Coming bloodbath in Ohio to test Strickland, Kasich as each defend, attack size, scope of government

COLUMBUS, Ohio -- Whether the General Election next November launches a second term for Democratic Gov. Ted Strickland or signals a first term for Republican challenger John Kasich, Ohio's next executive leader will face the uncomfortable task of finding politically workable solutions to the blood bath made all too real by tumbling revenues, disappearing dollars from Washington and conflicting political ideologies that argue government is the answer to and the problem of a brighter future.

As 2009 ended with a battle of political wills between Strickland and Republican leaders in the Senate over how to fill an approximately $850 million hole in the state's two year budget, the accumulation of billions upon billions from a combination of revenue shortfalls to the state or disappearing stimulus dollars from Washington, that may vanish as spending hawks in Congress pull back on deficit spending to help prop up states hit hard by the Great Recession, will require Ohioans -- and the leaders they elect to represent them in Columbus -- to rethink whether government is a friend or foe to their future.

The gauntlet Strickland, Kasich must run

Estimates from published reports show the state's structural deficit for the 2012-13 budget range from $4 billion to $9 billion. Ohio's next fiscal year, which begins July 1, is balanced with about $3.5 billion in one-time state and federal funding that includes $426 million from the latest budget fix, which delayed a 4.2 percent income-tax cut until Jan. 1, 2011.

What will intensify the drama of where and how much to cut spending on government or whether raising taxes is unavoidable despite declarations by both candidates that that option is off the table, is the fact that the state's so-called rainy-day fund was sucked dry to fill a previous budget gap, leaving the Buckeye State with no emergency parachute to deploy when it is falling the fastest.

Ohio facing billions in revenue shortfalls, loan paybacks

Added to this bitter brew will be the need in 2012 to repay Washington nearly $1.7 billion in funds borrowed to continue paying jobless benefits to the steadily rising number of Ohioans who have lost their jobs in the throes of a Great Recession that some economists say may stay weak for at least another year.

Exacerbating the state's worsening fiscal picture -- GRF tax revenues declined two years in a row and expected to do so again next year -- will be the need to fund its social safety net -- already tattered from billions in budget cuts -- at levels to protect Medicaid eligibility and services, MR/DD services, early care and education programs and disability financial assistance.

Republicans have generally opposed spending from Washington, but reports of new analysis based on Census data showing that the American Recovery and Reinvestment Act of 2009 (ARRA) is keeping large numbers of Americans out of poverty in states across the country have both challenged their ideological bent and kept many Ohioans from falling further into untenable situations.

In addition to boosting economic activity and preserving or creating jobs, the report from the Center on Budget and Policy Priorities shows the recovery act is softening the recession’s impact on poverty by directly lifting family incomes.

Kasich income tax elimination plan could add $7 to government spending cuts

If Ohio's future doesn't look bleak enough, consider what it will be like should an energized Gov. Kasich, who one national polling firm says is ahead of Strickland now, is emboldened to follow through on his campaign promise to eliminate the state's income tax -- 7.73 billion or about 44 percent of total GRF tax receipts -- with the help of a House of Representatives again controlled by GOP loyalists.

That stunning possibility, which would demand the virtual dismemberment of government as we know it, will truly be an ill wind of monumental proportions that will blow no good to anyone, not even the businesses Kasich hopes will flock to the state as the gears of government are dismantled, prepping his "new day, new way" plan for improving the state's business climate.

Factor in the imploding budgets of Ohio's six major cities and the landscape for delivering services of all kinds at the state and local level becomes a bleak and burnt nightmare of historic proportions.

A seasoned Republican legislator, who served in the House and who's now a senator and cognizant of what lies ahead, even went so far as to take a swipe at a fellow GOPer whose grand plan is to consolidate government. Bill Seitz of Cincinnati told one reporter that his lawmaker colleagues just "can't come waltzing in the day before a budget is passed and say: 'I know, let's cut state government from 24 agencies to 10 tomorrow.'"

Another budget watcher said that while downsizing government may sound good, as Rep. John Adams wants to do, reality shows that 85 percent of state spending goes directly to local services and schools.

