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State of State doesn't solve Ohio budget mystery

By JULIE CARR SMYTH

AP Statehouse Correspondent

 

POSTED: 07:33 a.m. EST, Mar 09, 2011

 

COLUMBUS, Ohio (AP) — Gov. John Kasich gave one of the longest State of the State addresses in recent memory, yet he provided few specifics as to how he's going to fill a historic $8 billion budget gap.

 

Kasich, a Republican who took office in January, said he will preserve an income tax cut that went into effect in January — a decision that will require his budgeteers to find or cut another $850 million. And he will not be relying on federal stimulus dollars and other one-time money responsible for much of the hole in the two-year, $50.5 billion budget.

 

Kasich indicated Tuesday, as he had for weeks, that the program changes he's preparing to announce will be bold — perhaps involving consolidation of agency functions, privatization of government services and cost savings through new ways of looking at problems.

 

He expressed support for policies that keep more seniors in their homes, give parents more education options, keep as many citizens as is practical out of prison and offer early government intervention in areas where it's cost effective.

 

Read more at: http://www.ohio.com/news/break_news/117639524.html

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So Kasich wants people not imprisoned for petty crimes (which I agree with), yet he wants to throw public workers who strike in jail? 

 

 

Apparently

State of State doesn't solve Ohio budget mystery

Kasich said providing prenatal care for low-income pregnant mothers could save Ohio money in the long run. Care for a very low birth weight infant costs $70,000 on average, compared with $2,000 for a healthy baby, said Greg Moody, director of the Governor's Office of Health Transformation.

 

Read more at: http://www.ohio.com/news/break_news/117639524.html

A very significant part of the Medicaid budget is for "low birth weight" babies.  So the government could and should fund prenatal health care for Ohio's poor expecting mothers.  That will be a difficult concept for the Republicans to accept. 

 

Like Steven Colbert said, the government should fund:

(1) National defense, and

(2) Nothing else

State of State doesn't solve Ohio budget mystery

Kasich said providing prenatal care for low-income pregnant mothers could save Ohio money in the long run. Care for a very low birth weight infant costs $70,000 on average, compared with $2,000 for a healthy baby, said Greg Moody, director of the Governor's Office of Health Transformation.

 

Read more at: http://www.ohio.com/news/break_news/117639524.html

A very significant part of the Medicaid budget is for "low birth weight" babies.  So the government could and should fund prenatal health care for Ohio's poor expecting mothers.  That will be a difficult concept for the Republicans to accept. 

 

Like Steven Colbert said, the government should fund:

(1) National defense, and

(2) Nothing else

 

To be fair, that's not to say that other things shouldn't be privately funded.  More government simply is not the answer to all of our problems. With less government support, you can find who is truly moral and not just a hypocrite.

How do you privately fund prenatal health care for poor people?  Charity?  $70,000 in charity for every mom-to-be?

How do you privately fund prenatal health care for poor people?  Charity?  $70,000 in charity for every mom-to-be?

 

Hey there Boreas!

 

That money that currently goes toward those in need isn't just created by the government (well, it is minted by....) it's taken by threat of imprisonment from you and I.

 

If we were allowed the freedom to allocate our tax dollars, I have faith in the American people that those who truly need the money will be helped. And not only that, you would see much less money toward using our military to fund foreign invasions. Not only that, but if taxes were cut or abolished, I still don't think anyone would starve in America. Too many good people honestly care about these things.

 

Anyhow, that's how life is in my libertarian, anarcho-capitalist utopia! I invite you to live there.

Americans are not very charitable, whether Republican or Democrat.

How do you privately fund prenatal health care for poor people?  Charity?  $70,000 in charity for every mom-to-be?

 

Since when do accidents of nature entitle one to $70,000 in free money at the expense of one's neighbors?

I have my opinion, and an indisputable source, Wikipedia, on my side!

 

http://en.wikipedia.org/wiki/List_of_most_charitable_countries

 

Americans are not very charitable, whether Republican or Democrat.

