Column by The Buckeye Institute
This opinion piece first appeared in The Columbus Dispatch.
“A penny saved is a penny earned.” “Money burns a hole in your pocket.” Such simple proverbs help children learn important lessons about saving and spending money. As Ohio enters its biennial budget process, state policymakers would do well to apply those elementary lessons as they decide how to spend our tax dollars.
When Gov. John Kasich took office eight years ago, a grand total of 89 cents rattled around in Ohio’s rainy day fund. Through fiscal prudence and a growing economy, that fund has since grown to almost $3 billion. Despite that exponential growth and improvement, analysts from Moody’s still consider Ohio financially unprepared to weather even a moderate recession — one that some economists warn could be just around the corner — making fiscal prudence and proverbial wisdom all the wiser to follow.
So, as Gov. Mike DeWine crafts his first budget, three fundamental principles should guide his administration’s fiscal policy.
First, every dollar that Ohio spends comes from hardworking men and women — the taxpayers — and taxpayers know best how to spend their money. Taxpayers spend their money supporting their families, paying the mortgage, fixing the car and saving for retirement. They spend money on things that matter to them, things that improve life for themselves and their children.
Politicians, on the other hand, love to propose grandiose ways to spend other people’s money, from soccer stadiums to music venues, from public statues to special-interest advertising campaigns. Politicians spend our money on things that tend not to matter to us or our families, things that governments have no business supporting, and things that pale in comparison to the value of letting hardworking men and women keep more of their own money.
Gov. DeWine and his budget-makers would do well to remember where the state’s money really comes from and who knows best how to spend it.
Second, think long-term — plan more for tomorrow and worry less about today. Fixing short-term problems is much easier — and gets much more attention — than planning for the future. Consequently, long-term projects that may be fiscally wise and prudent are too often ignored in favor of short-term spending. But being short-sighted almost never pays.
Ohio’s infrastructure needs and looming public-pension shortfall are perfect examples. The new administration should focus on funding long-term projects that will benefit Ohioans for years to come: building and repairing roads, improving public-transportation systems and maintaining the integrity of Ohio’s aging infrastructure. Likewise, DeWine should use the upcoming budget to bolster Ohio’s books and make the public pension system solvent for the long-run.
Moody’s analysts have warned that delaying public pension payments is “a recipe for long-term fiscal disaster.” It would be wise to address the pension system before a rainy day comes.
Finally, it is better to refund than to receive. State policymakers should make every effort to give the money they don’t spend back to the hardworking people it came from: the taxpayers. Remember, “money burns a hole in your pocket” and unspent surpluses sitting in government pockets will only make it easier for bureaucrats and politicians to spend other people’s money on non-essential items and favored special-interest groups.
It is wise, of course, to maintain a robust rainy-day fund, but once that account has a healthy balance policymakers should give taxpayers a healthy refund and resist the temptation to spend money that doesn’t belong to them.
Gov. DeWine’s new administration inherits a financially healthier Ohio than his predecessor, but he and the General Assembly must continue building upon the fiscal discipline that has helped the state recover from the Great Recession by putting taxpayer needs first, saving and spending for tomorrow, and always remembering that the money Columbus has jingling in its pockets really belongs to the hardworking people of Ohio.
Rea S. Hederman Jr. is the executive director of the Economic Research Center at The Buckeye Institute and vice president of policy.
On The Buckeye Institute Page: https://www.buckeyeinstitute.org/blog/detail/for-sound-fiscal-policy-you-cant-beat-wise-proverbs
