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Upheaval of the state teachers pension fund with a vote to oust a chair and put in a new one, and a lawsuit to remove two members and two different views on two big issues being discussed in Ohio.

Raising the minimum wage and eliminating the state income tax.

That's this week in the state of Ohio.

Welcome to the state of Ohio.

I'm Karen Kasler.

Turmoil at the $90 billion teacher's state pension fund has gone from the meeting room to the courtroom and back.

Just hours before the state teachers retirement system's monthly board meeting.

Attorney General Dave Yost filed a lawsuit to remove two board members he says are trying to steer most of the funds money to a private investment company to benefit themselves.

Retired teachers have been angry that their cost of living adjustment was suspended for five years.

They've backed elected board members and calling for more transparency and changes in the fund's investments.

And governor Mike DeWine stress appointee Wade Steen joined them.

Last summer, DeWine removed Stein for missing meetings.

Stein sued to get his seat back.

Now, Yost, who said he was investigating a link between board members and that private investment company, is suing to remove Stein.

He's.

He's hiding behind litigation.

It's defamatory.

It's not true.

I thought there was going to be a fair, impartial investigation.

I guess this might be the fastest investigation ever done in Ohio history.

But we're going to defend this vigorously.

None of it's true.

It's all false.

Yost is also suing to oust Rudi fit and bomb, with members backed by retired teachers, comprising a majority on the STRs board.

They voted this week to oust the chair and put them in charge.

DeWine says he wants to ensure that STRs remain solvent.

And he said there's important evidence in the form of an anonymous letter outlining Strauss's concerns about Stein and 15 bombs, relationships with that untested private investment company.

So that was my grave concern.

So going forward, I think the real the real question is, you know, how is these investments made?

the teachers deserve, to get the best return on the money.

They can.

We're all for that.

they also deserve to have the board, not waste money.

It's thought the anonymous letter came from STRS staffers.

Yost, spokesperson said in an emailed statement that reads in part, this lawsuit allows us to obtain the discovery documents necessary to finding answers to the allegations.

This is a step in the process to ensure that we continue to fight to protect teacher's hard earned retirement dollars.

Backers of a plan to hike the minimum wage to $15 starting in 2026 are circulating petitions for a constitutional amendment for this fall's ballot, the same one on which Ohio voters will pick for president.

U.S. Senate.

All 15 members of Congress, the 99 members of the Ohio House, 16 members of the state Senate, and three justices for the Ohio Supreme Court.

There are studies on both sides on how boosting the minimum wage is a good or bad thing.

But one fact is certain voters in states across the country have approved minimum wage increases every time they've been presented, with one going back to 1996.

I talked about that and more with Hannah Halbert from Policy Matters, Ohio, a progressive research group, and Greg Lawson from the Buckeye Institute, a conservative think tank.

So let's start with minimum wage.

People working 40 hours a week deserve to make a livable wage, according to the arguments for the minimum wage.

So, Greg, I want to ask you increase the minimum wage could improve employee performance and retention, which could lead to higher customer satisfaction.

It could increase demand for services and goods because lower income families would have more money to spend, and it could lift families out of crime and reduce racial and gender inequalities, perhaps even lower crime.

what's wrong with that?

Well, I think the challenge is, how much is it being raised?

How fast is it being raised?

These are two critical factors, because if you do it super fast, you could end up with a situation where the the businesses aren't able to adjust.

And I'm not talking about so much big businesses.

I think most big businesses today are probably paying at or above the minimum wage.

a lot of what you're finding is service sector jobs, but a lot of smaller kind of companies and smaller businesses that may not have access to large reservoirs of capital and money like that.

Those are the kind of folks that this has the potential to do some damage to.

so the concern that we would have is, does it cause certain businesses to, not be able to hire as many people?

That's obviously the big problem, because the reality of a minimum wage is it's definitely going to help people who get it right, because for all the reasons that you just cited.

The problem, though, is what happens to people who don't get jobs, at all in the first place.

It's sort of the unseen factor that doesn't always show itself up.

And so I think that people need to understand that there are sometimes economic consequences.

You do too much.

And we're already seeing this, by the way.