 

If you look only at the first set of data, yes the USA donates the most in total money.  However, if you look at per-capita donations, we suck.  It only takes a few philanthropic billionaires to skew the total numbers, but as a people, no, we're not very charitable.

I have my opinion, and an indisputable source, Wikipedia, on my side!

 

http://en.wikipedia.org/wiki/List_of_most_charitable_countries

 

Americans are not very charitable, whether Republican or Democrat.

 

If you look only at the first set of data, yes the USA donates the most in total money.  However, if you look at per-capita donations, we suck.  It only takes a few philanthropic billionaires to skew the total numbers, but as a people, no, we're not very charitable.

 

correct. our per capita numbers for haiti donations were horrific.

Wikipedia : $28.67 billion divided by 300 million Americans is not very impressive.  Even $28.67 billion divided by 100 million middle class and upper class Americans who can afford charity is only $287 dollars/donor.  Cheapskate America.  There was a time when hospitals were operated as charity hospitals by the major religions.  That would be grand, but I am skeptical.

 

Since when do accidents of nature entitle one to $70,000 in free money at the expense of one's neighbors?

Hey, don't look at me, I didn't get any chick pregnant! 

 

I could not imagine starting a family if I didn't have enough money to clothe a child and enough of a career to fund an education.  But I am not like a lot of parents.  Some people just have children and let them grow up like weeds.  They don't even help them with their homework.    Disgusting.

Wikipedia : $28.67 billion divided by 300 million Americans is not very impressive.  Even $28.67 billion divided by 100 million middle class and upper class Americans who can afford charity is only $287 dollars/donor.  Cheapskate America.  There was a time when hospitals were operated as charity hospitals by the major religions.  That would be grand, but I am skeptical.

 

Read it again.  That stat takes into account only giving by the "official sector," e.g., the government.  Private giving is where America really shines.

 

From 2005: http://www.america.gov/st/washfile-english/2005/February/200502181639511CJsamohT5.593508e-02.html

 

 

The 70 percent of American households that make charitable contributions give, on average, $1,800 dollars per year, or 3.5 percent of their income. This amounts to about $180 billion dollars. When contributions from foundations, bequests and corporations are added, total charitable contributions in the United States amount to over $240 billion.

 

Only about one-third of this giving is to religious institutions.

 

For another look, from 2008:  http://www.forbes.com/2008/12/24/america-philanthropy-income-oped-cx_ee_1226eaves.html.  (Despite the Forbes link, that article is not just unadulterated upper-class boosterism, either.)

^And much of that charity is effectively subsidized by government through tax deductions, so even "official sector" numbers are much higher than normally reported.  But we digress.

But we digress.

 

Official UO motto. 8-) ;-)

^And much of that charity is effectively subsidized by government through tax deductions, so even "official sector" numbers are much higher than normally reported.  But we digress.

 

And not only that, but much of private "giving" is towards organizations wealthy people have a personal interest in, like the Art Museum or the Orchestra, not the homeless or low-income single mothers.

State of State doesn't solve Ohio budget mystery

Kasich said providing prenatal care for low-income pregnant mothers could save Ohio money in the long run. Care for a very low birth weight infant costs $70,000 on average, compared with $2,000 for a healthy baby, said Greg Moody, director of the Governor's Office of Health Transformation.

 

Read more at: http://www.ohio.com/news/break_news/117639524.html

A very significant part of the Medicaid budget is for "low birth weight" babies.  So the government could and should fund prenatal health care for Ohio's poor expecting mothers.  That will be a difficult concept for the Republicans to accept. 

 

Like Steven Colbert said, the government should fund:

(1) National defense, and

(2) Nothing else

 

To be fair, that's not to say that other things shouldn't be privately funded.  More government simply is not the answer to all of our problems. With less government support, you can find who is truly moral and not just a hypocrite.

