Ohio
State Treasurer Josh Mandel...
Why
Ohio’s Outlook has Improved as the
Federal Credit Rating is Downgraded
August 15, 2011
While
global financial markets are
marred by uncertainty, Ohioans’ hard-earned tax dollars are being
prudently
invested and safeguarded.
To
highlight the contrast between
Ohio’s fiscal management with that of the federal government, look no
further
than the recent actions of Standard & Poor’s.
In
analyzing the fiscal management of
each, the firm decided last month to upgrade Ohio’s outlook (from
“negative” to
“stable”), but recently downgraded the federal government’s credit
rating.
Additionally, Fitch also recently improved Ohio’s bond rating.
These
ratings agencies applauded state
leaders for bringing our budget into balance through sound financial
management, and credited the Ohio Treasury with conservatively managing
debt.
One
of the reasons that Ohio’s outlook
is improving while the federal government is drowning in red ink is
that Ohio’s
constitution mandates a balanced budget. Our state is prohibited from
racking
up and carrying over deficits, and finally has elected leaders who are
taking
this requirement seriously.
In
the Treasurer’s office, we have
taken many steps to insulate public funds from the uncertainty that has
shaken
global markets. This puts taxpayers and local governments in the safest
position to weather the storm, even if the worst-case scenario plays
out in the
stock market and bond yields continue on a downward path.
Over
$1 billion in Ohio taxpayer
dollars are being safeguarded in secure short-term and overnight
investments to
maintain liquidity and guarantee that cash will be available when
needed by
cities, counties and school districts. My office is constantly
monitoring
markets in Europe and Asia so that we can act quickly if international
securities take a hit.
On
behalf of the State Treasury Asset
Reserve (STAR Ohio) program, where we invest funds for local
governments, we
have also increased liquidity and eliminated investments in banks in
Spain,
Italy, Portugal and Greece who could be impacted by the European
sovereign debt
crisis.
Contrast
this approach with what
happened in Florida, where rather than stressing safety, the state
sought
higher yields through risky and legally questionable investments. These
investments potentially cost taxpayers hundreds of millions of dollars
after
the collapse of housing and financial markets in 2008.
In
our office, we ended the fiscal
year with a $400,000 surplus, and are reducing general revenue fund
operating
expenses by $1.2 million over the next two years. We will also save
$100,000
annually by automating check processing and ending the unsecure daily
practice
of physically driving checks across the state to the depository bank.
If
families and small businesses are tightening their belts, then
government
should do the same.
In
Ohio we have embraced our balanced
budget requirement, and raised our fiscal outlook in the process. We
accomplished this without raising taxes. By charting a conservative
fiscal
course we are achieving positive results for taxpayers, even amidst
global
economic uncertainty.
Josh
Mandel is State Treasurer of Ohio.
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