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Ohio Governor John Kasich on his state turning a corner on economic recovery

Tuesday, May 17, 2011

HH: I begin today with Ohio Governor John Kasich, who is doing such a great job in turning the Buckeye State around. Governor, welcome back.

JK: Hey, Hugh, pretty good, huh? We’ve got the Reds and the Indians both in first place. It’s just not a coincidence that they are and I’m governor.

HH: I think it’s actually kind of, what do they all that, it’s not quid pro quo, but it’s whatever it is. Governor, yesterday you had Jamie Dimon…

JK: Yeah.

HH: …who’s the head of J.P. Morgan in town, and I saw that story and wanted to talk to you about it. He said the business climate is returning to Ohio.

JK: Well, look, I had a nice meeting. Jamie Dimon is one of the great corporate leaders in the country today. And he was very kind from the standpoint that he says that we’re getting it out here in terms of the business climate, you know, having regulators who don’t play gotcha, balancing our budget, eliminating a structural deficit, cutting taxes, and also being pro-business. I mean, we’re open for business. And Hugh, we dug ourselves into a very deep hole. We’ve lost more jobs in the last ten years than every state in America except for Michigan and California. And the simple fact of the matter is that we are getting ourselves straightened out, but it doesn’t get done in a day. But we believe making it easier for people to do business, cutting unnecessary rules and regulations, which we are actively doing, balancing budgets, not relying on one-time money, creating an entity that can speak the language of business to business leaders by privatizing our development department, aligning our curriculum in all of our schools to create the skills that workers need in the 21st Century, all of these things when put together, and our location, Hugh. You know, our location, we’re within 600 miles of 60% of the country. And on top of it, we’ve got some of the great knowledge workers, and people who know how to make things. So stick that all together, and you know, it’s a formula for success. But we have a long way to go.

HH: So I started to dig into it, and I see that American Greetings Corporation, which is already in Brooklyn, Ohio, but they had a chance to leave, they recommitted to the state. You had to work out a deal with them in March to give them a package of about $100 million bucks over 15 years. But that’s the open for business sign, isn’t it, Governor?

JK: Well, it’s our return on investment is positive for the state. I mean, when you take a look at payroll taxes paid by the company, the employees and all that, it’s what we call ROI positive. We did the same thing for Diebold, we helped Goodyear, and we have a package for Bob Evans, because they were thinking, you know, maybe put the headquarters in Texas. All those things are return on investment positive for the state of Ohio. Plus, you know, we’ve got a ton of other things going on. And all that put together means we’re on the right track. Instead of picking up the paper and reading another group is leaving, and we’re going to have some that are going to leave, just because of basic economics. But we’re winning our share now.

HH: I’ve always said the infrastructure in Ohio is second to none, and you already mentioned the knowledge workers there, the university community. Tell us about the issue set presented by the growth in casino gambling. This growth predates your tenure in the office, but it’s something that’s got to be managed very carefully.

JK: Well, I’m not sure what you mean. We, the people of the state approved four casinos in the state. And we are now trying to, we’ve hired some gaming experts to figure out how we proceed, because I’ve got decision to make on race tracks, video lottery terminals, another form of gaming, and I’ve got some people advising me who understand the business, and we’re hoping to create a win-win both for the casinos and for the people here in the state, because as you know, the state has its struggles.

HH: I know you care about people…there is this gambling addiction issue. That’s what I was reading into. If gambling gets too deep into the lifeblood of a state, it can ruin lives as well as build tax revenue bases. I’m sure that issue set’s in front of you.

JK: You know, there’s not been a lot of talk about that here. I mean, the Cleveland Plain Dealer has done some stories on addiction, but frankly, the big push here is to get them open. And look, I think that it is incumbent on the casinos, and on our casino commission to make sure that we have safeguards in place, Hugh, to make sure that we don’t have people losing house and home. But you know, my big issue right here is it’s going to open. I mean, the people approved this, we want to get it open, but I’d like to get a little bit more from them that can benefit the state in areas like education and job training. But your point is well made, and it’s something we have to keep an eye on.

HH: Let’s look ahead to the fall. The unions are coming back at you, Governor. Would you explain to the audience what it is they’re trying to undo, the legislative victory that you’ve already won?