We're seeing it in a lot of fast food restaurants, for example, you're seeing the kiosk ization of of things, and we're gonna have to start learning how to tap the screen a lot better and go backwards.

Well, that's actually not that bad.

But I will say.

Out raising the wage, we're seeing automation.

Yeah.

The fact is, is that human employees are never going to be the robots when it comes to price.

Never going to happen, especially if our goal is to have human employees able to, like, feed themselves and take care of themselves well enough to show up in a way that allows them to be productive.

It's just not going to work.

We've heard that argument, really for all time when it comes to humans and technology.

The fact is, is that technology makes workers more productive.

It increases wealth in our society.

And the if we really care about that, we should be looking at policies that ensure that they increase productivity.

That increased wealth is broadly shared, that we're not cut out minimum wage has has nothing to.

It's not going to slow the oncoming robots.

We're never going to beat them on purpose.

I want to ask you about some of the specifics here.

I, I believe I said lift families out of crime, but I met with families out of poverty.

So I want to make sure I got that clear.

But, Hannah, let me ask you, a higher minimum wage hurts the job creators is the other argument.

Labor costs would increase, profit margins would get tighter.

That could lead to job cuts and more automation.

Like Greg was saying, offshoring.

Perhaps that could mean goods and services would cost more, because that won't.

And that won't help people who are now making that higher minimum wage and a one size fits all approach might not help people who are living in areas with lower cost of living.

So why?

Let's talk about that.

First, the job destruction argument is one, regardless of what policy we're talking about, whenever it's a policy designed to increase worker protections, to strengthen, working people, whether it's in the state or nationally, these are the same things we here.

The fact is, is that Ohio raise the minimum wage in 2006.

Similarly, through a ballot initiative, the rate of increase between the 2006 model and what's proposed at the ballot now, or hopefully on the ballot now, is pretty similar.

So we've experienced this already.

These big claims about lots of job destruction.

It's going cause all of this habit havoc.

We're going to see, small businesses shuttering.

It just hasn't borne out by the facts.

And some of these jobs are essential jobs.

Jobs we need.

Well, and I think this is actually getting to the point that what we would say is we need to improve our education system.

We need to we're not doing very well with Stem.

I think in Ohio.

And that's not just Ohio.

That's across the board.

We are struggling to, I think, get the kind of jobs that we're wanting.

Now.

We've got Intel coming into Ohio, we've got all these tech jobs.

Everybody's really especially in Central Ohio, everybody is talking about that.

We need to do a better job of getting people those kind of skills, because at the end of the day, the minimum wage, nobody should actually be making them go wait for very long.

Minimum wage should be an introductory sort of situation.

I can't say that that doesn't happen to anybody, that somebody doesn't get stuck in a, in a tough situation in their life.

And maybe they're, you know, in a job that is not, fulfilling all of their needs and things like that.

But it really needs to be an introductory job that can be a ladder to more success as time goes on.

So and we get to that success is we need to have better education.

We need to have continue to look at regulatory reform and things like that that make it easier for the jobs that keep getting created.

Of course, right now, I guess I would really harken to the education piece because we have a lot of job openings and not a lot of people necessarily filling some of the jobs.

And this is a problem that you see with a lot of employers.

And and so we need to really work on that skill set.

I think you hear that from the DeWine administration.

You see the lieutenant Governor Husted talking about that all the time.

And I think you're seeing the legislature talk more and more about partnerships.

And how do we get that?

Those are the things that we should really be thinking about in terms of resolving.

I think a lot of the issues that Hannah raised that are real issues about what does it mean, how do you take advantage of labor?

Because if you don't have the skill sets to take advantage of the automation, then you don't get the productivity gains and the productivity gains or what actually give you wage gains.

Otherwise, for people who are left behind, they are going to, as time goes on, be left behind.

For every well-paying hard tech job which like, has not yet materialized.

With the Intel, we're like, let's look at the number of folks out there on the spot.

Now, the delays, you're going to have some janitors, you're going to have a fast food worker, you're going to have a child care provider, you're going to have a home health care aide.

All of those professions are needed.

They're important.

They make society go.

Those workers are not going to go away.

