The state budget is complex and made up of multiple funds, sometimes referred to as “silos” or “buckets.” While watching your tax dollars, I concentrate mostly on the state portion of the General Revenue Fund (GRF). The GRF revenues come from the sales tax, income tax, tobacco tax, alcohol tax, Commercial Activities Tax (CAT) and more.

If you were to examine the growth of GRF state spending since Governor Kasich took office and beginning with his first budget in Fiscal Year (FY) 2012, you would find that the General Assembly has been spending your money at triple the inflation rate. While the inflation rate for 2014 was only 1.6 percent, the governor's proposal is to increase the rate of spending by 4.2 percent in FY 2016 and another 4.0 percent on top of that for FY 2017. If we were to "correct" the FY 2016 proposal and reduce spending to where we could be (if we had only spent at the inflation rate using FY 2011 as a baseline), the FY 2016 proposal should be, in theory, reduced by $3.5 billion and another $4.1 billion for FY 2017.

That alone would eliminate most of the state income tax. If all of that isn't bad enough, I have reason to believe that it is worse than the numbers show. That's because FY 2015 won't be complete until June 30, 2015. The current estimated FY 2015 spending appears to be inflated because it includes actual expenditures plus appropriations. If the estimate is correct, FY 2015 spending will be higher than FY 2014 actuals by 5.7 percent. I think it's too high. Therefore, the governor's FY 2016 proposed increase might work out to be significantly greater than 4.2 percent. I believe that is far too much of the taxpayers’ dollars.

The Anal Analysis (The Rest of the Story)

If you were to do a granular analysis of each of the 500 or so line items of the GRF, you would find that much of the spending supposedly can’t be cut. For example, there are eight line items for "debt service." FY 2016 shows $1.03 billion and another $1.08 billion for FY 2017. Additionally, there's about $300 million in each fiscal year for "lease bond payments" and "lease rental payments."

What about Medicaid?

About $5.5 billion are state dollars, with $13 billion more coming from the federal government. If we were to eliminate Medicaid expansion and reduce spending to federal minimums, we would save $406 million in FY 2016 and another $563 million in FY 2017. The state portion of the expansion is $120 million in FY 2017. That number will grow dramatically in future years.

The Bottom Line

Per the above discussion, debt service and Medicaid can’t be adjusted for inflation. Therefore, using 2011 (the year Governor Kasich took office) as a baseline and adjusting the remaining line items for inflation, the governor's budget proposal could theoretically be reduced by $1.5 billion in FY 2016 and $1.8 billion in FY 2017. That's enough money to eliminate the Commercial Activities Tax (CAT).

If you want some additional heartburn, consider the fact that Governor Kasich's "All Funds" budget proposal for FY 2016 is 13.6 percent greater than FY 2014 actuals and that the 2014 inflation rate was only 1.6 percent. That's more than quadruple the annual inflation rate.

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John Becker Sworn In As State Representative Of The 65th House District


State Representative John Becker (R-Union Township – Clermont Co.) yesterday was sworn in as a member of the Ohio House of Representatives for the 130th General Assembly. He represents the 65th Ohio House District, which includes portions of northwest Clermont County.