Strickland to Kasich, GOP: Show me your budget plan

Strickland told Ohioans he is proud of his education reforms and said he hopes things will get better. Fit and ready to run what will be a no-holds-barred campaign, the man from Duck Run said is ready to talk with Republicans about future budgets. But he offered them a challenge too: He wants anyone opposed to his remedies to declare "what functions (of government) will be eliminated and how they're going to continue to carry out the essential services that people expect from government."

Of course, what people expect from government and what they are willing to pay for is the key question. For those who see government as an obstacle to progress, employing people who do little but who benefit from great benefit packages, the answer is simple: shrink it. For those who see government as critical to protecting those least able to fend for themselves or that checks abuses spawned by a marketplace unchecked, the answer is simple: defend it.

Follow me on Twitter @ohionewsbureau. Read more stories on people, politics and government here.

Ohio Spending Panel OKs $200K More for Slow Train to the Past Project

Ohio Spending Panel OKs $200K More for Slow Train to the Past Project

Outsourced California Rail Study Firm Outsources Work to $300/hour Consultant

State Spending Priorities Called into Question as Initial 3C Rail Study Reaches $650,000

by John Michael Spinelli

August 27, 2009

COLUMBUS, OHIO: The split vote last Monday by a bi-partisan legislative spending panel, over whether Ohio rail chiefs should be given another $200,000 on top of the $450,000 they received in late March to fund a California firm's assessment of the capacity and capital costs associated with Gov. Ted Strickland's idea to start running passenger rail trains between Cincinnati and Cleveland, raises questions of whether this project has merit at a time when Ohio's budget is under terrible pressure and if the Controlling Board will become a back-door to increased agency funding reduced during the regular budget cycle?

The Controlling Board, housed in the Ohio Department of Budget and Management and controlled by the administration of Democratic Gov. Strickland, is an insider's agency that rarely gains coverage by the media other than when spending on hot topics like casino gambling, slot machines or special counsel for special projects comes before its bi-weekly schedule. Ohio news media did take note that state agencies whose funding was reduced in the recently completed budget cycle, that ended on July 17 when Strickland signed a budget some say will lead to thousands fewer state workers and job losses by agencies whose state funding was cut sharply, are using the sleepy spending panel as a back-door method to add to their budgets.

In the case of the request by the Ohio Department of Development (ODOT) and its captive rail agency, The Ohio Rail Development Commission (ORDC) that asked for and received another $200,000 for critical work its needs before it can apply for high-speed rail (HSR) funds from Washington on October 2, the Controlling Board may find itself in the news more often as it becomes a new battleground to tussle over projects that really do need more funding or whether projects like the 3C railroad project, that Republicans in general and Republicans on this panel in particular say is not only not in demand but will spend precious dollars that could be spent on more pressing priorities, like funding food banks, children's health programs, libraries, services for the elderly and the sick, should slow down and wait for better times or better train technology.

Public information submitted (#90) to the Controlling Board by ODOT/ORDC to add another $200,000 to the $450,000 the panel approved in late March, shows the small, four-person California firm, Woodside Consulting, that state officials said they had chosen to perform analysis of the "capacity and capital costs" associated with the re-establishment of passenger rail trains along a 250-mile route connecting Cincinnati with Cleveland with stops in Columbus and Dayton along the way because only they could do it, will now outsource the state's outsourced work to other consultants, one of whom will charge $300/hour, a rate that even high-priced lawyers doing special counsel work for the Ohio Attorney General would envy.

Calls for comments to the three Republicans who voted against the rail consulting funding request Monday, State Senators John Carey (17th Dist), Mark Wagoner (2nd District) and House Representative Jay Hottinger (71st District), were not returned to Spinelli on Assignment in time for this column. However, a staffer for Hottinger who said he was familiar with his boss's general thoughts on the issue of high speed rail, said his boss believes their is little real demand for this project and that a train system like the one that runs in the nation's capital would be better suited for Ohio, as it would help move people from suburbs to city centers, a decision that might actually lure some drivers to abandon their cars for a commuter train.