 

Considering the deficiency in private nonprofit funding for this problem, and other poverty issues, don't we already know the answer to that question?

To be fair, that's not to say that other things shouldn't be privately funded.  More government simply is not the answer to all of our problems. With less government support, you can find who is truly moral and not just a hypocrite.

 

Just as God intended.

How do you privately fund prenatal health care for poor people?  Charity?  $70,000 in charity for every mom-to-be?

don't forget, that charity (or free healthcare) is only for certain things that the provider agrees with.

How do you privately fund prenatal health care for poor people?  Charity?  $70,000 in charity for every mom-to-be?

don't forget, that charity (or free healthcare) is only for certain things that the provider agrees with.

 

Which is somehow clearly an argument for using the coercive power of the state to take more than people would ever give to fund things that they'd never fund?

^They do it to me every year with the military budget and other spending that I personally don't agree with.

State of State doesn't solve Ohio budget mystery

Kasich said providing prenatal care for low-income pregnant mothers could save Ohio money in the long run. Care for a very low birth weight infant costs $70,000 on average, compared with $2,000 for a healthy baby, said Greg Moody, director of the Governor's Office of Health Transformation.

 

Read more at: http://www.ohio.com/news/break_news/117639524.html

A very significant part of the Medicaid budget is for "low birth weight" babies.  So the government could and should fund prenatal health care for Ohio's poor expecting mothers.  That will be a difficult concept for the Republicans to accept. 

 

Like Steven Colbert said, the government should fund:

(1) National defense, and

(2) Nothing else

 

To be fair, that's not to say that other things shouldn't be privately funded.  More government simply is not the answer to all of our problems. With less government support, you can find who is truly moral and not just a hypocrite.

 

Considering the deficiency in private nonprofit funding for this problem, and other poverty issues, don't we already know the answer to that question?

 

Well one can argue that an answer could arise from:

 

1. current government based framework is inefficient and consuming too many tax dollars, thus leading to less money available.

 

2. we've been so conditioned that it's government's job to save people, so less charity is given via private means as a result.

 

As for the poverty issues as a whole, hmmm, you bring up a good point. I believe the issues go far deeper than anything that can be alleviated by simply allocating more money.

 

But again, I contend that with our backs against the wall, the vast majority of Americans will respond to the needs of our people. In my opinion, we can help out far more creatively and allocate our money far more effectively than the government can. 

 

Again, that's my opinion and you're welcome to feel differently.

"We" are the government.  This still is America.... last time I checked, at least.  I think you meant to say that "I" can help out far more creatively and allocate "my" money far more effectively than "we can collectively"..... which may very well be true for many people.

"We" are the government.  This still is America.... last time I checked, at least.  I think you meant to say that "I" can help out far more creatively and allocate "my" money far more effectively than "we can collectively"..... which may very well be true for many people.

 

Well, right. Though we may disagree on just how far removed we are from the government elites in control. My belief is that we need to "de-fund" them.

 

When others feel as "I" do, and wish to channel money to a cause, it becomes "we."

 

 

"We" are the world.

-Michael Jackson

We elect these so-called "elites".... a term I don't find troubling at all really.  Not sure how the word "elite" became so dirty within the conservative circles.  The Founding Fathers were elites, no?  Should our elected LEADERS not be elite?

 

But the bottom line is that we live in a society.  Good luck finding one that you agree with 100% of the time.  There will always be causes WE as a society decide to take on that you won't agree with.  I know there are plenty of wealth transfers right out of my pocket which I could live without, but I accept the collective wisdom of our society and our time-tested system as a constitutional republic. 

The main problem with so many people today is that they don't want any government program they don't benefit from, but they don't mind the ones they do.  Obviously, not everybody will end up happy this way.

 

The idea of government funding is that there are certain things which need to be funded that are important enough that the whole of society should support them rather than individuals who deem those things important.  Determining what things are important enough to be funded this way is what we argue about.  Arguing that everything should be funded through private donations is (IMO) naive and unrealistic.

