Analyzing the Impacts of Motor Fuel Taxation

This morning, Scioto Analysis released a brief on motor fuel taxation, projecting the impacts on policy options for raising the motor fuel tax.

“Through our analysis, we were able to determine that an increase in the motor fuel tax would reduce consumption of gasoline by 1.6 million to 9.1 million gallons per year, which would reduce use of non-renewables and carbon emissions,” said Scioto Analysis Principal Rob Moore. “At the same time, the options we studied could raise anywhere from $200 million to $1 billion in new revenue, which could significantly bolster state revenues at a time they are lacking.”

This policy brief is one in a series of briefs on raising revenues while preserving the state economy. A recent study by Scioto Analysis found that use of non-renewables was one of the biggest drags on the state economy throughout the 2010s, leading to a less sustainable state economy.

“If use of non-renewables had stayed from from 2009 to 2018, the economy would have been $5.2 billion larger at the end of the decade than it was,” said Moore.

This analysis was conducted by Masashi Hamano, MPP candidate at the University of California, Berkeley’s Goldman School of Public Policy. Writing and analytical support was provided by Rob Moore of Scioto Analysis and additional analytical support was provided by Isabel Clayter, Ashwin MB, and Cruz Eduardo Flores Vera of the University of California, Berkeley.

Moore speaks at Genuine Progress Panel

Scioto Analysis Principal Rob Moore spoke Wednesday afternoon at a webinar hosted by the United States Society for Ecological Economics on Scioto Analysis’s work on the state Genuine Progress Indicator (GPI) over the past two years.

“It was such a pleasure to present with GPI researchers from across the country on this topic,” said Moore. “We had some tough conversations about right calculation of GPI and how an indicator like GPI can be used to inform the policymaking process.”

Also presenting their work calculating state GPIs Mairi-Jane Fox of Regis University in Colorado, Eli Lazarus of the University of California, Berkeley, Gunseli Berik of the University of Utah, and Regina Ostergaard-Klem of Hawaii Pacific University.

The full recording of the presentation can be found here, with Moore’s portion beginning at 17:30. The 2020 release of Scioto Analysis’s GPI report can be found here.

Road Pricing for Ohio

This morning, Scioto Analysis released an analysis of road pricing options for the state of Ohio. The brief covers the costs incurred by commuters and the public in the form of time and CO2 emissions from commuting, how road pricing can free up traffic and reduce emissions from stop-and-go gridlock while raising revenue for the state.

“The revenue impacts would not be large, but the $2 million in projected revenue could go to public transportation, support for low-income commuters, or plugging COVID-19 budget holes,” said Scioto Analysis Principal Rob Moore.

The study reviewed options for more or less aggressive road pricing strategies and their impact on commute times and the environment. On average, strategies could save the average commuter 3-10 hours a year in added commute time and could reduce 10 to 20 million gallons of excess fuel consumption per year.

This analysis was conducted by Isabel Clayter, MPP candidate at the University of California, Berkeley’s Goldman School of Public Policy. Writing support was provided by Rob Moore of Scioto Analysis and additional analytical support was provided by Masashi Hamano, Ashwin MB, and Cruz Eduardo Flores Vera of the University of California, Berkeley.

Ohio crosses the 2,000-death mark: COVID-19 in the Buckeye State

On Tuesday, the state of Ohio crossed the 2,000-death threshold for COVID-19. The crisis is far from over over, but in this moment when restaurants and other businesses are opening back up, we have an opportunity to look at what COVID-19 has looked like in Ohio so far. First, let’s look at cases.

Data from Ohio Department of Health and US Census Bureau.

The most concentrated outbreaks by far have been in Marion and Pickaway counties, home to two medium-security correctional institutions that were revealed to have serious outbreaks through widespread prison testing. As can be seen from above, the third- through tenth-most concentrated counties don’t even compare to the top two counties in cases per 100,000 residents.

Data from Ohio Department of Health and US Census Bureau.

Deaths are more spread out than cases by county, suggesting that testing was behind some of the large numbers in Marion and Pickaway counties. That being said, Pickaway county is still the third-highest in the state for deaths, which means the outbreak may be more severe in this county. The top 10 counties for deaths per 100,000 residents are mostly suburban, but with some urban and rural counties included as well.

Data from Ohio Department of Health.