In ORDC's pre-application to the Federal Rail Administration (FRA) that asks for more than $5 billion of the $8 billion being offered nationally for such projects, Ohio said its 3C plan would conservatively cost $1.53 billion. This figure, some rail observes say, will rise much higher if and when real bids are ever received. Bids to build HSR in Florida -- recall that the International standard for HSR is 167-mph or more-- were nearly double what proponents said they would be when they convinced Floridians in 2000 to have the state make a commitment toward Euro-style trains. In 2004, when the jaw-dropping bids came in from foreign companies that control the fast train technology, Floridians reversed their commitment in another statewide vote. The lesson from Florida, and now from California, where a slim margin of voters last November authorized the sale of $10-billion in bonds to pay one-third the total cost of the state's $45 billion HSR package and where a lawsuit filed recently by opponents of one part of the plan to adjust the route has been upheld by a county judge, should not be lost on regular Ohioans or their leaders.

Amid the fanfare and fever surrounding the prospect of HSR coming to a state near you, a vision that has every township official thinking their location will be a HSR stop and the riches brought in from the talking point that economic development will occur from it, more and more national voices are making clear arguments that are popping the myth bubble expanding around HSR. It may rub some rail proponents the wrong way, but its a message more people need to hear before they are lead to far down the primrose path.

The lesson may play out in Cincinnati, one big C in the 3C rail route. Residents of the Queen City opposed to a trolley project, that has already escalated in estimated cost from $123 million to $185 million, are pushing a charter amendment that if passed this fall would prevent any rail projects going forward without a vote of the public. The hometown newspaper, Gannet's conservative Cincinnati Enquirer, wrote a no-holds editorial calling for a halt to the trolley project. Proponents of trolleys running in a mostly Downtown loop argue not doing it will show how opposed to progress Cincinnati will be. Advocates to stop the trolleys in their tracks say its another boondoggle waiting to happen. Their argument is mostly centered on the health of city finances. Until Cincinnati city finances are flush again, such that it doesn't have to lay off workers or reduce funding for important programs, only then should such a project be discussed.

The implication for ODOT/ORDC is that passage of the charter amendment will help derail their hell-bent push to start the 3C because voters will have to vote again to authorize the building or updating of rail lines into the city.

Critics of the 3C plan, which if it ever gets started -- rail officials say with great uncertainty that their "quick start" train may not run until the fall of 2010 or even 2011 and that the train won't be in full bloom until 2015 -- say the speed will be so slow -- averaging only 57-mph because this train, by necessity, will be forced to share freight rail tracks with freight rail trains. Ohio rail officials are caught on the horns of a dilemma -- they want to encourage support for the plan but at the same time they must tell some officials they won't be a stop on the route. By themselves, freight trains had over 100 accidents in one year in Ohio, according to the FRA. It follows that collisions between passengers and freight will happen.

One key question state rail chiefs or even lawmakers are not asking, is who will be liable for such crashes? Indemnification, the technical name for who pays for accidents when they happen, is an issue, that like the capacity and capital costs Woodside is to produce, state rail chiefs don't want to talk about. State supporters of the costly train to the past would rather oversell its benefits -- one favorite talking point is that rail nodes will foster economic development, but it's a talking point any mode of transportation can make, so its not unique to the 3C -- and undersell the cost to build it, the cost to operate it, the ridership numbers who will use it and how much Ohio will need to subsidize it because it won't be a money maker.

Another critical aspect of the 3C is who should really pay for it, as this article about the debate over the cost of transportation in Virginia demonstrates. Should everyone or just users be stuck with the bill? State rail proponents would like everyone to pay for it even though only a few will actually pay the ticket price to ride nearly seven hours from one corner of the state to another. They are having a hard time making their slow train appear competitive with traveling the same distance by car. Those in the know in Ohio know that even when a rider gets from point A to point B, the public transportation infrastructure that awaits them in any Ohio city has a lot to be desired. State lawmakers have reduced state funding for public transportation by more than 60 percent since 2000, so who's fooling who here?

One funding options state rail officials would rather not discuss is asking those cities who want to be a part of the route -- Cincinnati, Dayton, Columbus and Cleveland -- and those riders who want to ride it to pay for it. Most of Ohio will not be close to it and few Ohioans will not ride it. So why should they pay for it? Tolls and user fees are popular forms of paying for infrastructure, as those of us who follow infrastructure bills in Congress know. James Oberstar (D-Minnesota), the reigning wonk on transportation infrastructure, knows everything about how transportation modes can operate seamlessly but he falls short on how to pay for it all. With the nation all lathered up over growing deficits made real by spending on tax cuts, war and now maybe health insurance reform, the appetite to have Washington dole out trillions more for roads, bridges, airports or trains and train stations is surely souring. States like Ohio will be left to their own devices and political wills to fund their own infrastructure.