We elect these so-called "elites".... a term I don't find troubling at all really.  Not sure how the word "elite" became so dirty within the conservative circles.  The Founding Fathers were elites, no?  Should our elected LEADERS not be elite?

 

But the bottom line is that we live in a society.  Good luck finding one that you agree with 100% of the time.  There will always be causes WE as a society decide to take on that you won't agree with.  I know there are plenty of wealth transfers right out of my pocket which I could live without, but I accept the collective wisdom of our society and our time-tested system as a constitutional republic. 

 

Our ideology is on two different planets lol.

 

I'm glad you brought up the constitution though, my spider senses honed at Akron Law tell me that special interests are pushing our military into world affairs well beyond what was intended under the constitution.

 

I'm sure we could have very good discussion of this over several beers....when's the next happy hour!

 

 

Hi Jeff. I believe it's unrealistic and naive to continue on with the status quo and expect positive results.

 

But to be honest, I never meant to say that "everything" should be privately funded. Just most things.

 

http://news.cincinnati.com/article/20110314/NEWS0108/303140054

 

Ohio Poll: Kasich approval at 40 percent

 

A new Ohio Poll finds 40 percent of Ohio adults approve of John Kasich’s performance as governor.

 

According to the poll, released Monday, 47 percent disapprove of his performance as governor and 13 percent neither approve nor disapprove.

• Politics Extra blog

 

The poll was released the day before Kasich is scheduled to release details of his two-year budget plan. The state faces an $8 billion deficit.

 

The poll also asked Ohioans how they would fix the budget problems.

 

Fifty-three percent say they would like to see Ohio's budget balanced through “a combination of tax increases and state spending reductions,” 35 percent would like to see the budget balanced through “reductions in state spending on programs and services,” 6 percent would like to see “state tax increases” and 6 percent “don’t know.”

 

The Ohio Poll was conducted by the Institute for Policy Research at the University of Cincinnati between March 1 and March 9.

 

A random sample of 908 adults was interviewed by telephone. The margin of error is plus or minus 3.3 percentage points.

 

This story will be updated.

 

I talked to alot of people this weekend and I think there are just as many voters who are ready to see public unions dialed back, as there are disgruntled union people.  Of course the pro-union folks are the ones making all the noise and getting all the headlines.  Let SB 5 pass, let the referendum proceed to get a constitutional amendment protecting collective bargaining, let Kasich privatize everything, let the chips fall where they may.

I'm curious if any of the folks who thought Kasich was going to reign in wasteful spending are pleased with him authorizing giving Bob Evans $8 million in incentives to move from Columbus to New Albany.  That's $8 million dollars in foregone state revenue (revenue that comes from the entire state) so that New Albany can benefit, while of course, Columbus loses the equivalent of what New Albany gains (and arguable there is a total net loss if taxes in Columbus are higher than in New Albany).

 

So let me just repeat: The State of Ohio is foregoing $8 million in revenue.  Costs remain the same for the City of Columbus and they lose a corporate headquarters.  New Albany gains a corporate headquarters (to be conservative lets assume no new infrastructure costs increase in New Albany as a result of the move).  This is saving us money, paying companies to shift around the state?

 

It's also interesting that the state is forbidding municipal corporations from engaging with unions for collective bargaining purposes, according to Kasich because this results in increased spending.  But Kasich is not forbidding municipal corporations from offering tax incentives for businesses, even though results in decreased revenue.  He also hasn't frozen all new infrastructure spending, which of course places indefinite future burdens on local governments (and the state), he's merely cancelled projects he doesn't like.  There's really no reason to think that Kasich is doing anything that will actually save the state any money whatsoever, particularly since the contracts and benefits he points to as being an intolerable burden still exist and will be litigated in unilaterally cut.