Ohio’s deaths have been heavily skewed towards older residents. About half of Ohio’s deaths were among people age 80 or older, three quarters were among people 70 or older, and more than 9 in 10 were people 60 or older. Only 3% of Ohio’s deaths were among those younger than 50 and there have been no recorded COVID-19 deaths in Ohio among children or teenagers.

Data from Ohio Department of Health.

Brookings reports that in each the ten countries with the most COVID-19 deaths, men outnumber women in number of deaths. In eight of these ten countries, men are dying in numbers 50% higher than women and in the Netherlands the number of men who have died is more than double the number of women who have died. In Ohio, we are seeing a lot more parity between men and women when it comes to deaths than in these countries.

Data from Ohio Department of Health.

We haven’t heard the phrase “flatten the curve” a lot recently, but that was the original goal of social distancing: to ease the burden on our medical system so everyone who needed treatment could get it. This means that looking at cases or death rates is not the appropriate chart to judge our success with, it is tracking hospital admissions. Hospital admissions reached a peak at about the very end of March, declined sharply through the first half of April, stayed steady through the second half of April, then declined gradually throughout May. Ohio still has a while to go in the COVID crisis, but if we play our cards right, we might be past the worst of it.

There is no script for reopening Ohio

Ohio is opening back up. While our state garnered national and international praise for its initial handling of the coronavirus crisis, we have experienced some notable bumps in the road on the way towards reopening ranging from crowded patios that skirt rules in place to questionable definitions of “mass gathering” that seem to make such skirting unnecessary in the first place.

Probably most troubling for public health advocates and those threatened by COVID-19 during this phase of reopening is how nakedly political the process has been. While the swift enactment of social distancing measures in March operated under the auspices of scientific credibility, even the governor acknowledges the timing of the lifting of these measures has not aligned with White House guidelines for relaxation of social distancing measures.

To say we followed the playbook in March and threw it out in May, however, is wrong. There was no playbook in March. There was no national, White House protocol provided for promoting social distancing. There was no CDC guidance for what should trigger business closings and shelter-in-place orders in the face of a novel coronavirus or any other highly communicable disease for that matter.

While we like to think of pandemic response as a carefully-scripted play, in reality it’s a lot more like taping an episode of “Curb Your Enthusiasm,” where actors have a general idea of a plot but are making up their lines as they are hit with new conflicts in every successive scene.

That being said, the DeWine administration’s aggressive action against coronavirus was vindicated early. There was no formal cost-benefit analysis conducted prior to the administration’s decision to close large sectors of the economy for months, but subsequent national studies of social distancing measures all suggested that the national-level social distancing measures generate trillions of dollars in risk of death reductions and would almost certainly outweigh the severe economic damage they may create. Subsequent research studying the impact of stay-at-home orders seems to support this analysis, suggesting that stay-at-home orders had a significant impact on reduction of spread of disease in Illinois compared to no-stay-at-home Iowa counties across their border.

Both friends and foes of state social distancing measures have characterized the current moment as a conflict between public health and the economy. This, however, is a false dichotomy. We know that economic factors impact health at the community and individual level. We also know that health impacts economic success, whether it means taking off sick days today or missing school and losing out on human capital accumulation.

Ultimately, the DeWine administration is dealing with an uncomfortable truth: If we didn’t have a script for closing, we certainly don’t have a script for reopening. Sure, the White House has issued a series of recommendations based off an American Enterprise Institute report thrown together in the first weeks of Ohio’s stay-at-home order by a team headed by a former FDA administrator. This is better than nothing but still leaves a lot to be desired, especially considering that original report on how to reopen the economy had no economists among its five coauthors.

No script can’t mean no guidance, though. Policymakers need to listen to public health researchers who continue a familiar refrain: distancing, screening, treatment, vaccine. Ohioans should be asking if mass gatherings for weddings and graduations are necessary in the short-term. Ohioans should be asking why places like Vermont have universal COVID testing while Ohio doesn’t. Ohioans should be asking if we have enough ventilators so we don’t become the next Lombardy or New York City in the case of a second outbreak. And Ohioans should be asking what little things we can do to chip in to speed the development of a vaccine for COVID-19.

