Our Local Economy -- A Dialogue With Ron

The following is a discussion with Ron about our local economy and governmental involvement in it.

Question: Ron, there are indicators that our country's economy is starting to recover. Do you see indications that our local economy is going to share in this recovery?

Yes, the economists I've been listening to indicate that we are in the early stages of an economic recovery. Anecdotally, from conversations I've been having with leaders in our local business community, I can also say that our local economy has begun to turn around.

However, nearly all the forecasters I’ve been hearing from are saying that they anticipate the recovery to be unusually long and slow.  That is what the state budget revenue forecast is based upon.

My preference is to focus more on what we can be doing to help our local economy get stronger, as opposed to simply trying to predict what the future holds.

Question: Ron, when our country experiences recessions, we often see a sharp almost explosive recovery, driven by pent up demand from consumers. Are we on the verge of this, and will our area participate?

I do like optimism – and I believe that a positive outlook is important to rebuilding our economic climate.  But it has to be tempered with realism.

Many of the jobs that are being added in our community are being transferred here from elsewhere.  They are not truly new jobs. Also, let’s remember that employment is more of a lagging indicator.

Federal Reserve Bank of Cleveland President and CEO Sandra Pianalto gave a speech outlining her economic forecast last Thursday. She gave a compelling case for a slow economic recovery, even though she indicated that the recession officially ended its decline last summer and that the GDP grew a healthy rate of almost six percent in the last quarter of last year. Her list of "headwinds" that are likely to slow recovery include things like:

She spent a lot of time describing a heightened sense of caution as a headwind slowing the recovery – caution both by consumers and the employers. She says this: 

This climate of uncertainty is the set of challenges that we need to change.  Business needs some sense of predictability and some reasonable indication that their business environment is likely to turn positive, not toxic, for some time into the future.

A lot of this uncertainty and toxic environment is in the governmental and political realm right now.  Since I am an elected official, this is naturally an area of focus and concern for me. This is the domain where governmental policy can contribute either negatively or positively to the climate for job. This is our challenge.

Question: Ron, with that comment in mind, can you give us your perspective on what challenges and opportunities we are currently facing?  Would you give that to us from your viewpoint as a state legislator representing Wayne County in the Ohio House of Representatives?

We do face some real challenges, but many of them are within our ability to fix, provided we have the will and the courage.  This is a huge topic, but let me touch on a number of categories of things that government needs to be doing, an doing now.

National, state and local governments are service providers primarily.  Here are five things that can make a real difference in helping our economy to recover on a much better trajectory that otherwise will be the case.  I call these the five R's:

Let me expand a bit on each of these "R's."

1. Regulatory balance

An example of where Ohio can help our business climate is to move away from practice of having the Ohio EPA fine small and medium size businesses where they are not actually damaging our state’s environment.  This has been a serious problem since the early 1990’s and is tied to the agency being too dependant on fines for operating revenue.

But most of the regulatory uncertainty that is holding back our economic recovery is the misguided activity at the federal level. "Cap and Trade" would cripple our ability to compete internationally by seriously increasing the cost of energy. Serious consideration of this legislation is a worry to those making decisions on taking business risks that have real jobs on the line. 

As a related example, yesterday’s news was again full of the USEPA’s determination to move forward with stricter air emission and specifically carbon dioxide restrictions.

This is introducing serious caution into our business climate.

 2. Responsible government spending

Our citizens and our job creators are worried about runaway government borrowing and spending at the federal level.  This impacts us here in Wayne County too.

At the state level, our Ohio’s state constitution prohibits state government from borrowing to finance daily operations of state government.  So for the first time, this requirement has been sidestepped by having the federal government borrow around $6 billion last year and this year to give to our state for operations.

While this is helpful in the short run, it creates worry about how state and local services are going to be impacted next year when this structural deficit may flood the state budget with red ink.

There are opportunities in this uncertainty, if we are willing to recognize and use them.

3. Rework government for efficiency

There are tremendous opportunities in difficult budget times to rework how he deliver governmental services, especially at the administrative levels. This is a very difficult area because it requires elected officials who are accustomed to working in their own political subdivision or agency to think and work outside of it. This involves turf with a capital "T."

a unique local example will illustrate my point. It involves the voluntary sharing of top administrative staff by the Orrville and Rittman school systems. You can read about this in an article published by The Daily Record.

 4. Reform Ohio's Workers Compensation

One of the serious weights on Ohio employers, both private and public, stems from the inefficiency present in this state’s Workers Compensation program.

Rankings of the cost of this program to Ohio employers put our state at a severe disadvantage to many other states. Depending on how these rankings are interpreted, Ohio finds ourselves having rankings that range from third from the worst to 12th from the worst in the nation.

This is not necessarily because our actual lost time costs and medical costs are the problem.  My understanding of the problem is that the system is not truly being run as a no-fault system as required by out state constitution. Instead it has been a feeding ground for trial attorneys for several decades, that drain off employer premiums for their fees and for claims that extend well beyond a common sense level.

5. Revitalize our work force

In good times our work force is continually under pressure from technology used to achieve competitive pricing – technology that squeezes more jobs out of the production equation and from the pressure of quality production at lower cost from off shore.

But during recessions this pressure intensifies and the challenge of workers having the right educational preparation and job skills becomes even greater.

Access to needed education and training for our work force is a continuing challenge at a time when we also need to control government borrowing and spending.

Paid for by Citizens For Amstutz, Matthew Hochstetler Treasurer, 4456 Woodlake Trail, Wooster, OH 44691