I talked to alot of people this weekend and I think there are just as many voters who are ready to see public unions dialed back, as there are disgruntled union people.  Of course the pro-union folks are the ones making all the noise and getting all the headlines.  Let SB 5 pass, let the referendum proceed to get a constitutional amendment protecting collective bargaining, let Kasich privatize everything, let the chips fall where they may.

 

Public opinion polling is more supportive of the unions than the sampling of your inner circle.  It also depends on how you asked the question, because 'dialing back' and SB5 are not the same.  Like I said before, most of the unions would have conceded that the coll barg act could use some reform.  And, of course, the cips will fall as they may.  They always do.

You're discussing economic development plans and collective bargaining with the unions.  Are the two related?  Show me somewhere that public unions have a positive impact on economic development. 

 

The Bob Evans deal certainly sounds lame, but I'd be willing to bet there's alot more to the story than what you've indicated.  If the $8 million is spread out of a period of years, and has strings attached in terms of reinvestment (building a new office perhaps) & increased employment, it might be a very good deal.

 

Also, your statement that offering tax incentives for businesses results in decreased revenue is way too broad to be accurate.  And why would Kasich freeze infrastructure spending?  Our infrastructure is one of the greatest assets the state has and is one of the main things we need to build upon to be more competitive.

I'm curious if any of the folks who thought Kasich was going to reign in wasteful spending are pleased with him authorizing giving Bob Evans $8 million in incentives to move from Columbus to New Albany.  That's $8 million dollars in foregone state revenue (revenue that comes from the entire state) so that New Albany can benefit, while of course, Columbus loses the equivalent of what New Albany gains (and arguable there is a total net loss if taxes in Columbus are higher than in New Albany).

 

So let me just repeat: The State of Ohio is foregoing $8 million in revenue.  Costs remain the same for the City of Columbus and they lose a corporate headquarters.  New Albany gains a corporate headquarters (to be conservative lets assume no new infrastructure costs increase in New Albany as a result of the move).  This is saving us money, paying companies to shift around the state?

 

It's also interesting that the state is forbidding municipal corporations from engaging with unions for collective bargaining purposes, according to Kasich because this results in increased spending.  But Kasich is not forbidding municipal corporations from offering tax incentives for businesses, even though results in decreased revenue.  He also hasn't frozen all new infrastructure spending, which of course places indefinite future burdens on local governments (and the state), he's merely cancelled projects he doesn't like.  There's really no reason to think that Kasich is doing anything that will actually save the state any money whatsoever, particularly since the contracts and benefits he points to as being an intolerable burden still exist and will be litigated in unilaterally cut.

 

Everyone knew when they voted for Kasich that they were unleashing the biggest corporate welfare revolution in state history. Ohioans don't want to lose more corporate HQ's since those are the best jobs. Kasich won because of the NCR thing where Strickland was made to look like a bad guy in the media. "He didn't see it coming! He didn't do enough to stop it!" Under John Kasich, that will never happen again. Companies will get whatever they want (and then some).

 

You're discussing economic development plans and collective bargaining with the unions.  Are the two related?  Show me somewhere that public unions have a positive impact on economic development.

 

Fair point.

 

The Bob Evans deal certainly sounds lame, but I'd be willing to bet there's alot more to the story than what you've indicated.  If the $8 million is spread out of a period of years, and has strings attached in terms of reinvestment (building a new office perhaps) & increased employment, it might be a very good deal.

 

The problem with corporate welfare is that it's horribly unfair. It punishes all the good, loyal companies who don't go begging for handouts. It creates an unfair playing field, and in the case of this Bob Evans deal (and most other corporate welfare), it plays a substantial role in the suburban sprawl disaster we have in Ohio. It's par for course now in Ohio for companies to threaten to leave, get huge incentives from taxpayers, and then move to the suburbs. This didn't start with Kasich, and it won't end with Kasich. It's just likely to heat up.

