Transcript The Lever

You want to know how to save
various sources of federal
funding…this will be tougher than
you know
You will only get the static
analysis not the dynamic
analysis…first the state…Ohio
could have fired every state
employee and not have the
books balance in 2011
That is just the General Revenue
Fund; Transportation is even more
doomed…
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The youth drive > 7.7%
Core inflator is 5%: Decline in gas
usage is 2%
Net loss of 2 pennies of tax
Cash for Clunkers
County Engineers/gravel
Fed have propped up Highway trust
with $30 B
Now about the fed annual budget
• Prior to 12-31-12 the % of GDP taken in
taxes was 15.5%: Starve the Beast
• On 1-3-13 it was 19.5%
• Historically we float between 18% and
19%
• We are still spending 23% of GDP
• France is near 40%
• To tax at 23% of GDP means we tax the
upper two of six tax brackets at 78%
So now let’s talk about the all funds
federal budget…
• The operating fund deficit is $16 trillion;
Defense is 25%, the two wars were 25%
of that
• The all funds deficit is $ 87 trillion
• That includes all deficits such as Social
Security at $ 20 trillion
• Medicare at $43 trillion
• 550% of our GDP
• If we tax all income over $ 66 k/yr we get $
5.1 trillion
• If we tax all corporate profit we get $ 1.6
trillion
• We could increase all taxes that high and
still take a dozen years to dig ourselves
out, or tax half that amount and take 24
years…with not spending on anything
else…
• This is static…not dynamic
The tax system is hot
• Top 1% has risen to 41.8% in 2008 from 17.4% in
1980
• 2/3rds income from the top 1% comes from nonwage
income, including capital gains, dividends and
proprietor's profits. (Docs sub chapter S)
• From 1960 to 2000, payroll taxes were never lower
than in the previous year, individual income taxes
dipped only twice, and corporate taxes dropped 11
times.
• Since 2000, individual income and corporate tax
revenues dropped five times, while payroll taxes fell
twice. Not only do revenues from individual tax
returns drop more often now. They fall more severely,
with recent collapses of 14%-20% versus the 3%-5%
range before 2000.
Just one more thin wafer…
• So…taxing the 1% more gives us more
volatility
• The top 1% hold so much more wealth
than traditionally
• Currently 90% of income tax comes
from the top 10%
• 90% of wealth dissipated by third
generation
The Biology of Humans says
tax the 1%…why?
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BRS; we have five core values
Security
Health
Children
Family
Fairness
Fairness will be the battle of this age;
more on that in the book section
So is there anything personally you
should do?
• Don’t buy a new car
• Don’t upgrade your kitchen
• Encourage your kids not to go to Oberlin,
but go to Wright State and study math
• Why?
• Since 1985, the number of college
graduates in soft sciences has doubled,
but hard science has stayed flat
What can you read to prepare?
• MoneyBall by Michael Lewis staring DATA
• Every time you see the phrase “Front
office” substitute in “local governments”
• The Big Sort by Bill Bishop Landslide Ctys
• Coming Apart by Charles Murray
• Buckeye Battleground by John Green
• The Fourth Turning by Strauss and Howe
• Capricious Chaos by some guy not yet
Ok, how about professionally?
• Rep. Amstutz put all his chips on the table
• Local Government Innovation Fund
• “You want to pay local governments to do
the thing they should be doing?”
• You can lead a horse but…
• $45 million in loans and grants
• http://development.ohio.gov/cs/cs_localgo
vfund.htm
What is the purpose?
• To promote shared services, collaboration and
consolidation that result in both cost savings and
better services.
• Contact your legislators to continue this program
as this is your only hope to get that new car.
• The other thing is more data is coming
• SB 356
http://www.legislature.state.oh.us/bills.cfm?ID=1
29_SB_356
Look at the Cupp Report
• http://www.ode.state.oh.us/GD/Templates/Pages
/ODE/ODEPrimary.aspx?page=2&TopicRelation
ID=1441
• Costs of local government; it will pass
• Get your costs down; remember Money Ball
• Look to MA; “242 regional housing authorities
into six regional housing boards. Consolidation
would save up to $10 million in annual
administrative costs, while streamlining agencies
and centralizing control”
• Ohio is a data desert but not all data is helpful
So…what do you do?
• Get paid to share your services
• Don’t say you are doing everything; you
are doing everything you are comfortable
• Ask local businesses/CPAs to form an
advisory team to perform a management
audit team or ask AOS
• Have your associations work to develop
chart of accounts
• Develop a plan for surviving without CDBG
• Strong charter county
Finally…you hope…some
practical things
• Subscribe to Hannah News Services
• Have lunch with people you have nothing
in common with…
• Read those books
• Send me hate email at
[email protected]
• @GO_GeneK
• Send me examples of good and failed
policies
“It ought to be remembered that there is nothing
more difficult to take in hand, more perilous to
conduct, or more uncertain in its success, than to
take the lead in introducing a new order of things,
because the innovator has for enemies all those
who have done well under the old conditions, and
lukewarm defenders in those who may do well
under the new. This coolness arises partly from
fear of the opponents - who have the laws on
their side - and partly from the incredulity of men,
who do not readily believe in new things until
they have had a long experience of them.”
Nicollo Machiavelli, The Prince