Ohio State Spending Analysis - Capital vs Subsidy

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Teaching to Fish vs. Giving Fish: A Statewide Problem

Ohio has a fundamental spending imbalance: for every dollar spent on capital investment that builds long-term infrastructure and economic capacity, the state spends over 13 dollars on subsidy spending that addresses immediate needs without building lasting opportunity.

This isn't just an Appalachian issue or a rural issue—it's a statewide pattern reflected across nearly 7 million state transactions totaling $100 billion. While subsidy spending provides essential services like Medicaid, education funding, and public assistance, the extreme imbalance means Ohio is giving fish instead of teaching to fish.

Data Validation: Our analysis of 6,712,863 individual state transactions matches the official Ohio Legislative Service Commission county spending report totals, providing independent verification of these findings.

Official Definitions

According to the Ohio Legislative Service Commission (LSC), state agency expenditures are categorized as follows:

Subsidy Spending consists primarily of:

State payments to Medicaid providers and other public assistance programs
Funding for schools and institutions of higher education
Moneys distributed to political subdivisions to offset or supplement the costs of certain public services
Loans and grants for economic development
Funding for highway construction and local government road and bridge projects
Distributions of federal COVID-19 relief program funding

Capital Spending contains:

Disbursements for the acquisition, construction, or improvement of physical assets such as land, buildings, and infrastructure

Note: Agency operating expenditures, such as payroll and purchased personal services, are excluded from this analysis.

Source: Ohio Legislative Service Commission

                    "Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime."
                    
                    This ancient wisdom applies to economic development. Capital investments teach communities to fish by building 
                    infrastructure for self-sustaining growth, while subsidy spending addresses immediate needs.
                    
                    The statewide ratio of 1:13 (capital to subsidy) reveals a systemic underinvestment in 
                    Ohio's long-term economic capacity. This pattern holds across urban, rural, Appalachian, 
                    and non-Appalachian regions alike—suggesting a fundamental policy choice that prioritizes 
                    short-term relief over lasting opportunity.

Infrastructure-Blocked Development: The Programs That Acknowledge the Problem

To its credit, Ohio has launched programs specifically designed to address what we call infrastructure-blocked development—communities locked out of economic growth because they lack basic water, sewer, or broadband infrastructure. The flagship programs are Ohio BUILDS (Broadband, Utilities, and Infrastructure for Local Development Success) and H2Ohio, together representing approximately $2.6 billion in infrastructure investment.

Ohio BUILDS (launched 2021) encompasses:

Water/Wastewater Infrastructure: ~$1.3B for new water systems, sewer lines, replacing failing septic
Brownfield Remediation: ~$560M cleaning 462+ hazardous sites in 86 counties
Building Demolition: ~$270M for 5,000+ blighted buildings
Broadband Expansion: ~$232M connecting ~230,000 residents

H2Ohio (launched 2019) focuses on:

Agricultural nutrient management: 2.5M acres enrolled
Wetland restoration in the Western Lake Erie Basin
Lead service line replacement: 115+ communities funded
Failing septic/sewer replacement (31% of Ohio systems are failing)

These programs explicitly recognize the link between infrastructure and economic development. As Athens County Commissioner Chris Chmiel stated: "It's the only way for economic development—if we don't have the basic infrastructure for it, there's no way to grow."

The Problem: Demand Far Exceeds Supply

While these programs represent genuine "teaching to fish" investments, they are drastically underfunded relative to the scale of need:

                    Round 6 Water Infrastructure Grants (2024):

                    703 applications requesting $1.4 billion

                    Only $122.7 million awarded

                    Funding rate: Less than 9%

                    According to Buckeye Hills Regional Council, "the state would need to spend almost three-fourths 
                    of the BUILDS funding to address water and wastewater infrastructure needs just in southeast Ohio"—meaning 
                    75% of the entire $250M program would be consumed by just 8 Appalachian counties.

Structural Barriers: Who Gets Left Out

Even well-designed programs can't help communities that lack the administrative capacity to apply. Unincorporated townships and rural communities without village governments face systematic exclusion:

Townships lack dedicated staff to pursue competitive grant applications
Unincorporated communities like Stewart, Ohio aren't on any priority list
No village government = no mechanism to even apply for funding
These communities continue discharging sewage to rivers with no path out of the trap

Example: Rome Township in Athens County—population 1,251—has received $0 in Ohio BUILDS or H2Ohio funding despite documented sewage-to-river discharge issues in Stewart. The community's toilets continue flushing into the Hocking River because there is no public sewer infrastructure and no administrative pathway to obtain it.

The Bottom Line: Ohio BUILDS and H2Ohio prove that state leaders understand infrastructure-blocked development. But with a 9% funding rate and structural barriers excluding the most vulnerable communities, these programs remain exceptions to the 1:13 rule—not solutions to it. The state acknowledges the problem while funding it at a fraction of the demonstrated need.

Total State Spending

FY 2025 (6.7M transactions)

Capital Investment

Subsidy Spending

Capital to Subsidy Ratio

⚠️ Severe underinvestment in long-term capacity

Geographic Distribution of State Spending (FY 2025)

Source: Ohio Checkbook - Spending by County (FY 2025). Data represents state disbursements to counties between July 1, 2024 and June 30, 2025.

Statewide Spending Breakdown

Capital vs Subsidy Comparison

What This Means for Ohio

The 1:13 capital-to-subsidy ratio means that for every dollar Ohio invests in building long-term economic capacity—roads, bridges, buildings, infrastructure—it spends thirteen dollars on immediate relief and services. While these services are essential, the imbalance suggests a system focused on treating symptoms rather than addressing root causes.

Programs like Ohio BUILDS and H2Ohio demonstrate that state leaders understand infrastructure-blocked development—they know that communities without basic water, sewer, and broadband infrastructure are permanently locked out of economic growth. But these programs are funded at roughly 9% of demonstrated need, leaving hundreds of communities trapped in a cycle where they receive subsidy payments to survive today while lacking the infrastructure to build a different tomorrow.

This isn't sustainable. Without adequate investment in infrastructure and economic development, communities remain dependent on subsidy programs rather than building the capacity for self-sustaining growth. True economic development requires teaching people to fish—and that means rebalancing toward capital investments that create lasting opportunity.

The question isn't whether Ohio should fund essential services—of course it should. The question is whether Ohio will ever invest at scale in the foundational infrastructure that would allow communities to need fewer services in the first place.