Corporate welfare isn't always as bad as it may seem to be.  Sometimes a market has changed enough that a new location closer to customers or shipping routes is necessary to remain competitive.  However, if a company is on it's last dime and no longer competitive, and the govt can't do something that will make it competitive again, which a tax break won't, then I don't think it is typically given.  There are some very highly educated and skilled people advising the state on the matter.  These people know that corporate tax breaks can be like Pandora's box and they'll be judged by the performance of the company after the subsidy has been given.  The instance of Hugo Boss comes to mind.  Dennis Kucinich raced in to save them, but any business person who studied that company and their plan would agree that they should not be in Cleveland. 

 

And corporate welfare is not really what created suburban sprawl.  Bad policies at ODOT which added more interstate ramps and widened 2-lane highways into the mess which is now Brunswick/Avon/Mentor etc created suburban sprawl

You're discussing economic development plans and collective bargaining with the unions.  Are the two related?  Show me somewhere that public unions have a positive impact on economic development.

No, I'm simply talking about state expenditure.

 

The Bob Evans deal certainly sounds lame, but I'd be willing to bet there's alot more to the story than what you've indicated.

What leads you to assume this?

 

If the $8 million is spread out of a period of years, and has strings attached in terms of reinvestment (building a new office perhaps) & increased employment, it might be a very good deal.

If the deal leads to anything less the state receiving anything less that the $8 million in foregone taxes, it is by definition a bad deal to pay $8 million to move an office within the state.

 

If we assume Bob Evans moves to a pre-existing office building, given that there are high office vacancy rates in the three major Ohio metros, the state paying for an office to move from one of those metros to another confers no general benefit to the state.

 

If we assume Bob Evans moves to a new building, we must add to the existing infrastructure (sewers, roads, etc.) and therefore the cost of that to the $8 million given away.  We should also amortize the cost of maintaining that new infrastructure over whatever period would be appropriate to the $8 million give away.  Assuming that new infrastructure will be maintained indefinitely, that adds to the cost.

 

Also, your statement that offering tax incentives for businesses results in decreased revenue is way too broad to be accurate.

Clearly tax incentives decrease government revenue, that's why they are incentives, because people pay less.  Typically local govs try to entice businesses to locate within their boundaries by foregoing property taxes (which the business, because it owns the land, pays) in order to get the payroll taxes (which the employees pay).

 

But that is a municipality.  New Albany benefits when a business moves there from Columbus, since the sets of New Albany and Columbus are mutually exclusive.  The sets of Cleveland and Cuyahoga County are not mutually exclusive- something that benefits Cleveland would benefit Cuyahoga County, since Cleveland is totally within the set of Cuyahoga County, but the reverse is not always true (though it is often true).

 

However both New Albany and Columbus are within Ohio.  So if Bob Evans moves from one city to another, it doesn't change anything for the State.  Except we've apparently foregone $8 million in tax revenue for it.

 

And why would Kasich freeze infrastructure spending?  Our infrastructure is one of the greatest assets the state has and is one of the main things we need to build upon to be more competitive.

Perhaps the fact that I said new infrastructure spending instead of spending on new infrastructure was confusing.  (Theoretically) Kasich is arguing that collective bargaining increases the cost of labor for the state and municipalities, and that these costs are nigh perpetual.  The same is true for spending on new infrastructure.  Replacing an old bridge with a new bridge isn't new infrastructure in the same way that expanding a counties road system may be.  In this case adding to the infrastructure network rather than densifying the existing net work would be far less efficient.  This is an opportunity Kasich could pursue, but doesn't seem to be.

Studies have shown that the presence of a union leads to higher wages at both union and nonunion shops.  Higher wages means greater tax receipts for the state.  Higher wages for workers at the lower end of the wage scale means more spending, since the lowest-paid workers generally save very little of their income.  Union deals generally include a provision for subsidized healthcare for their workers.  That saves all of us, since the alternative is that the workers would use emergency rooms more, which is the most expensive form of healthcare and its cost is spread around to taxpayers and those who are covered by insurance.  Through all of this, and more, unions greatly increased the size of the middle class.  Isn't that economic development?