As the races for various public offices in 2010 come closer, the wisdom or folly of pushing the 3C slow train to the past will gain more speed. Gov. Strickland will have to defend it while his opponent, possibly John Kasich , a former Ohio Congressman know for his attention to balanced budgets, low-taxes and deficit hawk sentinel, could use it to show what a waste of funds it will be and ask where, exactly, Strickland expects to come up with Ohio's share of hundreds of millions, maybe billions, for a project that would necessarily have to usurp money from more important state priorities.

But until the un-electeds like the leaders of ODOT and ORDC are reigned in by their boss, they will continue to make unsubstantiated arguments for their slow train to the past and spend money as if it was delivered in a box car from CSX, all because they have control over it. Voters will be left at the train station (most communities don't have and can't afford to build) as they watch slow trains that won't go any faster than Civil War era trains chug away from them on routes to yesteryear.

John Michael Spinelli is a Certified Economic Development Financing Professional, business and travel writer and former credentialed Ohio Statehouse political reporter. He is registered to lobby in Ohio and is the Director of Ohio Operations for Tubular Rail Inc. Spinelli on Assignment is syndicated by Newstex.com and is available for subscription (99 cents/month) to Kindle owners. His tweets on Twitter can be followed @OhioNewsBureau. To send a news tip or to make a comment, email him at: ohionewsbureau@gmail.com

Tubular Rail, the Valley of Death and Helping a Hurt Ohio

Tubular Rail, the Valley of Death and Helping a Hurt Ohio

"Trackless Train" Company Wins State Support for Ohio Supply Chain in Bid for DOE Energy Funds

TR technology as Cool as "Making a Rock Float."

by John Michael Spinelli

June 2, 2009

COLUMBUS, OHIO: Officials from Tubular Rail, the "trackless train" company from Texas, had reason to smile last week. After eights months of seeking an audience with Gov. Ted Strickland's development staff to introduce them to the company's patented technology that reorganizes the essential elements of conventional railroads by eliminating the need for tracks or bridges, a letter of general support from Ohio was issued that signaled state officials are ready to help the company build an Ohio supply chain for both its transformational prototype and for the next generation of trains it believes will become the fourth transportation industry, after trains, cars and planes, that promises to become a new standard for America and the world.

With the understanding that "a significant portion of the components for both the demonstration and commercial system can be sourced in Ohio," StevenSchoeny, Director, Strategic Business Investment Division, affixed his name to a letter than informed company officials that "the Ohio Department of Development is prepared to work with Tubular Rail and your suppliers in Ohio to take advantage of Ohio's economic development programs to build your supply chain capacity."

The announcement Monday by General Motors that it was entering bankruptcy court where it will reinvent itself in a final turnaround effort to remain a viable auto-manufacturer in the U.S, makes the hunt for new jobs that much more compelling. Ohio has everything to gain and nothing to lose from taking an interest in the birth and development of a new industry, as Tubular Rail thinks of itself.

Combining GM's announcement yesterday that its future reorganization plans will cost Ohio another 1,000 jobs with Tuesday's announcement by NCR that it will relocate its headquarters from Dayton to Georgia, taking about 1,300 jobs with it, and adding it to the dour backdrop that more than 300,000 jobs have been lost on the watch of Gov. Ted Strickland, elected in 2006 on the campaign promise to turnaround Ohio, solidifies the expectation that the state's unemployment, now above 10 percent, will continue to tick upwards.

And now that John Kasich, a former Ohio Congressman and investment banker, has declared he will challenge Strickland in 2010 and whose campaign slogan is "A New Way, A New Day," the race is on to see which man can best restore jobs and prosperity to a once mighty industrial state bobbing in a sea of red ink.

GM's bitter-sweet news makes Ohio's rough road to recover even rougher. The Hobson's Choice now, exacerbated by an imploding economy that has triggered a range war in Columbus over how to balance the budget by the next fiscal year, which starts June 11, pits Democrats, who want to fill a current and growing budget gap with billions in one-time stimulus funds, and Senate Republicans, who are ready to wield a big ax and lop off even more state-funded programs, better syncing future state expenditures with expected shrinking revenues.

