$800M hole develops in Ohio budget
As the long-in-the-tooth economic expansion sputters and Ohio’s anticipated tax take dwindles, its smallgrowth state budget is being downsized to no growth.
Gov. John Kasich and majority Republican legislative leaders are shopping for cuts of $400 million a year in the proposed two-year budget beginning July 1.
The budget effectively will be flat-funded, with some areas scheduled for increases Counties seek budget relief /
perhaps about to lose them and others to get less than they do now.
“We’re going to look at all the options,” the governor said Thursday in announcing the pending reductions. “Everything has to be under the microscope.”
Asked if any areas, such as schools, were immune from reductions in the $71 billion-a-year state budget proposal, Kasich said: “The message is we’re not going to take anything off the table.”
Speaker Cliff Rosenberger, R-Clarksville, Senate President Larry Obhof, R-Medina, and Kasich said, however, that funding to battle Ohio’s opioid-addiction and overdose-death crisis likely will not be affected.
How much is $400 million, in terms of state spending? Kasich’s budget sought a $290 million increase (2.6 percent) in school funding over two years. About $400 million a year also would operate the Department of Natural Resources and its state parks with some to spare.
The pending cuts in spending proposed by Kasich are a result of economic growth throttling back both nationally and in Ohio. Times may be tight, but Ohio has fared better than many states, the governor said, pointing to mid-course budget cuts in 19 other states last year.
State tax collections through March were $615 million, or 3.7 percent below projections for the fiscal year, undermining the assumptions of the amount available in the next budget, said Tim Keen, director of the Office of Budget and Management.
Kasich and the GOP legislative leaders also said they do not plan to tap the state’s $2 billion rainy-day fund to fill holes in the coming budget.
Minority Democrats long have lamented that $5 billion in tax cuts on Kasich’s watch have left the state without the money to better fund schools and local governments and improve opioid-addiction treatment. They also say the cuts have not stoked job growth, with Ohio long trailing national averages.
But Kasich said the tax cuts have helped fuel the creation of 460,000 private-sector jobs. “When [Democrats] say it doesn’t work, I have no clue what they’re talking about,” Kasich said. “They left me with a disaster, which we had to claw out of.”
“We were promised that deep cuts to communities, deep cuts to schools, privatizing job creation and shifting taxes to give millionaires breaks would grow our economy and create jobs, but today’s announcement is proof Gov. Kasich and other leaders have broken that promise,” said Rep. Jack Cera of Bellaire, the ranking Democrat on the House Finance Committee.
Senate Minority Leader Joe Schiavoni, D-Boadman, said, “We learned once again that more income-tax cuts don’t lead to more revenue,” adding that Kasich “blames everyone but himself for the struggles that Ohioans face every day.”
Obhof said the budget reductions can be managed “while making key targeted investments.”
Kasich said he still would like to see income taxes cut to aid business and job growth, but he conceded it may not happen. He may have to accept no net tax cut and “tax reform” rather than reductions, Kasich said.
Kasich’s proposed budget would cut funding to 390 school districts, and many had hoped lawmakers would at least restore that funding.
“Our No. 1 priority is maintaining what we have,” said Tom Ash, lobbyist for the Buckeye Association of School Administrators. Still, school districts need funding to offset the loss of tax revenue accompanying the closing of power plants and to cover the inflationary growth of operating costs, he said.