 

We will find out, however, as there are fewer and fewer union jobs and more and more non-union, part-time, minimum-wage jobs without benefits for people without a college education. 

 

Some unions are good and others aren't, but eliminating collective bargaining isn't going to make the bad unions better and destroys the good unions.  I also don't see how it will make government run better to prevent the fire department from bargaining for their benefits as a group.

Finally!  The real meat and potatoes stuff.

 

Snippets and comments:

 

The five prisons that would be privatized include two that are publicly-owned, two privately-run facilities and one that is vacant. The facilities -- which would be sold for an estimated $200 million -- are the Lake Erie Correctional Institute in Conneaut, the North Coast Correctional Treatment facility in Grafton, the Grafton Correctional Institution, the North Central Correctional Institution in Marion and the Marion Juvenile Correctional facility, according to the administration source. The Marion juvenile facility is currently vacant.

 

Meh.  As a general rule, I'm not that big a fan of prison privatization--it's a core government function, and privatization seldom does good things for transparency.  That said, if two are privately-run already and a third is vacant, we're probably actually not talking about as big a deal here as I first thought when I first heard the rumor reported.

 

Management & Training Corporation, a Utah-based private company, currently runs the Lake Erie Correctional Institute and North Coast Correctional Treatment.

 

What a strange name for a prison operator ...

 

Kasich's budget plans also include sentencing reform that sends short-timers to community-based corrections programs instead of prison.

 

Good.

 

The plan for the Ohio Turnpike would involve a longterm lease to a private vendor. Kasich in February told the Ohio Newspaper Association that he'd like to get $3 billion for leasing out the turnpike, which he called an under-utilized state asset. The turnpike installed a new automated tolling system known as E-Z Pass in October 2009 and at the same time raised tolls. Those moves led to an Ohio Turnpike record $236 million in collections last year.

 

So about 12.7 times revenue.  Hmm.  Does anyone have any information on just how long a lease we're talking about here?

 

I used to be firmly opposed to infrastructure privatization, but I'm more comfortable with it today than I've been in the past.  Indeed, many people have noted that private ownership of infrastructure would in most cases lead to a lot less overbuilding.  Still, I have a lot of doubts, especially because I have a certain skepticism of the ability of the state government to actually allocate the $3 billion one-time infusion into things that will actually deliver positive returns over the course of the years that the turnpike would remain leased.

My guess is the $3 billion payout would be a lump sum amount at a discount to the leasee (think 15 to 20 year lease) to offset the $8 billion deficit in Ohio's current budget.

The plan for the Ohio Turnpike would involve a longterm lease to a private vendor. Kasich in February told the Ohio Newspaper Association that he'd like to get $3 billion for leasing out the turnpike, which he called an under-utilized state asset. The turnpike installed a new automated tolling system known as E-Z Pass in October 2009 and at the same time raised tolls. Those moves led to an Ohio Turnpike record $236 million in collections last year.

 

So about 12.7 times revenue.  Hmm.  Does anyone have any information on just how long a lease we're talking about here?

What should we consider a good return, and what should we consider to be a good lease period?

 

I'm having trouble finding this information, but I think the Cincinnati Southern Railroad is leased to Norfolk Southern on a 25 year basis, with options to renew at variable terms, for around $20 million per year.

 

It seems to me that a shorter lease is preferable to a 99 year lease.  They say the Indiana Toll Road Lease has been successful.  Details as best as I could find here:

http://www.roadsbridges.com/Indiana-Toll-Road-lease-approved-NewsPiece11150

 

It seems to me that you'd want to trade silly restrictions like "no tolling to Indianapolis" (in our case the Ohio equivalent) and toll relief for shorter lease periods.  I think it would also make sense if the money went straight to the Treasury rather than be earmarked for specific payoffs (corridor counties, etc.  They arguably benefit already simply because the road has been located there).

