Sunday, January 10, 1999

Challenges facing Taft are familiar


School funding, economic threats top state agenda

BY MICHAEL HAWTHORNE and SANDY THEIS
Enquirer Columbus Bureau

[taft]
Cincinnati's Bob Taft becomes governor of Ohio at 12:01 a.m. Monday
(AP photo)

| ZOOM |
        COLUMBUS — Two decades after Ohio defined the Rust Belt, Gov.-elect Bob Taft takes over a state Monday that by most indicators is robust and prospering.

        The unemployment rate and welfare rolls are hovering at or near historic lows. A half-million more Ohioans are working than seven years ago. Companies are scrambling to find workers and many offer benefit packages for even their lowest-paid employees.

        But the state's gains haven't been shared by all. And there are economic threats on the horizon that could pose significant challenges for Mr. Taft, 57, during the next four years.

        For instance, the unemployment rate remains mired well above the national average in Southeast Ohio and other counties that have yet to recover from the exodus of manufacturing jobs during the 1970s and '80s.

        In Cincinnati, Mr. Taft's hometown, the problem isn't a lack of jobs, but rather not enough workers trained for positions in the burgeoning serv ice and financial sectors.

        Then there is the cost of keeping jobs in the state. The city of Toledo may go into debt to save 4,900 jobs at a Jeep plant. In the Youngstown area, the already fragile economy is threatened by imported steel and the possible replacement of a General Motors assembly plant with a smaller factory em ploying fewer workers.

        Mr. Taft says he is ready to tackle the problems.

        “We need a better plan that takes into consideration the strength of the various regions,” he said Friday. “We've done a good job on specific projects, but we need to take a more global view.”

        Despite Mr. Taft's promises to foster continued growth, analysts say his ability to keep the good times rolling is limited.

        His predecessor, former Gov. George Voinovich, was wildly popular in part because a bullish stock market encouraged borrowing and spending by employers during much of his eight-year reign. Growth and prosperity would be threatened during Mr. Taft's watch if stock prices drop or businesses falter.

        “So much of this is tied to the national and world economies,” said Donald Berno, president of the Ohio Public Expenditure Council, a nonpartisan group that studies the state economy and tax structure.

        “Although they tend to reap the benefits when times are good and suffer the damage when they're bad, governors generally are restricted to tinkering around the edges,” Mr. Berno said.

        One area where Mr. Taft can make a difference is the state's education system. Employers are clamoring for dramatic improvements in test scores and graduation rates, which could lead to better-trained workers and higher salaries.

        Mr. Taft has called for greater cooperation between high schools and two-year community colleges to help students acquire skills for high-tech industries. He also wants high schools to place a greater emphasis on science and mathematics, and pledges to enlist volunteer tutors to ensure 4th-graders are reading at their grade level.

        Employers want to concentrate on reforming the way schools operate. But questions about how elementary and secondary schools are funded will continue to dominate the political agenda in Columbus.

        The Ohio Supreme Court is expected to rule later this year on legislative changes intended to comply with the court's March 1997 decision that declared the school-funding system inadequate and unconstitutional.

        No matter how the court rules, Mr. Taft and state lawmakers will be under pressure to spend more money refurbishing Ohio's crumbling school buildings, which a 1996 federal report determined are the worst in the 50 states.

        Among the other economic issues facing Mr. Taft are the consequences of welfare reform.

        Ohio's welfare rolls are at their lowest level in more than 28 years, but advocates for the poor say many former recipients can't afford health care once they no longer qualify for Medicaid.

        In an effort to assist families moving from welfare to work, a coalition of Cincinnati-area business and advocacy groups is proposing the state spend $80 million to continue Medicaid coverage for parents with incomes less than 150 percent of the federal poverty level.

        Business groups are tentatively supporting the idea because people who can't afford health insurance end up in hospital emergency rooms for even routine treatments. Those costs are passed on to employers through higher premiums.

        Ohio also needs to do a better job getting people to where employers are locating, said Hamilton County Commissioner Bob Bedinghaus.

        The unemployment rate in the city of Cincinnati is more than double the rate in all of Hamilton County, he noted, yet many new jobs are across the Ohio River around the Cincinnati-Northern Kentucky International Airport.

        “We need to address workforce issues from a regional standpoint,” said Mr. Bedinghaus. “There are people to fill these jobs if we can train them and get them to where they need to be.”

        In another border city, Toledo Mayor Carty Finkbeiner is locked in a struggle with his counterparts over the state line in Michigan.

        Two years ago, the city and officials from the company now known as DaimlerChrysler negotiated one of the most expensive incentive packages in history — a $278 million deal that will keep the automaker making Jeeps in Toledo.

        However, the city may go into debt to complete the deal. The cost to relocate businesses for the Jeep plant expansion has ballooned to $76 million from the $30 million originally estimated. Mr. Finkbeiner wants to borrow money from the federal government to cover the city's share of the costs.

        While the Jeep package means 4,900 jobs will remain in Toledo, it highlights a downside to the bidding wars between states and communities trying to lure or keep well-paying manufacturers with tax breaks and other incentives.

        One of Mr. Taft's first tests may be in the Youngstown area, where General Motors announced last week it will close its Lordstown assembly plant. GM plans to decide within the next 60 days whether to build a smaller, more efficient replacement nearby.

        Mr. Taft visited the region just weeks after his election, promising the state's assistance in retaining the 5,400 hourly jobs at the plant and 2,800 at a nearby metal fabrication plant.

        Economic challenges are equally as complex across the 29 counties in eastern and southeast Ohio that are part of Appalachia, which have strug gled to keep up.

        Seventy-one percent of private-sector employees live in just 15 of Ohio's 88 counties, according to the Ohio Public Expenditure Council. Those same counties produced 57 percent of new private sector jobs between 1986 and 1996.

        Meanwhile, the unemployment rate in Morgan County is 12.5 percent. In Adams County, the jobless rate is 9.8 percent.

        The key to more rapid growth is education, said inter im Gov. Nancy Hollister, a Marietta Republican who will step down Monday to take a state House seat that encompasses much of the region.

        “The only way we are going to lure employers is if we have a well-trained workforce that is indispensable,” Ms. Hollister said. “Our challenge is to make sure we develop a first-class system of education in Appalachia, so we all share the benefits of economic development.”

       



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