“As governor of Ohio, we have gone from $8 billion in the hole to a $2 billion surplus. We have grown 350,000 jobs. We have cut taxes more than any sitting governor in the country.”
–Ohio Gov. John Kasich (R), PBS NewsHour interview, Aug. 19, 2015
“Well, my approach is let people know what I’m all about … turning Ohio around from $8 billion in the hole to surpluses and the growth of 350,000 jobs.”
–Kasich, CBS “Face the Nation” interview, Aug. 16, 2015
These are just two recent examples of Kasich, who is vying for the Republican presidential nomination, repeating one of his favorite talking points. Kasich cited these figures during the first GOP debate this month, and he is bound to repeat it in the future. So we checked the facts. How accurate are his numbers?
Given that we are covering a lot of ground, we will issue two Pinocchio ratings–one for the $8 billion figure and one for his other claims.
‘$8 billion in the hole’
When Kasich became governor of Ohio in January 2011, his budget officials projected there would be a $7.7 billion shortfall if the state continued with the same level of revenue and spending under the existing levels set by the previous administration. This projection included the federal stimulus and other one-time dollars that no longer would be available after Kasich took office.
In the budget that Kasich approved in March 2011, state budget officials wrote that they anticipated the state would begin to see increases in tax revenue, as a result of the economic recovery. The state projected state revenue would increase by $790.7 million in fiscal 2012, and $1.4 billion in fiscal 2013. That amounts to $2.2 billion in state revenue over two years. These revenue numbers were higher than state officials initially projected for the $7.7 billion figure.
“In the $7.7 billion number, we made certain assumptions about what revenue growth would be. When we put the budget together, revenue growth was somewhat stronger than that. So there was some difference between the two assumptions — couple hundred million dollars per year,” Tim Keen, the state budget director, said in an interview.
But Keen said the $7.7 billion figure still stands, because that was the projection that budget officials first calculated when Kasich took office in January, and it was the starting point. At the end of fiscal 2012-13, revenue actually exceeded what state officials estimated. Keen said that critics who claim that state officials had exaggerated the projected budget shortfall were using the benefit of hindsight.
Still, that does not explain why Kasich continues to use the $7.7 billion figure. After all, he does have the benefit of hindsight, more than four years after the fiscal 2012-13 budget was approved. Scott Milburn, campaign spokesman, said in a lengthy e-mail response:
“That was the initial projection and the bogey at which we aimed from the beginning. We take a cautious approach to budgeting and, at a time when the economy was still very shaky, we weren’t going to use the cover of subsequent upward revenue projections as an excuse to lighten the load of what we had to accomplish. Doing so could expose the state to unacceptable risk if there was even a modest sudden downward tick.
I’m sure that there are some who, in hindsight, now argue that the word ‘projected’ should modify any reference to the initial shortfall calculations around which the budget was built, and it wouldn’t surprise me if they’re also some of the same folks whose hands were on the wheel when Ohio was steered off the fiscal cliff to begin with. I’m not sure they have much standing to quibble now with descriptions of the effort to clean up their mess.”
$2 billion figure and jobs numbers
After Kasich took office, he decided to set aside any balance remaining at the end of the two-year budget, rather than using it to offset spending in the next cycle. After every budget cycle, the state publishes the amount of money that was deposited into its savings account, which currently tallies at just over $2 billion.
The important context here is that revenue from the economic recovery also coincided with the beginning of Kasich’s governorship. As Kasich often notes, before he took office, there were 89 cents in the rainy day fund.
For jobs, Kasich uses Ohio’s private-sector jobs figures, which checked out using the Bureau of Labor Statistics figures. Kasich has used the private-sector jobs measure to tout his state’s recovery. As for non-private jobs, the Cincinnati Enquirer noted earlier this year that government jobs are at a three-decade low. BLS data show government jobs in July 2015 remain virtually the same as January 2011.
As regular readers know, The Fact Checker is skeptical of state executives who claim success to changes in jobs numbers in their state, as those numbers can change as a result of many factors, and can’t be tracked to the decisions of a single executive.
$5 billion in tax cuts
Kasich is referring to the net tax reduction over five years, which totals $4.8 billion, according to state officials.
Zach Schiller, research director at the progressive policy research institute Policy Matters Ohio, noted that the $5 billion net reduction figure does not reflect some other changes that affect residents’ tax bill, such as local governments that offset some of the tax cuts by increasing sales and property taxes.
Kasich says he has cut more taxes than any other sitting governor in the country. This is based on his staff’s analysis. But comparing tax cuts across states accurately is difficult and not always an accurate comparison, because states have varying budget cycles and types of tax revenue. (This National Conference of State Legislatures database shows all the different ways state tax actions can be compared.) It also is important to give context to the amount of tax revenue cut in a state, by comparing it to the share of the economy.
The state budget and tax research team at the left-leaning Center for Budget and Policy Priorities tracks income tax cuts across states, looking at the cuts as a share of the economy. Even under that measure, Ohio ranks among the top five states with the biggest income tax cuts.
The Pinocchio Test
‘$8 billion in the hole’
While Kasich’s campaign explains that the $8 billion figure reflects the breadth of the budget imbalance that the administration faced when he took office, it would do the public a favor to add a caveat or to make it transparent that it was the initial projection. Projections provide a guideline, but officials typically base their next year’s budgets on the actual spending and revenue rather than the initial projections. Ultimately, the projection was not as high as $7.7 billion, and the actual shortfall was decreased by hundreds of millions of dollars, as his budget director told us. We issue Two Pinocchios to the $8 billion figure, as it is misleading to the public.
Other Kasich claims
The rest of Kasich’s figures check out, for the most part. There is some context missing, but not enough to negate the larger points he makes with each figure. He cites the state government’s tally of the rainy day fund. BLS data show a consistent increase in the number of jobs since he took office. But The Fact Checker has frequently urged readers to be wary about job-creation claims, either at the state or national level, as so much of what happens in an economy is beyond a politician’s control. It’s almost an automatic Pinocchio when a politician starts making that kind of an assertion. Lastly, the $5 billion figure largely checks out, and Ohio does rank among the top five tax cutting states, as compared to the share of the economy. But it is not exactly accurate to compare one state’s total tax cuts to another.
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