And what you're really saying whenever you're saying, well, they should just earn their way out of it, is that there are some people who shouldn't be paid enough to survive.

And in Ohio, raising the minimum wage up to $15 as per the ballot initiative, we've not modeled.

Senator Blessing's proposal.

Yet.

I was just going to ask you about that.

The ballot initiative will move a million people, million people in Ohio.

That's not folks who are just down on their luck.

Those are folks who are working hard every day trying to get 40 hours, I'm sure, or maybe string in a 2 or 3 of these together.

they deserve to eat without the need for food stamps.

I want to ask about Senator Bill Blessing's bill that would raise the minimum wage to $15 an hour starting in 2028.

So it would go up over four years, in contrast to the constitutional amendment, which is not on the ballot yet, but the signatures are being gathered that would raise the minimum wage to $15 an hour starting in 2026.

And of course, a constitutional amendment can't be changed.

A law can.

So what are your thoughts?

I mean, ballot initiatives, when they go to voters, they haven't.

Minimum wage ballot initiatives have not lost since the 1990s.

So it seems likely that this is going to happen.

Well, I'd be surprised if it makes the ballot, and I think it probably will.

I think it's likely to pass.

I think that's just the reality of the situation now.

I think the Senator blessings Bill.

I give him credit for trying to figure this out and do something I we probably can't be supportive of the concept inherently, but I think it's better than what the alternative is.

I think there's a couple of other provisions in there that that are important.

It's a little bit slower in there.

It also the problem with the not a big problem with the ballot issue is it applies to tipped workers.

And so I think what you're going to see, and I'll be shocked if this doesn't come out in some of the campaign materials as time moves on, but you're going to see some tip workers, I'm sure you'll see people saying, yeah, it's going to help us.

And I think you're gonna see some people from other states where this has happened say, well, actually, this might be a problem for tipped workers because tipped workers actually typically if you their wage, their standard wage might be below what the minimum wage is.

But when you factor in all the tips that they make, it might not be.

Now, I think that's going to be a question.

and you're starting to see a little bit of tip fatigue because you're starting to see this show up in everything that you do.

And if you have this increase in labor costs, it's going to get embedded in the cost of all the stuff you do.

It's going to and by the way, a lot of people aren't going to like higher cost of living.

That's going to happen.

Let me and so we have to.

Deal with this, $20 hamburger or whatever, like there are places not just in the United States, but elsewhere in the world that pay much higher minimum wages and have lower costs on hamburgers.

The fact is, a lot of these businesses are going to raise their prices whenever the public will tolerate it.

And at least with the minimum wage, you have some direction shifting that money to the working people who are providing that product.

It just is.

You know, it's one of those policies that actually does lift all boats.

And I know that policy matters.

Ohio is on board with the, constitutional amendment.

And you said you not modeled out Senator Blessing's.

But I do want to ask you, his bill include something that's been long supported by low income advocates, and that's the refundable earned income tax credit.

So, yeah, why not go along with that?

It's hey, look, the the policy is great.

Policy matters.

Support getting more people money into working people's pockets as quickly as we can, without large economic disruptions.

Senator Blessing's bill is a path to do that.

But there are real problems with it.

One has already been mentioned.

It is not protected.

There's no protections, in that legislation, if passed that, the legislature come right back and slow it down to remove critical components.

And that's really needed.

That happened in Michigan.

We've seen that play out in reality.

And knowing the history of this particular legislature, I wouldn't be surprised to see with additional pressure from the business associations or the restaurant association that they make that call.

In fact, this bill and thank goodness Senator Blessing has been very forthright in it.

He says that this bill is a response to the ballot initiative and from the restaurant association.

So there is no guarantee or promises.

there's no way I would give up the, the potential legislation for something certain, like the constitutional amendment.

Well, we could talk about this all day, but I want to move on to the other thing I want to talk about, which is the elimination of the income tax.

And this is an idea that Republicans have talked about going back to former Governor John Kasich and maybe even before that, there is a bill that would actually do that, phase it out and also eliminate the rest of the commercial activity tax.

on May 7th, the Ohio Office Budget Management released its monthly revenue data from April showing a little over $1 billion in personal income tax collections for April.

