You want to know how to save various sources of federal

funding…this will be tougher than you know

You will only get the static analysis not the dynamic

analysis…first the state…Ohio could have fired every state employee and not have the

books balance in 2011

That is just the General Revenue Fund; Transportation is even more

doomed…

• The youth drive > 7.7%• Core inflator is 5%: Decline in gas

usage is 2%• Net loss of 2 pennies of tax• Cash for Clunkers • County Engineers/gravel • Fed have propped up Highway trust

with $30 B

Now about the fed annual budget

• Prior to 12-31-12 the % of GDP taken in taxes was 15.5%: Starve the Beast

• On 1-3-13 it was 19.5%• Historically we float between 18% and

19%• We are still spending 23% of GDP• France is near 40%• To tax at 23% of GDP means we tax the

upper two of six tax brackets at 78%

So now let’s talk about the all funds federal budget…

• The operating fund deficit is $16 trillion; Defense is 25%, the two wars were 25% of that

• The all funds deficit is $ 87 trillion

• That includes all deficits such as Social Security at $ 20 trillion

• Medicare at $43 trillion

• 550% of our GDP

• If we tax all income over $ 66 k/yr we get $ 5.1 trillion

• If we tax all corporate profit we get $ 1.6 trillion

• We could increase all taxes that high and still take a dozen years to dig ourselves out, or tax half that amount and take 24 years…with not spending on anything else…

• This is static…not dynamic

The tax system is hot• Top 1% has risen to 41.8% in 2008 from 17.4% in

1980• 2/3rds income from the top 1% comes from nonwage

income, including capital gains, dividends and proprietor's profits. (Docs sub chapter S)

• From 1960 to 2000, payroll taxes were never lower than in the previous year, individual income taxes dipped only twice, and corporate taxes dropped 11 times.

• Since 2000, individual income and corporate tax revenues dropped five times, while payroll taxes fell twice. Not only do revenues from individual tax returns drop more often now. They fall more severely, with recent collapses of 14%-20% versus the 3%-5% range before 2000.

Just one more thin wafer…

• So…taxing the 1% more gives us more volatility

• The top 1% hold so much more wealth than traditionally

• Currently 90% of income tax comes from the top 10%

• 90% of wealth dissipated by third generation

The Biology of Humans says tax the 1%…why?

• BRS; we have five core values

• Security

• Health

• Children

• Family

• Fairness

• Fairness will be the battle of this age; more on that in the book section

So is there anything personally you should do?

• Don’t buy a new car

• Don’t upgrade your kitchen

• Encourage your kids not to go to Oberlin, but go to Wright State and study math

• Why?

• Since 1985, the number of college graduates in soft sciences has doubled, but hard science has stayed flat

What can you read to prepare?

• MoneyBall by Michael Lewis staring DATA

• Every time you see the phrase “Front office” substitute in “local governments”

• The Big Sort by Bill Bishop Landslide Ctys

• Coming Apart by Charles Murray

• Buckeye Battleground by John Green

• The Fourth Turning by Strauss and Howe

• Capricious Chaos by some guy not yet

Ok, how about professionally?

• Rep. Amstutz put all his chips on the table

• Local Government Innovation Fund

• “You want to pay local governments to do the thing they should be doing?”

• You can lead a horse but…

• $45 million in loans and grants

• http://development.ohio.gov/cs/cs_localgovfund.htm

What is the purpose?

• To promote shared services, collaboration and consolidation that result in both cost savings and better services.

• Contact your legislators to continue this program as this is your only hope to get that new car.

• The other thing is more data is coming• SB 356

http://www.legislature.state.oh.us/bills.cfm?ID=129_SB_356

Look at the Cupp Report

• http://www.ode.state.oh.us/GD/Templates/Pages/ODE/ODEPrimary.aspx?page=2&TopicRelationID=1441

• Costs of local government; it will pass• Get your costs down; remember Money Ball• Look to MA; “242 regional housing authorities

into six regional housing boards. Consolidation would save up to $10 million in annual administrative costs, while streamlining agencies and centralizing control”

• Ohio is a data desert but not all data is helpful

http://www.facebook.com/photo.php?pid+58699&idq9315331

So…what do you do?

• Get paid to share your services• Don’t say you are doing everything; you are

doing everything you are comfortable • Ask local businesses/CPAs to form an

advisory team to perform a management audit team or ask AOS

• Have your associations work to develop chart of accounts

• Develop a plan for surviving without CDBG• Strong charter county

Finally…you hope…some practical things

• Subscribe to Hannah News Services• Have lunch with people you have nothing

in common with…• Read those books• Send me hate email at

ekkrebs@gmail.com • @GO_GeneK • Send me examples of good and failed

policies

“It ought to be remembered that there is nothing more difficult to take in hand, more perilous to

conduct, or more uncertain in its success, than to take the lead in introducing a new order of things, because the innovator has for enemies all those

who have done well under the old conditions, and lukewarm defenders in those who may do well

under the new.  This coolness arises partly from fear of the opponents - who have the laws on

their side - and partly from the incredulity of men, who do not readily believe in new things until

they have had a long experience of them.” Nicollo Machiavelli, The Prince