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Ohio has fixed this problem before
Thursday,
January 24, 2008 3:31 AM
THE COLUMBUS DISPATCH
At a glanceWhat happened: Projections released yesterday show that there could be a state budget shortfall ranging from $733 million to $1.9 billion by the end of June 2009, depending on how the economy performs. What's causing it: The national economy likely is heading toward a recession, which is hammering an Ohio economy that already was struggling. Economists blame skyrocketing fuel prices, fallout from the mortgage crisis and other factors. What's being done: Gov. Ted Strickland has told state agencies to identify spending cuts and other ways to reduce costs without slashing state services. There's no timetable, but Strickland wants it done in days or weeks, not months. What gets cut: Specific decisions haven't been made, and it's more difficult to cut spending for state prisons and some agencies than others. Strickland wants to protect funding for education and other administrative priorities. What's not being done: Strickland said he has no plans to raise taxes or delay planned tax cuts being phased in by 2010, and he will be cautious about tapping the state's $1 billion rainy-day fund.
Few deny that the state's latest budget shortfall is bad news. But it remains unclear whether
the latest batch of red ink is as deep or thick as those that state officials faced in years
past.
If nothing else, the trouble has come a lot faster. Recent severe budget shortfalls seemed to spawn about every 10 years, but the latest news that revenue could fall $733 million to $1.9 billion short of projections comes only about five years after the state's last budget predicament. A number of budget experts around the Statehouse said yesterday there's no need to panic … at least not yet. To save Ohio from drowning in red ink, state leaders in the past have used a variety of tactics, including tax increases, an option that Republican legislative leaders say is off the table. Gov. Ted Strickland also said of a tax increase: "That is nothing that I am considering at this time." State leaders also often targeted social programs and education to ease past budget crunches. House Speaker Jon Husted, R-Kettering, remembered the budget problems lawmakers faced during his freshman year in 2001. "The questions we're working on are not very different than issues we've worked on collectively in this chamber before, so I'm confident we can handle it," he said. However, Strickland and legislative leaders today face some different dynamics than past budget dilemmas. State government is politically divided today, compared with the one-party rule in the early 1980s, 1990s and 2000s. State leaders also don't have as many obvious options available today as Gov. Bob Taft and lawmakers did in the early part of the decade. Some say government cuts are tougher now, coming on the heels of several reductions by Taft that reduced the state government work force by 3,500 and closed two prisons. Taft also used hundreds of millions in tobacco settlement dollars that don't exist anymore. Here's a look at how some budget shortfalls were handled before: • In December 1971, Gov. John J. Gilligan didn't face a budget shortfall as much as he faced embarrassment for the condition of Ohio's schools, highways and facilities for the mentally ill. He persuaded the Republican-controlled General Assembly to enact the state's first income tax. • In 1983, his first year in office, Democratic Gov. Richard F. Celeste faced a $530 million deficit on a budget of $6.7 billion, a nearly 8 percent shortfall. Under Strickland's worst-case scenario, today's deficit would be 3.6 percent. Celeste, with help from a Democratic-controlled legislature, made permanent a 50 percent income-tax surcharge imposed under Gov. James A. Rhodes, and added 40 percent to it. • Trouble returned soon after Republican Gov. George V. Voinovich entered office in 1991 and inherited a state budget in the red. The fiscal crisis that engulfed his administration forced Voinovich to raise taxes, make Draconian budget cuts and at one point moved him to tears. He faced a budget shortfall estimated at $262 million the first year and up to $1.5 billion for the two-year budget. The new governor had to lay off 600 employees. Another 500 layoffs would come later. By the end of 1991, Voinovich asked the General Assembly to increase a host of taxes on alcohol, cigarettes and other tobacco items, to help what was then estimated at a $931 million budget shortfall. He also trimmed state spending by 3 percent to 6 percent. Voinovich's plan included $196 million in cuts and other adjustments to save $254 million. Among the victims: many state liquor stores were closed and the others privatized. On April 1, 1992, Voinovich was talking with reporters in his Statehouse office. Outside his window, he could hear the impassioned chants of hundreds of protesters opposed to the cuts in general assistance he had ordered. "Whether they believe it or not, George Voinovich really cares for his fellow man," he said. "That's why I'm in the business," he added, his voice faltering before he broke into tears. "I'm doing the best I can with what we've got." The state of Ohio, he said, was bankrupt. • Facing skyrocketing Medicaid costs, a bursting tech bubble, a national recession and economic reverberations from the attack on Sept. 11, 2001, Gov. Bob Taft trimmed state budgets in five straight years from 2001 to 2005, and signed a series of bills to fill more than $4 billion in budget shortfalls. Husted said that from the time Taft introduced his budget in early 2001 to the time the House took action on it a few months later, the plan already was $700 million out of balance. In December 2001, Taft signed a $1.5 billion budget-correction bill. The plan included about $500 million in agency cuts, $250 million from the rainy-day fund, $260 million raided from the tobacco-settlement fund, and joining the new multistate Mega Millions lottery. But revenue quickly diverged again from projections. In June 2002, Taft signed a bill filling a $1.9 billion budget hole. It contained $1.54 billion worth of additional revenue, including a 31-cent cigarette-tax hike, more tobacco money and $600 million from the state rainy-day fund, plus $455 million in spending reductions. In February 2003, the legislature passed another $566 million budget fix, which was added to another $162 million in state spending cuts -- on top of $121 million in cuts ordered by Taft two months earlier. Just as Taft and legislative leaders finished fixing the 2002-03 budget, they had to wrap up a new two-year budget. Thanks to several factors including the previous use of one-time money to balance books, lawmakers passed and Taft signed a temporary penny sales-tax increase, half of which still exists today. Story toolsToday’s Top Stories
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