I know somebody said they had some text prepared for a situation in Ohio, but here we go anyway.
Every state in the union has some form of tax on the end-purchase of alcohol. The effective rates are all over the scale, but Ohio is not a particularly punishing state in terms of booze taxes; Ohio is also one of several states where the state government effectively controls the distribution of alcohol as an internal enterprise. I don't know how that works, but that system in itself is not the point. (And if you want some stats,
here's a table.)
Ohio's government takes in a total revenue of somewhere between $50 to $70 billion each year, naturally down lately with the economy in trouble. It's also one of many states where the governor and majority party have been using "our state is broke" as the justification for all kinds of cuts and changes in their upcoming budget (such as the third-time's-the-charm
ban of gay marriage, somehow). The state alcohol tax isn't a huge chunk of the budget by any means, but it is there - 2010 saw a total revenue of around $230million, of which about $55m went to fund the state distribution system itself (or something like that) while about $165m went into the state's general coffers. Nobody wants to raise or lower the tax, per se, and 0.4% of state funding isn't a big deal. Small enough a deal in fact that the state has been getting unsolicited advice to
sell the distribution system and its funding into the private market, getting a couple decades worth of returns up front in exchange for never having it again.
But Ohio Governor John Kasich found a much more creative way to blow this money. The big buzzword in state politics is "Public-Private Partnerships", essentially-private enterprises established and run by the government. Such "partnerships" are as old as the country, and visible everywhere. The Postal Service is a public-private enterprise, as is the "water company" virtually everywhere and electricity providers in most states. Governor Kasich wants to make a new one, a public-private partnership dedicated to investing in Ohio businesses. Ohio, like basically ever state, already has a state-run agency that does exactly that job, the Ohio Department of Development, which channels public funding into private investment, hopefully making a return, but ultimately meant to boost business development in the state. There's a lot of things that can be said about the practice and real effect, but that's not the point.
The point is, Governor Kasich doesn't think it works well enough, and his congressional Republican supermajority sees him eye to eye. That's why Ohio
voted to create "JobsOhio", a private investment firm run on behalf of the state. And I love the idea that they apparently named the organization after its own url address. This plan ran into problems
almost immediately when it became nakedly clear that the organization would exist in a legal black-hole devoid of accountability or transparency. After
adding some lip-service to legal reporting, it passed anyway. The opening line of the original is probably the most interesting - "Requires the Governor to be the only member of and to form a nonprofit corporation, to be named 'JobsOhio.' " That was changed somewhere along the way - originally the Governor basically ran the fund himself; the "transparency" added made the head of the firm chosen and answerable to a nine-person panel, headed by the Governor and wholly staffed at his appointment. Because, y'know, giving the Governor (wait for it) unilateral authority over the appointing mechanism is so much more palatable than just letting him run the thing himself. And you're probably wondering what exactly this has to do with Ohio's liquor taxes - for whatever inscrutable reason, the Ohio legislature decided to
fund JobsOhio entirely through the liquor-tax, not including what's already used to run the distribution system. Oh, and there's no mention of the Department of Development which already did all this being dissolved in any way.
tl;dr - Allow me recap. Ohio, in the midst of an economic crunch and state deficit which the governor constantly reminds everyone of, created a redundant agency to invest in Ohio businesses, paid for with perfectly good tax money, run by and at the governor's behest; armed with government money, private sector sensibility, and none of the legal accountability of either. You couldn't do a much better job of creating a corrupt money-hole if you flat out asked for it. And Kasich's next plan:
work the same magic with Ohio's prisons.
Admittedly, blowing a couple hundred million dollars out of the state budget for the governor's business friends isn't exactly a new development in state governance, and is pretty small potatoes altogether. I was just amazed by the borderline-laziness of the whole thing, and how of all possible revenue streams, "JobsOhio" will be funded on the back of drinking, the one and only government tax that returns
more money when the economy sucks.
Anyway, I've got some updates on the shenanigans in Michigan. There's no new legal developments, just some interesting light shed on the subject, and some very ominous smoke.
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Topic: The Dissolution of State Government (Read 41425 times)