Issue 2’s failure and the state budget


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Now that Issue 2 has failed and collective bargaining reform — championed by Governor Kasich — is dead, many are asking what it means for state and local budgets.

Local governments have been shrugging it off, planning to cope with reduced tax collections and Kasich budget cuts the same way they always have – by demanding concessions through the collective bargaining process, rationalizing services, and seeking additional revenue where the voters will support it. They aren’t bemoaning the failure of Issue 2, because they never believed it would be much of a tool. Check out these headlines:

One thing that was never made clear was what Issue 2′s defeat means for the state budget. The answer is: none. First, the widely advertised savings to come from requiring workers to pay 10% of their pension and 15% of their healthcare are unavailable at the state level – because state workers already pay that much. And provisions in the bill limiting automatic annual and experienced-based salary increases that the state says would save $190 million per year were not included in the budget’s savings estimates at all. That’s because none of those provisions of SB5 were included in the budget.

So while you will hear gloom and doom from the Kasich folks about how every local tax increase or layoff is a result of the failure to pass SB5 (see links to articles above – it’s not true), what you will not hear them say is that the state’s budget is about to be unbalanced as a result of the failure of Issue 2.

That may have been a tactical mistake. Kasich loved to threaten impending calamity during the campaign to pass Issue 2. His threats included Ohio sliding into recessionpensions systems failing and a state tax increasethe institution of card check by private unionslowering of the state’s credit rating and the exodus of our kids from Ohio. Most of these threats were not believable.

If instead, Kasich had included the provisions about state worker pay increases in the budget bill, it would have meant that the failure of Issue 2 could have been accurately claimed to have blown a hole (albeit a small one) in the state’s budget, giving him a bit of a mandate to find savings elsewhere when a new budget bill was required to fix the hole. Instead, the state currently sits on a small budget surplus, and anticipates additional revenue from soon-to-launch Video Lottery Terminals that hasn’t even been plugged into the budget yet. So any claims the Governor plans to make about fiscal shortfalls necessitating further austerity measures cannot be blamed on Issue 2.

But they have another shot at a rhetorical victory. Because Kasich and the GOP balanced the state budget without savings from SB5, and instead used massive cuts to local governments and schools, they will now attempt to claim that every time layoffs and tax increases occur at the local level, it’s the fault of the labor unions and the failure of Issue 2, and not because of the cuts contained in their budget.

The question now is — will local governments, school officials and organized labor be effective in communicating the real reason for their budget woes — the Kasich budget, and not public workers.

 

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