Ohio Debt Rating Decline Linked to Stimulus Bucks, Loss of Manufacturing Jobs
Buckeye State Leader in Loss of Manufacturing Jobs
Y-2-Y Revenues Off by 11%
August 31, 2009
COLUMBUS, OHIO: The same effect experienced by a borrower whose credit card score is negatively affected by undisciplined borrowing and the borrowers diminished ability to pay off their balance in full in a reasonable time is having a similar affect on on Ohio.
Noting decisions to delay $736 million in debt payments by relying on one-time federal economic stimulus funding and on estimated revenue from expanding gambling, a controversial initiative that could further be compromised if legal challenges filed against it gain traction, Moody's Investor Services said its decision last week to reduce its rating of Ohio borrowing from the second-highest to the third-highest was a reflection of its concern that Ohio's budget could experience even rougher seas in the future when federal funds evaporate and gamblers don't lose as much as projected.
While Moody's is concerned about the future, its rating decision also reflected its concern for the past, as reflected in the tremendous number of manufacturing jobs lost in Ohio over time and in just the last twelve months.
For that story, data released by the US Bureau of Labor Statistics and published in the Atlanta Business Chronicle show Ohio led all other states in the loss of manufacturing jobs over a period of one year. For Ohio, its loss of 127,000 manufacturing jobs topped all other states. Its closest rivals in loss were California (123,400) and Michigan (108,900).
Ohio clearly has fewer resources at its disposal to maintain superior borrowing rates. Once an industrial titan of the Midwest whose once well-developed industrial might was the envy of other states and nations, Ohio has lost many battles over the years as its manufacturing base continues to tumble in size from its salad days of being a leader in labor-intensive industries like steel, rubber and glass that among other important industries made Ohio a good place to raise a family and locate a business.
Ohio communities could once count on manufacturing jobs as the bread and butter of their livelihood. Ohio's state budget was similarly blessed by revenue from these and other industries and the workers who pushed them forward that could be transformed into good roads, strong bridges, institutions of education and infrastructure that attracted families and businesses alike.
But with the state budget under attack from cliff-diving revenues exacerbated by business leaving the state and workers looking elsewhere for greener pastures, Ohio seems hard pressed to turn the tide by reclaiming a future that reflects its prosperous past. Even though its two-year state budget of $50.5 billion is still considerable when compared to budgets from other states, the across-the-board pain it delivered to individuals and agencies was considerable.
If the prospect of 30-40,000 more Ohioans losing their jobs due to state budget cuts becomes reality, the added grief that will be visited on Ohio families will be like rubbing salt into an already open wound of a bleeding budget waiting for a transfusion that may not arrive for years.
Response to such news by the Governor's office say the state's rating "continues to be solid despite the national economic downturn" and note as proof of that that "the latest outlook change did not affect the cost of issuing coal-development bonds recently."
"The long-running structural changes affecting Ohio's economy indicate that the state may have difficulty recovering jobs in tandem with national trends as the recession ends," the report said, according to the AP article.
According to the August 11th Monthly Report on Ohio's Economy and State Finances, "Ohio’s economy has begun to see signals of the beginning of a weak recovery from the deepest downturn experienced in the past 50 years." The report stated that as the national recession eases a bit, a weaker than average recovery is expected to begin as early as the end of this summer. "The pace of economic recovery in Ohio will depend heavily on the fate of the motor vehicle industry," a reference to the fates of General Motors and Chrysler, two Detroit-based firms with large numbers of workers in Ohio, who went into and emerged from federal bankruptcy court.
The unemployment rate in June for Ohio was 11.1 percent, the report noted, a figure it said would continue to "show a downward trend throughout July." Consumer confidence also decreased somewhat in July, but the trend still appears to be improving relative to the extreme lows registered in February, it said. Also, for the first time in nine months, Ohio’s total tax receipts exceeded estimates. However, the real news is that "year-over-year performance is still 11 percent below the July 2008 levels."
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
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