 

I used to be firmly opposed to infrastructure privatization, but I'm more comfortable with it today than I've been in the past.  Indeed, many people have noted that private ownership of infrastructure would in most cases lead to a lot less overbuilding.  Still, I have a lot of doubts, especially because I have a certain skepticism of the ability of the state government to actually allocate the $3 billion one-time infusion into things that will actually deliver positive returns over the course of the years that the turnpike would remain leased.

To be fair to future administrations (and the people of Ohio, frankly) let's hope the payment isn't an upfront lump sum.

 

Just found something on the Cincinnati Southern lease:

http://www.cincinnatisouthernrailway.org/about/

"In 1987, the City renegotiated the terms of the lease for more favorable annual income. From 2003 to 2008, the Southern Railway Note Proceeds totaled $95.5 million. "

>private ownership of infrastructure would in most cases lead to a lot less overbuilding

 

If the federal government had never enacted a gasoline tax, the states would have eventually built turnpike networks, but would not have built them directly through the cities because it would have been too expensive.  Our cities would be in much better physical condition, people would have spent far less of their income on transportation, and we'd have fewer fat people. 

 

>I'm having trouble finding this information, but I think the Cincinnati Southern Railroad is leased to Norfolk Southern on a 25 year basis, with options to renew at variable terms, for around $20 million per year.

 

That is pretty much spot-on.  We didn't start getting a significant amount of money until the late 1980's, after the city sued Norfolk-Southern.  There was a lump payment of about $8 million, which helped pay for some of the Bicentennial stuff, and the annual income increased from under $5 million to over $10 million. 

 

Funny thing -- talk radio guys always bark about how government should be run more like a business but hate when states pocket excess toll revenue. 

 

 

 

 

 

...

If the federal government had never enacted a gasoline tax, the states would have eventually built turnpike networks, but would not have built them directly through the cities because it would have been too expensive.  Our cities would be in much better physical condition, people would have spent far less of their income on transportation, and we'd have fewer fat people. 

That was insightful.

This should be interesting...

 

Kasich administration source says five prisons to be sold in next state budget, turnpike leased

 

http://www.cleveland.com/open/index.ssf/2011/03/kasich_administration_source_s.html

It's pretty clear that Kasich will use the prison sale as one time money to help balance this years budget.  Since we will still be paying to house prisoners, I'm not sure what other options we are going to have other than to use these guys in the future, so this is starting to look like a pretty terrible deal.

Keep in mind that the summary you posted was drafted by the sponsors of SB5.  But, except a few parts, it seems relatively forthcoming about the Bill's provisions, many of which are indeed common sense reform.

 

My biggest gripe with the Bill is the extreme anti-libertarian slant it has.  It prohibits, then prohibits, then prohibits again.  Anybody who supports this Bill and claims to believe in libertarian principles is either a hypocrite or just plain dumb.

My biggest gripe with the Bill is the extreme anti-libertarian slant it has.  It prohibits, then prohibits, then prohibits again.  Anybody who supports this Bill and claims to believe in libertarian principles is either a hypocrite or just plain dumb.

 

I think you misunderstand libertarianism here.  There are some non-libertarian points in there, but in most respects, it's not an affront to libertarianism, particularly because most of the prohibitions are restrictions on the terms local governments can accept in contract negotiations.  Since local governments are extensions of the state government (regardless of how autonomously they function), this is not significantly different from establishing certain terms that the state itself cannot legally accept--a form of government self-restraint that is salutary and completely in keeping with libertarian principles.

 

Restrictions on government are far less offensive to libertarian principles than the same exact restrictions would be if imposed on contracts between any two private persons ("persons" in the legal sense here).  Libertarianism, like most political-economic schools of thought, recognizes that governments are unique animals.

I disagree.  The concept of local self rule in our state constitution alters the analysis significantly.  This is the big, bad state imposing its 'wisdom' on the people of any given community.  Don't impose your Norwalk values on the City of Cleveland.... if you catch my drift.

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