COMMENTARY: Ohio election shows power of government to vote itself money

Thursday, November 10th, 2011

By Frank Keegan – Every Ohio household should write a check for $76,000 today just to pay unfunded pension benefits for government workers betrayed by politicians and union bosses who made them promises taxpayers now must keep.

By Frank Keegan – Every Ohio household should write a check for $76,000 today just to pay unfunded pension benefits for government workers betrayed by politicians and union bosses who made them promises taxpayers now must keep.

That is the bottom line from Tuesday’s vote on Issue 2, which among other things eliminated workers paying 10 percent toward their pensions, which are short at least $190 million by even the most optimistic estimates.

Another calculation that is not so optimistic proves the average Ohio household must pay at least $2,541 a year in additional taxes every year for 30 years to make up public pension shortfalls if there is no reform. Ohio is the second worst state in the nation, right behind New Jersey.
 
Did anybody bother to tell voters that fact before they overturned a new law intended to pull Ohio a little back from inevitable fiscal collapse?
 
That fact probably would not have made any difference, because more than 650,000 work for state and local governments. They equal 82 percent of the victory margin for Issue 2.
 
It won with more than 2.1 million of the 3.5 million votes cast against about 1.3 million citizens who did not want to see themselves and their state crushed under insurmountable debt.
 
The 10 percent pension contribution by workers overturned Tuesday would have made only a small dent in part of the hidden Ohio debt, but at least it would have been a start.
 
Issue 2 also involved provisions that would have saved taxpayers without even touching basic collective bargaining rights guaranteed by federal laws and regulations.
 
But the election was stacked against taxpayers from the start.
 
As of Jan. 1, Ohio lost more than 516,000 private sector jobs since 2001, according to the Bureau of Labor Statistics. That is an 11 percent decline in the number of workers who pay for everybody else.
 
State government employment dropped only 896, or 0.68 percent, and municipal 11,056, or 2.1 percent. Ohio’s population went up only 1.6 percent in the decade, compared to a 9.7 percent increase nationally.
 
And while total private wages increased 11 percent in that decade, falling behind inflation, state government wages increased 27 percent, and local 24 percent. Preliminary data for this year show the trend continuing.
 
Even though the voter turnout Tuesday is the highest in two decades for an off-year election, only about 41 percent of Ohio registered voters cast ballots on Issue 2.
 
That leaves 28 percent of the adult population inflicting fiscal bondage on all. When an overwhelming majority of those inflicting it have a direct, immediate vested interest in imposing the cost on everybody else, victory is assured at least until the economic bottom falls out of the state.
 
Then the 5 million Ohio residents who did not vote Tuesday will wake up.
 
Wake-up is inevitable nationwide.
 
Even if the Great Recession never had happened, state and local governments should have started cutting spending in 2009 equal to 12.3 percent a year every year through 2058, according to the Government Accountability Office.
 
Recession only made that worse. Economists still are trying to figure out how much worse.
Governments did not start cutting enough. They are not cutting now. They will not cut until it is too late.
 
Columnist Girard Miller calculated conservatively for Governing magazine earlier this year that, “Nationwide, if taxes are not increased, more than 1 million state and local government positions will evaporate through hiring freezes, attrition and early retirement plans in the coming decade,” merely from retiree costs. That is not going to happen when those facing cuts can outvote those forced by law to pay.
 
So, increase taxes?
 
According to the U.S. Government Revenue website, total direct revenues increased 16.7 percent in the decade. That includes 8.5 percent federal, 16.6 percent state and a 47.7 percent surge in how much local governments – which tax most those who can afford it least — take out of people’s pockets.
 
How long can they keep taxing 106 million who are falling behind to pay 22 million who are getting ahead? Tax the rich? Good luck, but they don't have enough money to pay the tab anyway.
 
What really terrifies is the fact that these numbers don’t even begin to show the true cost of government. Politicians hid and deferred costs for years.
 
We know about the federal deficit, social security, health care and other huge federal obligations politicians used to push tax increases onto future generations.
 
What we don’t know about are hidden state and local government debts that add up to at least $9.9 trillion as of 2008, according to GAO, and probably as high as $18 trillion on top of the estimated $2.9 trillion in official state and municipal debt estimates.
 
Politicians, union bosses and apologists for abysmal fiscal stewardship during the last decade base their reassurances that everything is OK on an assumption they can just keep raising taxes and fees forever.
 
That assumption — like the ones they use to calculate deceptive pension and retiree health care costs – is headed for a collision with economic reality, which always becomes political reality. Reality eventually wins, always.
 
If politicians do try to increase state and local taxes enough to pay the false promises, 106 million taxpayers will rise up and replace them with leaders who can do arithmetic.
 
Frank Keegan is a national editor for The Franklin Center for Government and Public Integrity, watchdog.org and statehousenewsonline.com . Any disgusted public employee, journalist, activist organization or citizen watchdog who wants help exposing government waste, fraud and abuse may contact him at: frank.keegan@franklincenterhq.org
For a comprehensive primer on state and municipal government pensions, check Statebudgetsolutions.org and sunshinereview.org . And for an aggregation of news from around the country, check Pensiontsunami.com . Comprehensive information on all state elections is at Ballotpedia.org .

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