In the meantime, we need to preserve our economy, not as some abstraction that correlates with electoral outcomes for incumbents, but as a system that we use to get people things they need and want. This means measuring what matters comprehensively and using these measures to guide our policymaking. There is no tradeoff between economic activity and public health: They are two enterprises inextricably linked. It’s up to us to make sure they walk forward in tandem, supporting one another, with a script or without it.

This commentary first appeared in the Ohio Capital Journal.

Ohio's Long-Term Trend: Economics Up, Environment and Social Indicators Down

This morning, Scioto Analysis released a new report on Ohio’s Genuine Progress Indicator (GPI), a comprehensive economic measure that fills the environmental and social gaps neglected by Gross Domestic Product (GDP) measures.

This year’s study covers ten years of data on Ohio’s GPI, addressing the time period from 2009 to 2018, where the best primary data is available. Ohio’s GPI grew over this time period by about 19%, mostly driven by economic factors. Below are some positive trends from 2009 to 2018 that drove GPI growth:

• Personal spending was up $4,400 per capita, net saving was up $2,600 per capita, and Ohio’s unemployment and underemployment rate was cut in half over that period.

• Higher education is on the rise: 420,000 more people had bachelor’s degrees in Ohio in 2018 than in 2009.

• Air pollution is on the decline: four out of five major pollutants saw emissions declines, with nitrogen oxide emissions cut in half over the period and 2018 sulfur dioxide emissions at one-sixth the level of 2009 emissions.

• Inequality growth has slowed: after increases in inequality levels from 2009 to 2013, the trend of Ohio’s Gini coefficient flattened from 2013 to 2018.

Despite the positive overall trend, GPI growth was stymied by environmental and social factors, leading to a growth rate in GPI that was about half the GDP growth rate over that time period. Below are the main factors that decreased GPI over this time period.

• A boom in natural gas drilling and substitution away from coal led to a decline in CO2 emissions, but relied on extraction of limited nonrenewable resources that chipped away at Ohio’s stock of nonrenewables.

• The average worker spent 31 more hours at work and 8 more hours commuting and the average adult spent 18 fewer hours on housework and caring for children or other family members in 2018 than in 2009.

• Trends in farmland pricing and economic hangover from the Great Recession in the consumer durables market also took a bite out of GPI growth.

“While we’re in the midst of a short-term economic crisis, it’s easy to lose the forest for the trees when it comes to the long-term trajectory of our economy,” said Rob Moore, Scioto Analysis Principal and study co-author. “When we measure what matters, we see that Ohio’s long-term economic vitality is being stymied by increased family time constraints and rapid depletion of state natural resources, side effects that can be addressed by public policy decisions.”

This study was a partnership between Rob Moore of Scioto Analysis and Isabel Clayter, Masashi Hamano, Ashwin MB, and Cruz Eduardo Flores Vera, a group of graduate students at the University of California, Berkeley’s Goldman School of Public Policy. This is the first of a series of briefs on Ohio’s economic trajectory and options for policymakers interested in improving it.

What do school shutdowns do to kids?

By Noah Stein and Rob Moore

As states are reopening for recreation, office work, and even dining across the country, states are keeping schools shut down. On its face, this decisions seems like a no-brainer: buildings with hundreds of young children are breeding grounds for germs and our influenza shutdown protocol prominently features school closings as a strategy to limit the spread of disease. 

As students switch from in-school instruction to at-home instructions, though, they switch from an in-person learning experience to a virtual learning experience. This has the potential to erode the human capital development of children if virtual learning is not a good substitute for in-person learning, which could mean lower wages down the road and cascading harm to the economy.

For years, researchers have been working to understand variations in a student’s long-term earnings in the context of access to education. Now that the nation’s students have been pushed into a new virtual learning environment, understanding the impact of education on different learning outcomes has taken on a new urgency. According to a recent article published by Brookings, access to steady education is directly related to one’s lifetime earnings. Brooking’s valuation of education and Ohio’s current K-12 enrollment data suggest children in Ohio alone could see a loss of over $58 billion dollars in foregone lifetime labor market earnings due to lost educational time from school shutdowns associated with COVID.

A study looking at Ohio students who voluntarily participated in “E-schools” found them to be at higher risk for failing on their graduation tests relative to traditional public school students.  This study drew its conclusions from virtual classrooms of students who knew what they signed up for. Now, Ohio students across the board are dealing with the abrupt transition to a virtual learning environment they have no experience navigating. This means the existing risk of lowered test scores and increased achievement gap could be even more significant than past data shows. 