Amid this economic turmoil in Ohio, Tubular Rail has submitted an application to the federal Dept. of Energy, Advanced Research Projects Agency - Energy, which is offering up to $20 million per project for new energy ideas that are so "transformational" they will "disrupt the status quo" so much that a new industry standard will emerge.

From the DOE grant guidelines: "Often, a technology is considered transformational when it so outperforms current approaches that it causes an industry to shift its technology base to the new technology. The Nation needs transformational energy-related technologies to overcome the threats posed by climate change and energy security, arising from its reliance on traditional uses of fossil fuels and the dominant use of oil in transportation."

With their Ohio letter in hand, company officials added the Buckeye State to the list of team members located in Texas and Ohio that it hopes will catch the eye of DOE grant staff.
If Tubular Rail is passed through to the next round of the , when a full 150-page application will be completed,

"This project effectively creates a 'fourth form' of transportation, one that will have the impact today that the locomotive, Model T and Kitty Hawk had in their day," according to Robert Pulliam, inventor of TR technology and president of the company.

Pulliam, born and raised in Detroit but now residing in Houston, Texas, said the two mile prototype system will be proof-positive that a new "Green" industry addressing Green House Gas emissions, oil imports, infrastructure costs and job creation is upon us.

Tubular Rail's goal, according to Pulliam, is to build a transportation system that reduces the cost of installation and the affect of infrastructure impact, yet achieves the energy efficiencies inherent in steel railway systems.

Pulliam said the "Pecos Project" will be a full-scale operating system to test and prove all components, reconfiguring the essential functional elements of the rail-bed and train. It reverses orientation of steel rail and steel wheel by ingeniously putting the rails on the car and propulsion on the supports or O-Ring stanchions.

The stated goal of the program is to take an "immature technology that promises to make a large impact on the ARPA-E Mission areas...and develop it beyond the 'valley of death' that prevents many transformational new technologies from becoming a market reality."

As stated in its grant guidelines, DOE's goal is to provide funding such that a company like Tubular Rail, which already has preliminary engineering and patents in hand, can overcome the later phase of the "valley of death" by funding the technology (component, system, hardware, software, or other) that must be matured to the point that it can transition into industrial development and deployment.

The Thayer School of Engineering at Dartmouth College, which performed work for Tubular Rail, contrasted and compared TR technology with current convention railroad technology. "We strongly believe in the spirit of Tubular Rail and would like to see the project receive funding soon," theThayer report concluded. It added, "An improvement upon conventional technology is necessary because existing technologies for high-speed and urban transit are expensive, difficult to build through populated areas, and more environmentally unfriendly. In summary the basic advantages of Tubular are an initial investment 54 percent less than the competition,operations 450 percent more efficient than conventional technology and emits 35 percent less CO2 than other forms of transportation." Simply put,Thayer said "Tubular Rail is a viable option for the future of the rail industry".

What does all this mean for Ohio? Jobs, jobs, jobs. Ohio, by agreeing to have its name added to TR's list of potential partners, puts itself in a prime position to seize the day on the birth and development of a new transportation industry. Although TR's prototype will be built in Texas, Ohio can still be home to another Wright Brother's Kitty Hawk moment, TR's 1st commercial passenger.

With daily announcements of job losses battering the spirit of state leaders, workers, their family and friends and the communities they live in, any lift Tubular Rail can give to the Birthplace of Aviation should befacilitated no matter the cost. But helping TR out means state leaders and the citizenry at large need to re-think how they think about rail. Locomotive engines guided by tracks in the ground have been around for a long time. But the new paradigm, as invented by Mr. Pulliam, takes those relationships apart and puts them back together differently, but uses readily available technologies.

Frank Sonzala, a TR board member from San Antonio who is also a proven entrepreneur and patent holder, says the simple concept behind the company's game-changing technology is tantamount to "making a rock float." With Ohio sinking like a rock, it's letter of support is one small step for a state sinking beneath the waves of the Great Recession, but one giant step for Tubular Rail.

John Michael Spinelli is a Certified Economic Development Financing Professional, business and travel writer and former credentialed Ohio Statehouse political reporter. He is registered to lobby in Ohio and is the Director of Ohio Operations for Tubular Rail Inc. To send a tip or comment, email ohionewsbureau@gmail.com