Now, that is 13% lower than estimates.

Obama said that's because of higher than expected refunds.

But last fiscal year, the personal income tax brought in $10.7 billion.

The state budget just for general revenue funds was $42.5 billion.

How on earth you make up that quarter of the General Revenue Fund budget?

If there's no personal income tax?

I think we have to be very careful.

We've been on the record.

and I'll say this, I think actually some of our local issues and local government issues and municipal income tax is probably actually more important now for the state than even further reductions to the state income tax.

Those would probably possibly increase if.

You got rid of it.

So so I think we need to look at that.

And I think what we have said is there is there are positive elements of how much growth you could see if you get rid of it.

But I think you have to do it in a very smart way.

Right.

You can't just do it, in a very short time period.

You have to have a long glide path.

If you try to rapidly do it, you're going to have a major problem, but you can kind of grow your way out over time by doing it with a long glide path.

That's point one.

Point two is, I don't think that's in the legislation right now, but we have talked to legislators and we'll continue to talk about what other states have done when they've been doing tax reform, which is to do revenue triggers, which means that if you have revenues that don't come in as the way you want them to, then there's a circuit breaker.

And so you don't continue to do the march on the tax cut.

I think that's a more responsible way because what it does, it says, okay, hey, we got a problem here.

We we slow it down so that we're not doing something, that puts you in a budget hole, because I do think it's going to be not possible.

and I can tell you, too, you know, we got to be realistic.

We have Medicaid expenses.

Medicaid is already the state budget, as former Governor Voinovich once called it.

And it's not going to go away.

Nursing homes alone are getting hundreds of millions of more dollars and are suing for more right now.

and so that's happening.

You've got the K-12 education issue.

We haven't fully funded the new, fair funding plan.

So you've got that sort of situation, you've got school choice expenses that are obviously happening as well.

And how do you.

Pay for all of that?

So it's ready to say welcome to the Policy Matters team.

Their career.

Absolutely.

Look how we collect taxes is just as important as how we spend them.

And the idea this march to zero on the personal income tax is just not nonsensical for this state.

Ohioans are, looking at this is if if this happens, we're looking at cuts of like 37% that is, health insurance for kids, schools.

It's just the idea that we are entertaining this in a state like Ohio, where the middle class has been squeezed and is being squeezed from all directions.

Just what a waste of time.

The estimate of one of the sponsors is that Ohio's economy would grow from $750 billion to $1 trillion by 2030, and population growth would be more members of Congress.

Yeah.

So this, how many times do we have to hear.

Don't worry, it's going to trickle down.

There will be a business boom unlike we've ever seen.

The fact is, is that Ohio has been cutting the personal income tax.

The only tax, by the way, that is based on a person's ability to pay it.

Right, which is a very important.

38% of Ohioans do not pay the income doing.

That for decades.

And, you know, it took like a pandemic, recession, massive federal investments, the Chips act, huge additional tax breaks, and suddenly we're in a different age.

The fact is, is that the taxes aren't creating the business environment.

It's having good schools, higher education, place that safe, a place that people want to live.

And all those things take public resources.

It's time we stop giving the top 1% a handout and start thinking about how do we build a tax program for the the 60%?

Well, and we could do that if we had targeted tax credit.

I think tax.

Credits like the child tax credit they refundable EitC.

That is in Blessing's bill, a refundable sales tax.

Like there's tons of ideas and Greg like it's it's really incredible to hear you agreeing that you know maybe it's time we take the foot off the gas and and look at.

So I think we need to be smart about what we do.

And we need to get rid of the.

Another thing that I think you would agree with is tax expenditures.

It's something else that we do.

We have what, over $11 billion, maybe even closer to 13.

I'd have to look at the latest one.

Looked at.

And and and we should be looking at that.

Because if we don't do that that's another thing.

So so so how do you get to the if you wanted to do the income tax, how do you get there?

It's got to be partly that it's got to be done over a longer period of time.

There have to be revenue triggers.

you have to have either either cuts or more likely, what you'd want to do is limit the growth of spending, which is something that has been talked about periodically in Ohio, which is, you know, do you tie growth of general revenues and things like that to population and growth?

Because he's had a problem.

