With All Revenue Arrows Pointing Down in July, Budget Picture, Prospects Look Perplexed

OhioNewsBureau

COLUMBUS, OHIO: With the release Monday of the latest Monthly Financial Report by Ohio Gov. Ted Strickland’s budget director, which reported that for the first time in many months, every general revenue source performed below estimate, the perplexing puzzle of the numbers is whether the pattern of underperforming economic indices is due to factors that will be reversed in coming months or whether it represents “serious signals of the of the downturn being experienced across the United States,” a situation that further complicates what elected leaders can do, if anything, to restore jobs and prosperity to a state home to four of Forbes Magazine’s top ten fastest-dying cities.

State Figures Force Leaders to Go Figure

According to the July report sent to OhioNewsBureau today by J. Pari Sabety, detailing Ohio’s financial position and highlights of regional and national economic indicators, the $139.8 million (or 9.8%) shortfall can only cause Strickland, House Speaker Jon Husted and Senate President Bill Harris to take another lap around their worry beads. 

The report, which reflected the first month in the second year of the state’s biennial budget, also said the federal measure of Gross Domestic Product (GDP) growth was revised down to 00.2% in the fourth quarter of 2007 from 0.6%, representing the first quarterly decline in real GDP since the 2001 recession. Despite about $78 billion in tax rebate stimulus checks sent to tax filers to spend to spur economic activity, Sabety’s report said the economy “continue to struggle,” evidenced by the statistic that total employment decreased for the seventh consecutive month in July and Ohio employment remained stagnant. As previously reported by the OhioNewsBureau, Ohio has set a new record of 148 consecutive months of underperforming the national average for job growth. 

Exports, the report said, are “propping up the US economy” while real GDP, excluding net exports, has fallen in two of the last three quarters. 

On the jobs front, the good news offered is that Ohio employment increased for the second month in a row in June – the first back-to-back monthly gains since January – with 7,900 jobs, which follows an increase of 8,100 jobs in May, resulting with on the year employment being up by 6,000 jobs. The bad news is this figure is still 9,900 jobs below the year earlier level. Ohio employment, the report noted, is unchanged since April 2007. 

Today’s figures, and the statement that the consensus of forecasters is for “weak growth with a risk that the economy contracts in the second half” can only contribute to the extension of this streak. To read the report in all its painful detail, here it is.

Forbes Magazine Article on Fastest-Dying Cities Cites Ohio

Meanwhile, the Forbes Magazine article that focused on the woes of America’s Rust Belt, which is described as the “former manufacturing backbone” of the US that’s now in “rougher shape than ever” as it continues “searching for some way to replace its long-stilled smokestacks” cited Ohio, with four cities among its top ten fastest-dying, as the worse for wear. Ohio cities cited were Youngstown, Canton, Dayton and Cleveland.

Jobs and Poverty Report Says Bigger Not Better

In a report released last week by researchers from The Ohio State University and the University of Oklahoma on jobs and poverty, their results showed it may be easier for people living in small metropolitan areas to get out of poverty than it is for those living in large metro areas, a conclusion that seems on first blush to be the opposite of conventional wisdom. The report said despite an increase in the number of jobs created during the 1990s, many people living in large metro areas across the United States failed to find jobs.

Bucking conventional wisdom, the researchers said many people who lived in smaller metro areas found jobs despite significantly less job growth over the same period of time. Consequently, poverty levels in many large metropolitan areas stayed the same or slightly decreased, while poverty rates decreased in smaller metro areas. 

“Job growth matters, but only if you could get it where jobs are needed the most. We found that jobs had a bigger impact on reducing poverty in smaller metropolitan areas because if you live in a small area, you can get to where the jobs are. But if you live in Columbus or Cleveland or New York or Atlanta, it is going to be harder to get to the jobs,” said Mark Partridge, a professor of agriculture, environmental and development economics at Ohio State. He and Dan Rickman, an economist at Oklahoma State University, performed the study to find why poverty rates in the United States stayed the same in many large cities despite increased job growth over the last 30 years.

As gas and energy costs rise, the researchers’ results suggest that many barriers in large metro areas are inhibiting poor people from landing jobs. One of those problems, they said, is finding reliable transportation that can deliver the poor, who live in the inner city, from finding employment. New jobs are often created in the suburbs, they found, but many large cities around the United States do not have reliable public transportation systems, which limit how far some people can travel to find work.

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.
Photo credits: (c) 2008 AnHarris, istockphoto

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