Tuesday, December 29, 2009

Ohio State Government On The Verge Of Collapse

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This from Jim Siegel from The Columbus Dispatch

It took Ohio lawmakers more than two months of grueling debate to figure out how to deal with an $851 million budget shortfall.

Some wonder what will happen in 18 months, when the deficit is a few billion dollars or more.

The latest budget debate "shows how divergent the various views are in how we should address the problems of the state," said Joel Potts, executive director of the Ohio Job and Family Services Directors' Association.

Balanced against a desire to keep taxes low is the reality that many Ohioans are in crisis and need help, while social services are being slashed, he said.

"If we're in a crisis, we need to start acting like we're in a crisis. I'm not so sure we're there," Potts said.

Gov. Ted Strickland and state lawmakers recently solved the short-term budget problem, but as Sen. Bill Seitz, R-Cincinnati, told his colleagues while doing his best Bachman-Turner Overdrive impression: "B-b-baby, you ain't seen nothin' yet."

Estimates of the state's structural deficit for the 2012-13 budget range from $4 billion to $9 billion.

"Anybody who says they know what the 2012 and '13 number is, is just wrong at some level," said David Ellis, the assistant state budget director. "There are many things that are yet to be identified."

Whatever the correct number, it's big.

The fiscal-year 2011 budget, which begins July 1, is balanced with about $3.5 billion in one-time state and federal funding. That includes $426 million from the latest budget fix, which delayed a 4.2 percent income-tax cut until Jan. 1, 2011.

"Mature people on both sides of the aisle have got to get serious," Seitz said. "We can't come waltzing in the day before a budget is passed and say: 'I know, let's cut state government from 24 agencies to 10 tomorrow.' "

Under the state constitution, Ohio's budget must be balanced at the end of each year, and dealing with a shortfall largely boils down to reducing spending or increasing revenue.

Ohio leaders are working without a safety net. The state's rainy-day fund was depleted to fill a budget hole last year, and lawmakers waived the requirement that the budget end the fiscal year on June 30 with at least a half-percent cushion.

So far, the governor, House speaker and Senate president have not said specifically what they will do to address the situation.

The only provision added to the budget fix that even remotely addressed long-term spending was construction-law changes for three university projects, added at the urging of Senate Republicans.

Supporters expect that it will save up to 30 percent on building costs. But even if fully implemented, Ellis said, it will save little to nothing in general tax spending because it's likely that much of the savings would just be spent on additional projects.

Sen. Timothy J. Grendell, R-Chesterland, called the construction pilot program "a thimble to hold back a tsunami."

"There were many suggestions of how to deal with this, but unfortunately, we weren't able to get there today," he said prior to passage of the budget fix this month.

Grendell and House Republicans have pushed for a plan that would consolidate state government from 24 agencies to 11. They say it could save $1 billion a year and eliminate 11,000 government workers.

But a recent analysis by the nonpartisan Legislative Service Commission did not estimate the savings, and it projected cost increases in the short term. Ellis doubts much would be saved because 85 percent of state spending goes directly to local services, including schools.

"Can you maybe save a few positions here and there? Sure, but most of the money goes out the door to support services to Ohioans," he said.

Other cost-saving ideas include sentencing changes designed to reduce Ohio's prison population, but the tough-on-crime factions in both parties have struggled to find an agreement. Republicans also have pushed for studies of more privatization of government services and a four-day workweek, along with performance audits to study agencies' efficiency.

Strickland has talked about the possibility of selling state assets but is most hopeful that he can help persuade federal lawmakers to approve another round of stimulus funding.

"But that's not all I'm doing," he said. "We are not passive about looking forward. We are committed to scrutinizing everything we think we can do."

Strickland said he is willing to engage in a serious discussion with Republicans about future budgets.

"But (they say) 'We're going to reorganize government and downsize 11,000 employees' without being specific as to how they're going to do that, what functions will be eliminated and how they're going to continue to carry out the essential services that people expect from government."

Dispatch Senior Editor Joe Hallett contributed to this story.


There's no safety net. The state's rainy-day fund was used to fill a budget hole last year.

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