We have a major budget shortfall in Ohio. We have all heard the number. $8 billion. Ohio’s stagnant population growth and slow economy helped create this, and it is going to require large cuts to almost every part of the state budget.
Of course, we are required to have a balanced budget. Running a deficit like the federal government does is not an option. And this $8 billion hole is not a new problem. So how did they do it?
Did they reduce spending to a sustainable level that would keep our budget in check for years beyond? No. What they did is outlined below. It’s as irresponsible as it gets, as you will see. They were all band-aid type, one-time fixes that have made crafting this years budget even harder.
This is the easy path that they took 2 years ago (Ohio’s budget is biennial). This is the mess that Ted Strickland left for John Kasich.
Federal “stimulus” money: $4,195,375,224
This is the part most people have heard about, but it is only half of how they plugged the hole. Our federal tax dollars that were supposed to stimulate the economy and create jobs, instead went to fund state government in Ohio, and many other states. And people wonder why the stimulus was a huge, very expensive failure. Federal stimulus funds for this year’s budget: $0
HB 318 Income Tax Rate Increase: $844,400,000
An income tax cut had been passed under the previous administration, and was being phased in over a number of years. For one year, the planned incremental rate decrease was delayed. This was done later in the year, so some folks found themselves owing money to the state because their paycheck withholding had been set for the lower rate that was supposed to have been in effect. This was a cancellation of a tax cut, therefore, it was a tax increase for the year. Democrats still refuse to call it that. Governor Kasich has ruled out raising taxes in this way again. Therefore, funds of this type available for this year’s budget: $0
Debt Refinancing: $735,900,000
The state refinanced its debt for a one-time infusion of cash, just like you might refinance your mortgage and get cash out. Not a way to meet a budget, but they did it. Cash from debt refinancing available for this year’s budget: $0
Tobacco Trust Fund Liquidation: $627,622,890
Remember that huge tobacco lawsuit a few years ago? The money was put into a trust fund to be used for stop smoking support programs and education. It was not ever supposed to go into the general fund. But Ted Strickland and the Democrats did just that. They used every last dollar. It’s gone. $0
Unclaimed funds transfer: $385,000,000
These are funds that go unclaimed by folks who don’t realize they have money waiting for them somewhere. Sometimes you’ll see the local news programs list some names and the amount of money they have waiting for them. It sits in an account administered by the state. Well, they used this money too. It doesn’t belong to the state, it still belongs to people who come to claim it, so future claims will have to be paid out of the general fund until the account is repaid. Nice, huh?
Prior fiscal year roll-forward balances: $364,300,000
This one is self-explanatory. Balances available to roll forward into this year’s budget? $0
eFMAP extension: $293,400,000
These were another series of one-time monies from the federal government. eFMAP extension money expected for this year’s budget: $0
School Facilities Commission “Loan”: $250,000,000
More money taken for the general fund from an account that is not supposed to be used for such expenses. Available for this year’s budget: $0
Medicare Part D payment reduction: $151,500,000
Another one-time source of funds from the federal government. Expected amount for this year: $0
Assumed spending lapses: $428,185,965
Amount expected for this year’s budget: $0
- Other “raids”: $594,197,510
Total one-time funds used to balance the 2010-2011 budget: $8,869,881,589
Regarding the “other” category, many accounts and funds were raided to balance the budget. For example, when you renew your license plates, you know how you are asked if you want to donate $1 to the Save our Sight program for children? Yeah. They raided millions from that, too. The Dispatch published a story about it, and all of a sudden Ted Strickland claimed not to know anything about it, and promised the money would be restored. But it shows the lengths they went to to patch up that budget, instead of making the hard choices that Governor Kasich and the legislature are now willingly taking on.
If you think the fireworks in Columbus will end once the Senate Bill 5 controversy has passed, think again. Necessarily, there will be many program cuts, and almost everybody will be protesting cuts to their particular piece of the pie.
The Governor will introduce his proposed budget into the Ohio House around the middle of March, at which point the House will take time to have their say before it goes to the Senate. His budget will do what should have been done previously, which is to reduce spending so that one-time fixes are not needed. Tax increases are also out of the question, since we are already one of the more heavily taxed states, and further increases will only make us that much less attractive to business.
John Kasich took this job knowing the enormous challenge that was waiting for him. Instead of trying to please everybody and insisting nothing is wrong like the previous governor, he is talking to us like grownups, and letting us know that we are in a bad situation and that we have to make some hard choices to secure our future and stop Ohio’s slide into an abyss. I’ll take that leadership over timidity any day.