That being said, some studies have found online classes to be more cost-effective, accessible, and environmentally friendly than in-person instruction. Theoretically, anyone with access to the internet can access classes from home. This ability to have more agency on how the student digests the material has been shown to increase retention rates by up to 60%. And due to reduced community times, The Open University in Britain has concluded that switching to virtual learning reduces CO2 emissions by 85% per student.

The unexpected switch to online learning will likely result in lower test scores, an increased achievement gap, and severe economic consequences if students respond to virtual learning the way they have in the past. On the other hand, there is some silver lining in the potential for increased retention rate and reduced environmental impact. Ultimately, it will be years before we know the eventual impact of months of school closures. In the meantime, it is up to us to delicately balance the potential public health benefits of school closures against their severe human capital costs.

Why are state policymakers saving funds for the recovery?

Over the past couple of months, the state of Ohio has seen a $200 million budget surplus evaporate into a nearly $800 million budget deficit. Faced with what look like a 30% annualized drop in GDP in the second quarter of 2020, the governor of Ohio has issued a budget plan for the end of the fiscal year that calls for $780 million in Fiscal Year 2020 budget cuts, with four out of five dollars in budget cuts coming out of K-12, Medicaid, and higher education spending. 

Data from Cleveland.com

To state budget watchers, this move should be surprising. Ohio has saved about $2.7 billion since the Great Recession to use during a budget crisis such as the one Ohio is experiencing now. The Kasich administration had resisted Democratic calls to spend the funds when the economy was strong and the budget was stable, and now the DeWine administration has stated it does not intend to use these funds, quite literally called “budget stabilization funds,” to stabilize the budget in what may end up being the most dramatic quarterly shortfall in Ohio fiscal history.

This implies that the state could continue to cover historic shortfalls for the rest of the year, which itself is an extremely unlikely worst-case scenario even using the state’s own reported forecasts, without cutting its budget at all. 

Governor DeWine has said "The 'rain' is not a passing spring shower - it could be a long, cold, lingering storm, and we should not use the fund until it is necessary." The implication of the governor’s statement has been that budget shortfalls will worsen in the coming quarters, though sources cited by the governor’s budget office suggest the economy is expected to improve over the last half of 2020 and early 2021.

Hundreds of millions of dollars in cuts to education and health care coverage means that people will not build human capital and get access to health care in the middle of a national pandemic. It also means dollars will sit in state coffers while people who want to work sit at home unemployed. Maybe the state’s decision to hold back funds in the midst of a fiscal crisis is informed by bad information. Maybe it’s informed by bad politics. Whatever it is, it doesn’t seem to be informed by the fiscal reality and economic forecasts its budget office reports.

Prognosis Ohio debuts "A Few Minutes Moore"

This week, WCBE Podcast Prognosis Ohio debuted a new segment called A Few Minutes Moore, where Scioto Analysis Principal Rob Moore provides commentary on interviews for the show. The full transcript of the first segment, responding to an interview with John Barker of the Ohio Restaurant Association on reopening restaurants, is available below.

Over the past two months, we have been firsthand witnesses to one of the most unique economic events in Ohio’s history: the intentional closing of large sectors of the economy to curb the spread of a deadly virus.

On the latest episode of Prognosis Ohio, Dan talked to John Barker, the President of the Ohio Restaurant Association, the trade association for the industry most widely and deeply impacted by social distancing measures. 

Restaurants have been caught in the crosshairs of the COVID crisis. Last week, MIT researchers published a study on the transmission risk and social benefits of types of locations impacted by social distancing measures to stop the transmission of COVID-19. In this study, they married smartphone visitation data assessing the volume and density of location crowding with employment and sales data and a survey they conducted on public opinion of location importance to assess transmission risk along with social importance of types of locations.

On the one hand, sit down and fast food restaurants were the first- and second- highest locations for risk of transmission of the twenty-six types of locations in the study. These locations are densely packed with many unique visitors moving in and out and staying for a relatively long period of time. Popular restaurants are pretty much the closest thing we get to a continually-operating mass gathering.

