may have just not been for the kid

    • Which came first, the problem or the solution? Luckily it doesn’t matter.

  10. I really like looking through a post that will make men and women think.

    Also, many thanks for permitting me to comment!


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  3. The power-grab continues. Today’s chapter: Lottery | Ohio Budget Watch
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  5. 100 Days: Kasich introduces a “Jobs” Budget that will cost Ohio over 50,000 jobs
  6. Private prisons: local governments win some and lose some | Ohio Budget Watch
  7. Democrats offer ideas to fix the state budget | Ohio Budget Watch

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