Ohio Hamstrung by More Job Losses as National Decay Won’t Go Away
ONB COLUMBUS: In the latest monthly economic health profile issued Thursday by the Ohio Department of Budget and Management, the grim impact a decaying national economy is having on Ohio was evidenced by job losses in February and a turn down in personal income, consumer spending and consumer confidence.
The backward-looking report revealed that the 13,500 jobs gained in January were nearly whipped out by the 11,600 jobs lost in March, and that the 12 months ending in February saw employment losses in manufacturing (-14,300), leisure and hospitality (-4,300) and financial services (-3,000) with job growth in health services (+14,500), trade, transportation and utilities (+3,600) and professional and business services (+3,500).
The report said employment in construction, mining and government was "little changed."
In view of the sobering report released this Tuesday by the Governor's Council of Economic Advisors, state leaders have been warned that more months of slow growth lay ahead, possibly into 2011, with more jobs to be lost, resulting in a higher unemployment rate.
DON'T GET IN OUR WAY IF YOU KNOW WHAT'S GOOD FOR YOU
This report will only give more ammunition to Ohio Gov. Ted Strickland and Republican lawmakers who have joined forces to pass a $1.57 billion jobs program they say will create 57,000 jobs in the future to fire at anyone who stands in the way of this effort moving forward. After so many years of losing so many jobs, political leaders are in no mood to suffer fools gladly.
But as bad as these numbers are and have been and as thirsty for new jobs as state leaders are these days, their road to corralling all the revenue sources they need to fuel their program hit a pothole they thought they backfilled overnight.
The Ohio Tobacco Prevention Foundation, a group that manages hundreds of millions of dollars in tobacco-company settlement money Ohio received years ago, sought to snooker Strickland and company by offloading most of their funds to various non-profit groups in an effort to keep state officials from raiding their coffers.
Despite how this tug of war turns out, Ohio voters will be called upon to approve $400 million in state bonds at the polls in November, a key slice of the job's cake state leaders hope to bake. Late in the afternoon, a Franklin County judge stopped the Ohio Treasurer from grabbing $230 million of the group's anti-smoking money. Strickland and legislative leaders want the money for their jobs program.
CAN’T WIN FOR LOOSING (JOBS)
This troubling report is merely the latest in a succession of sad statistics that show to what extent Ohio has lost jobs over the past seven years. According to a report authored by Charles McMillion for Campaign for America’s Future, a group advertising itself as the “strategy center for the progressive movement,” Ohio lost 209,400 (3.7%) of its nonfarm jobs between December 2000 and December 2007, resulting in the “worst seven-year loss in state records that begin in 1939 as the Great Depression was ending.”
”The industrial composition of Ohio job losses and gains reflect recent record trade deficits and the explosion of household and federal debt stimulus. Over the past seven years Ohio lost 23.3 percent of its manufacturing jobs (236,000 jobs,) lost construction jobs, lost jobs in wholesale and retail, lost jobs in information services and even in financial activities. Recent job growth came in private health services bureaucracies (100,100 jobs), restaurants and bars (24,500 jobs), and in state and local governments (18,700 jobs), mostly for public education, health care and prisons. Since 2000, Ohio added just 2,500 jobs in firms providing professional, scientific and technical services.” [McMillion, Ohio Job Losses Worst Since Great Depression]
McMillion says the areas of job production in Ohio, as noted in the professional and business services areas, are of concern because they are “almost entirely in less productive, lower-paying industries — including the low end of the ‘professional and business services’ category — that cannot create export earnings to offset the cost of imported oil, autos, computers, clothing, etc.”
OHIO IN RECESSION?
Even though President Bush and other politicians, national and state, cannot bring themselves to say the word recession, the report had no problem declaring that a “majority of forecasters have concluded that the economy entered a recession around the turn of the year.” It made this case by pointing to the fact that total employment decreased for the third month in a row and private sector payrolls fell for the fourth month in a row and that The Conference Boards composite index of leading indicators decreased for the fifth consecutive month in February and the sixth out of the last seven months.
Obliquely referring to the economic stimulus package the White House and Congress agreed to recently that will put money in the pockets of everyone who files a tax return and meets other requirements in the coming months, it forecasted some positive affect on the economy, but cautioned that the risks of falling home prices, high energy prices and the credit crunch are still potent drivers of an economy on the rocks.
Ohio saw its employment fall by 0.1 percent in the 12 months ending in February while three of its contiguous neighbors – Kentucky, Indiana and Pennsylvania – saw gains of 1.0 percent, 0.4 percent and 0.4 percent, respectively.
STATE TAX COLLECTIONS AND SPENDING DOWN
There was good and bad news about taxes and spending. The bad news about tax collections was they were down $262.4 million (1.9%) below estimates for the first nine months of FY 2008. The good news about state spending, through the general revenue fund, is that it was $375.6 million (1.8%) below estimates.
Revenue shortfalls were in part attributed to the slide in personal tax revenues, the report said. Other factors affecting tax shortfalls were the negative performances in 12 taxing categories, including major tax sources like auto sales, corporate franchise and cigarette taxes. In only four areas – non-auto sales tax, kilowatt hour tax, other income and liquor transfers – did year-to-date gains occur.
These numbers make it clear that since incoming revenues may not meet budget projections, for state government to not fall even further behind, Gov. Strickland and his team of agencies will need to continue to under-spend. The lesson for state managers is that if the top line (revenues) isn’t expanding, the bottom line (expenditures) needs to be reduced for the whole ship of state to keep on an even keel.
John Michael Spinelli is a former Ohio Statehouse government and political reporter and business columnist. He now serves as the OhioNews Bureau Chief for ePluribus Media Journal. Find ONB archives here.
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