On the other hand, sit down and fast food restaurants are centers of commerce and employment and heavily valued by the public. The study found fast food restaurants to be among the top five most socially important types of locations along with banks, groceries, general merchandise stores, and auto and mechanic stores. Sit down restaurants were not far behind in the top ten. 

Thus the restaurant dilemma. We care about and value restaurants, but they are the most dangerous places we have when trying to stop the spread of an airborne illness.

As we reopen Ohio, the governor has treated the restaurant issue gingerly. As Dan brought up, we currently have no timeline for the opening of restaurants and bars in the state, though some conversation has transpired around appropriate standards for cleanliness, personal protection equipment, and social distancing measures on premise.

The problem with a lot of these proposals is that, as Barker said in his interview, restaurants run on exceedingly thin margins. I was talking to a restaurant owner in my neighborhood, the Brewery District, last week, who told me that opening at half capacity with scarce, expensive personal protection equipment is not viable for his business, and that they will wait until they can open to full capacity to resume dine-in business, citing the coalition of 50 Georgia restaurant chains that organized recently to make a similar announcement. And as Barker said in the interview, even all these measures in place will not necessarily make people feel safe enough to go back to restaurants on their own.

In an ideal world, we have perfect information about who has been infected and we ask those individuals to self-quarantine with violation of that request subject to penalties in proportion to the risk they expose others to. In absence of a robust testing infrastructure, we have to rely on blunt-force interventions such as closing entire sectors of the economy.

How we decide to navigate into a new normal will have significant impact on the lives and livelihoods at risk and reliant on this and other industries. I think I am not alone in hoping that the easing of social distancing restrictions matches the compassion and prudence that led to their implementation in the first place.

A “new normal” for commuting?

People are driving a lot less in Ohio these days. A report from the Ohio Department of Transportation suggested there have been a little more than half as many cars on the road as usual statewide since implementation of strict social distancing measures in March.

This is good for many Ohioans, and not just because of the benefits of reduction in risk of transmission of COVID-19 afforded by social distancing. For instance, despite the inconvenience of reduction of driving, reducing time spent on the road means less emission of pollutants.

According to the U.S. Energy Information Administration, the state of Ohio’s petroleum use led to emission of 75 million metric tons of carbon dioxide into the air. Less driving means less carbon emissions and slower contribution to global climate change, not to mention the benefits from reduction of harmful local emissions.

Another benefit of reductions in miles traveled is reduction of use of nonrenewable resources. Less cars on the road means less use of petroleum and less depletion of nonrenewable resources, which will help stabilize the price of transportation and energy use in the long run.

Most concretely for Ohio families, however, less time on the road means more time doing other things they care about, whether that is working, spending time with their family, or even something as simple as sleeping. The average person in Ohio spends 46 hours a year commuting — more than an entire work week each year spent on the road. Less cars on the road means less time spent in traffic and more time doing things families would rather do with their time.

Over the next few months, we will see traffic numbers climb back. At the same time, state policymakers will be scrambling for options to close a historically large budget gap. Easing of social distance restrictions will lead to a new normal for drivers, and policymakers have some tools they could use to make that new normal a healthier one for Ohioans while at the same time raise revenues for essential state programs.

A straightforward tool is more road pricing. High occupancy toll lanes or express lanes could be easier to implement in this moment of lower traffic than they would otherwise. These types of strategies would reduce traffic while generating revenue that could be spent on public transportation or other state programs.

A more ambitious approach would be to assess a pollution fee on fuel usage. This could be collected at the retail level for gasoline and would be tied to the social cost of pollution as determined by the cost of emissions to public health and environmental degradation. In an ideal world, this fee would apply to more than just transportation, but transportation could be a first step in curbing the cost of emissions.

An old tool that could also be helpful here is the gas tax. While Ohio increased its gas tax at the beginning of the DeWine administration, it is still below the level of Indiana and Pennsylvania’s. With gas prices at a nadir due to a mixture of a demand shock due to social distancing and a supply shock due to international oil production, the gas tax could be a strong tool for raising revenue, pricing driving, and not particularly hurting consumers.

Tools such as these will increase telecommuting, busing, biking, and walking while reducing driving and raising revenues for the public sector. Ohio has been wise throughout this crisis and intentionally shaping our transportation system in a post-shutdown world will take further wisdom from both policymakers and the public. 

This commentary first appeared in the Ohio Capital Journal.