Senate has to fix out-of-balance budget
Published 10:11 am Thursday, May 21, 2009
For months, my colleagues and I in the Senate have voiced tremendous concerns about the Strickland Administration’s heavy reliance on $7 billion in one-time state and federal money to balance House Bill 1—the state budget for fiscal years 2010-2011.
We fear that when these funds dry up in two years, it could lead to a massive tax increase on Ohio families and impact our state’s long-term financial stability.
The Governor and Democrats in the Ohio House have repeatedly balked at these concerns despite Ohio’s difficult economic situation and strong evidence that state tax revenues were on the decline.
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In fact, on April 29, the House passed a revised version of HB 1 that actually increases all funds spending by $1.6 billion over the Governor’s budget proposal and continues to be held weakly together by billions in one-time money, including the state’s rainy day fund—an emergency savings account, which currently holds $1.01 billion.
The Governor said then that he could support all the changes made by the House and once again discounted Republican concerns about the long-term impact of spending increases and the use of one-time money, telling reporters “What do we do in two years? I’ll cross that bridge when I come to it.”
We would learn days later that the Governor was told on April 28 that Ohio’s revenue picture wasn’t looking good, but he failed to tell the House before they voted on HB 1. Then, he came out and endorsed the House proposal.
On May 5, Office of Budget and Management Director, Pari Sabety, and Department of Taxation Commissioner, Rich Levin, announced that because of slumping state tax collections, Ohio could face a shortfall of at least $600 million and possibly more than $900 million in the current fiscal year, which ends July 1.
Ohio’s rainy day fund may have to be used to fill this revenue gap in FY 09, which would create at least a $1 billion hole in HB 1, because both the Governor and the House used the state savings account to balance their versions of the FY10-11 budget.
Ms. Sabety testified in the Senate Finance & Financial Institutions Committee on May 7 that the Governor was told a day before the House voted on HB 1 that there was a “significant problem” with state tax revenues. She added that current revenue estimates for HB 1 will almost certainly be lowered when new forecasts are completed in mid-June. This revision could deepen the budget hole by hundreds of millions of dollars.
The Senate now must make the tough decisions necessary to fix a budget bill that is fiscally unsustainable and seriously out of balance.
It is going to be a tremendous challenge, but I am confident that we can craft a proposal that significantly reduces spending, while investing the state’s limited resources in what matters most to Ohioans and the future success of our state.
In the meantime, as the Senate works to clean up the budget mess left by the Strickland Administration and House Democrats, the Governor has been traveling the state touting his school funding plan.
I have discussed at length in previous columns my concerns with the Governor’s education proposal.
During a speech in Columbus on May 4, the Governor called on the Senate, writers, educators, business leaders, parents and other advocates to support his education plan, because “if we let this moment pass…we will have sinned against our children.” This powerful rhetoric came days after the House made some dramatic changes to the Governor’s proposal in HB 1.
It would be easy to fall into a trap debating what is considered a sin or not as far as public policy. Instead, the debate should focus on what is the best policy and how to reach consensus on an education plan that is good for Ohio students and taxpayers.
The great thing about democracy is that we have the freedom to make our own judgments. I am not going to say it is a sin if someone disagrees with me, but my conscience will not allow me to support a plan that increases disparity between Ohio’s low-wealth and high-wealth school districts. I will not be pressured by the Governor’s holier than thou rhetoric to make a decision that I consider to be a mistake for the future of our state.
In the coming days, as the Senate Finance Committee continues to take testimony on HB 1 and my colleagues and I discuss what our plans should be moving forward, I will work to ensure that the Senate passes a budget with the best interest of our state’s economy, the future success of our students and the financial well-being of Ohio taxpayers in mind.
John A. Carey is a member of the Ohio Senate and represents the 17th District.He can be reached at Ohio Senate, Statehouse, Columbus, Ohio 43215 or by phone at (614) 466-8156.