Ohio: Impact of Economic and Political Conditions
SUSAN A. MACMANUS
The need for more sophisticated policy analysis and for rational approaches to budget formation and execution intensified in the late 1970s and early 1980s as Ohio and its local governments experienced severe fiscal pressures to a point near bankruptcy. 1 Even though the state's books have now been balanced (and there is a substantial surplus as well as a new rainy-day fund), its economy is still pressured by the transition away from a manufacturing-dominated economy. The political reactions to these severe economic pressures explain the state's changing tax structure and its expenditure priorities as well as the adjustments to both its formal and informal budgetary processes. Moreover, Ohio's budget process is continually affected by changing political and economic climates which are themselves interrelated.
Historically, Ohio's economy has fluctuated more than the national economy. 2 The problem is that the differential is negative and widening. Three major factors have contributed to this problem: (1) a nondiversified economy, still heavily dominated by manufacturing jobs in smokestack industries; (2) a population decline, including a significant (37 percent) outmigration of the state's college graduates; and (3) a reputation as being a "bad place to do business." It is not surprising, then, that for Budget Biennium 1985-1987, the programmatic goals focused on accelerating Ohio's economic recovery, creating more jobs, improving the quality of education at all levels, and controlling the costs of running the government. 3
Ohio's political environment has remained a competitive one as measured by levels of interparty competition. 4 The prevailing pattern has been for the balance of powers to tip slightly in favor of one party and then the other. This trend parallels basic economic trends. Democrats initially gain control when the economy has been in decline or recession. Republicans tend to gain control when it is overheated or inflationary. Predictably, the "out-party" blames the "in-party" for the prevailing economic trend.
We now look at how the budgetary process works.