The thing that I think is, is that government continues to grow in Ohio.

Right?

And it continues to grow, at a lot of different levels.

It's not just at the state level.

It can happen at the local level, too, but on a per capita basis, if you look at Florida and states that now Florida is different, I'm not trying to say we're going to have sunny beaches and everything else, but I so I understand that.

But they have a lot less spending, but they have a lot less spending, on a per capita basis.

And I and I think that's one of the questions is how are we structuring some of our government.

Bodies in what you're able to do in terms of education, in terms of supporting people's health.

Structure as.

Well?

Infrastructure, like we don't want Florida is not the goal.

What we want is an Ohio that really does create a place for working.

Families, can have a middle class life where you can take your kids on vacation, where you can save for college or trade school, where you don't have to worry about living from paycheck to paycheck.

And you can't do that whenever you insist upon cutting the income tax so much.

In order for the top 1% of the state to get a bigger cut, you can't do it.

I want to ask you final question.

If not, cutting the income tax, what about the flat tax, which is also been talked about going to like a 2.5%?

I think that would make sense.

And I and I think two key thing on the state level, it would too.

And and I would I would say one thing that also needs to be looked at is that, you know, states all across the country are cutting the income tax and, and on now, you know, North Carolina, Georgia, I mean, lots of states are doing this.

And one of the problems that you have is the notion that you can, you know, raise it or not, continue to try to stay competitive with other states, I think is problematic because other states are doing it.

You're in a competition overseas, extremely competitive.

And I so I think but I think that that's.

You have a flat tax does not get you out of the problem.

Well let let's think services and also delivering that's a cut for the richest folks whenever you buy.

The but but I think the bottom line with all is the bottom line is you can't just stay static, because if you're not moving, you're going to be losing.

And that is a problem to.

Cut but tax entirely.

Right.

Well, and I'm saying again we got to be very smart in how we do that.

And I've been very clear about that.

And and well Kansas screwed up and how they did it.

They they didn't cut any spending.

They didn't do any better than North Carolina.

And.

Well, and they have revenue triggers, which is something that I mentioned.

And I'm going to keep mentioning that because that's the key piece.

You can't just gut government overnight.

You you can't do that.

I mean, we want to restrain government.

We want to keep it limited because we don't want it to take over the world.

you know, like some kind of vast colossus.

But you got to be smart about it.

Once you've built it out, it's going to take time to adjust.

Right?

So that's why you need to be strategic about this.

And one of the things that I hope, policymakers are going to think about is if you're going to keep going down this road, how do we do it in a way that is sustainable and makes sense?

I think there's arguments for why you want to go somewhat down the road.

What do you go all the way down the road is going to be a question we can ask, and it might be hard to do in the next budget.

I mean, the revenues are lower.

like you mentioned before that, you know, how are we going to wrestle with that with all those expenses?

So we need to be smart.

We need to be strategic.

I think the key thing, though, is you can't just raise these things in a world where everybody else is competing on this, because if you do that, you're going to have problems.

And Ohio has a long standing.

We have to leave it there.

And unfortunately.

Greg said the the goal at the end is to cut government overtime.

And let me tell you, you can't have a middle class if you got government.

I think I said not getting government overtime is what I said.

You can't get government all at once, right?

Yes.

And if you want a middle class, you better have health care.

You better have education, you better have a safety net.

And, that's the thing that taxes afford.

All right.

And that is it for this week for my colleagues at the Statehouse News Bureau of Ohio Public Radio and Television.

Thanks for watching.

Please check out our website at State news.org or find us online by searching State of Ohio Show.

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Support for the Statehouse News Bureau comes from a medical mutual dedicated to the health and well-being of Ohioans, offering health insurance plans as well as dental, vision, and wellness programs to help people achieve their goals and remain healthy.

More at Med mutual.com.

The law offices of Porter, Wright, Morris and Arthur LLP, Porter Wright is dedicated to bringing inspired legal outcomes to the Ohio business community.

More at Porter.

Right.

Com Porter Wright inspired Every Day and Ohio Education Association, representing 120,000 educators who are united in their mission to create the excellent public schools.

Every child deserves more at OHEA.org.