JK: Well, what we did is we limited the ability of public employees, all of them, to they’re only going to be permitted to negotiate on wages and working conditions, but not on health benefits and pensions. I mean, the average city worker in Ohio pays 9% for their health care. The average private sector worker pays 23%. So we’ve got private sector workers not only paying for their own health care, but also paying for the health care of others, and in fact, for the pensions of others when they don’t have a pension themselves, maybe a 401K, but nothing that provides for guaranteed benefits. So the situation here is that we are trying to create a balance between those in the private sector and public employees, and at the same time, we want to give our local communities the ability to control their costs, because part of our problem in Ohio is not just state taxes, but it’s local taxes as well. And when you keep giving benefits out you can’t afford, and you can’t control those costs, you keep raising taxes, you hurt yourself. American Greetings could possibly leave Brooklyn, Ohio and move somewhere else because of the tax level.

HH: Yup.

JK: So the other thing we say is if you don’t want to contribute to a union, you shouldn’t have to, public employee union. So…and we also want to get to the point, Hugh, this is interesting, where we want all public employees to be judged on their pay, on the basis of performance.

HH: Yup, yup.

JK: And so they’re going to come and try to beat us back on this, and we’ll see what happens.

HH: Now I want to ask you, because very few people can actually take a position on what Paul Ryan is doing based upon having occupied the chair he’s sitting in. You were the chairman of the House Budget Committee last time we got balance. What do you think of the Ryan budget, and what do you think of everything…

JK: Actually, Hugh, I don’t know what’s in the Ryan…I’ve got enough problems.

HH: (laughing)

JK: I inherited an $8 billion dollar deficit here, and I’m not about to step into Congressional micromanagement when I’m not there. I commend Paul Ryan for having the guts and the courage to stand up and lay out a roadmap. I used to do that in my early days there, which ultimately led to a deal that strengthened the country, strengthened the economy, paid down debt, and did all these good things. So Paul deserves a lot of accolades. He actually was a staffer on the Budget Committee, worked for a member, and he was one of the people that came and helped us, and he deserves great credit. In terms of all the details of what he has, you know, I have not…I’ve got enough to do out here. And I’m not trying to take a pass here, Hugh, I just don’t know what all is in this thing. I know this…

HH: All right, then tell me how did you close an $8 billion dollar hole in Ohio?

JK: Well, we put politics aside, and we entered into a massive reform agenda which we started working on two or three years ago. And then we got a cabinet that by the grace of God somehow, we got a cabinet that said we want to help you in this, and we want to be efficient and effective, and by reforming the prisons, reforming Medicaid, reforming K-12, higher ed, basically, I would be…I wouldn’t…look, we’ve had the most reform and the most significantly changed budget in modern Ohio history. And I think when you take a look at what other states are doing, I’d say, you know, we’re leading the pack. I’m proud of what my legislative partners have done. We passed this through the House. It’s over in the Senate. We expect it’ll pass there. And we also not only closed an $8 billion dollar deficit, Hugh, but we also maintained the income tax cut we received in January, which was phased in, and was automatically put in. So we’ve cut taxes and eliminated a structural deficit.

HH: So where’s the unemployment, and where do you expect it to be a year from now?

JK: Well, you know, our unemployment is almost 9%.

HH: Wow.

JK: You know what’s happening, these numbers bounce around depending on who enters the workforce. I don’t want to predict. The last guy to predict was Muhammad Ali, and he doesn’t box anymore. What I have to do is just keep focused on making sure that we keep moving forward, keep reforming, keep sending a message out there. See, we’re privatizing our development department. And what we’re able to do is by doing that, and putting a liquor…you know, they still run the liquor business in Ohio.

HH: Yeah, I know.

JK: You know that. We’re getting rid of that. And we’re going to put that into our Jobs Ohio, so they actually have revenue each year in which to help strengthen Ohio businesses, and go hunt some that are not in Ohio. All these things contribute, and so the path back is daunting, but can be done, Hugh.

HH: One minute, Governor, how is GM looking? I know you went up to Lordstown to check out the plant.

JK: Well, they put $205 million into Toledo. GM, you know, Lordstown has that new car over there. That’s all good news. We’re hoping they’re going to make some more investment. We work with the Big Three. I was up there the first week after I was elected. And then I’m going back again, and we talk to them all the time. And look, making things matters again. And logistics matters in the Midwest. So atoms are mattering again, not just information.

HH: Governor John Kasich, always a pleasure. I will have you back when the Indians are 50-23. So great to talk to you, Governor.

End of interview.

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