Tuesday, March 04, 2008
Ohio Revenues up in January, but Budget Expected to Tighten in 2009
Ohio, along with about half the states, faces a budget shortfall in fiscal year 2009, according to the Center for Budget and Policy Priorities. Both the OBM and LSC February monthly budget reports describe a slowing national economy in late-2007 and early-2008. The President signed a federal fiscal stimulus on February 13 of $168 billion for fiscal years 2008-09, which is good news (despite debate about the form of the stimulus) considering that approximately half of economic forecasters are now predicting a national recession this year. Ohio faces its own challenges, including high foreclosure rates, with 1.8% of Ohio households in foreclosure at some point of 2007, according to LSC. LSC also reported that Ohio’s unemployment rate rose to 6% and is forecast to average 6.3% in FY 2009 (our current budget used a forecast of 5.5% for this year and 5.4% for next), which is expected to affect state revenues and the need for Medicaid and other public assistance programs.
Revenues – Although General Revenue Fund (GRF) tax receipts were above estimate by $31.9 million in January, they remain below estimate so far this state fiscal year by $86.6 million (.8%), and OBM and LSC do not expect the January surplus to continue. OBM reported that the tax reforms of H.B. 66 continue to phase in and affect year-over-year revenue growth.
Expenditures – Expenditures have been $171.4 million under estimate so far this state fiscal year (1%) and came in $33.1 million (1.5%) below estimate in January, according to OBM. All spending categories came in under estimate in January except for Tax Relief, however, they are expected to come in closer to estimate once December and January payroll close. Medicaid GRF spending was $27.7M (3.5%) below estimate in January per OBM, at least partly because expansions and rate increases that were planned for January 1 have not happened, however, expenditures are about $5.6 million above estimate year-to-date (.1%) because of increased caseloads, especially in the Aged, Blind and Disabled category. The good news is that Ohio’s federal share is set to increase in federal fiscal year 2009 by about $40 million over the budgeted amount because of an increase in Ohio’s federal matching FMAP rate. Ohio continues to work with the federal government to expand Medicaid to serve the increasing need and to maximize federal matching funds. TANF spending was over-estimate $6.2 million in January and $7.1 million year-to-date. OBM reports that TANF will only fund Prevention, Retention and Contingency services and Child Care from the TANF general revenue fund for the rest of this fiscal year.
OBM testimony
J. Pari Sabety, OBM Director, testified in front of Ohio’s House Finance Committee on February 26 about a shortfall of between $733 million and $1.9 billion for the current biennium budget. Director Sabety outlined three possible scenarios for Ohio’s economic picture – low growth, no growth, and recession. Based on its analysis, OBM found the low growth scenario the most likely ($733 million shortfall) and used it to balance the budget. Strategies to correct the budget deficit include budget cuts (52%), lapses to the General Revenue Fund (21%), transfer to the General Revenue Fund ($50.3 million), additional tobacco securitization interest income ($25 million) and proceeds from enhanced lottery proceeds including keno ($73 million). Director Sabety explained that the Governor’s plan maintains his priorities to maintain tax cuts and to avoid new or increased taxes or fees. Most of the savings would be accomplished through administrative action, but some pieces will require legislative authority, probably in April or May. The two main reasons given for the shortfall were reduced revenues and increased Medicaid spending for reasons including unrealized savings from Medicaid cost containment ($51 million in SFY 2008 and $164 million for SFY 2009). Medicaid caseloads have exceeded estimates for six consecutive months. Director Sabety answered Committee questions about the reliability of the latest projections, the extent a downturn will impact Medicaid and cash assistance caseloads, plans for an increasing older population, the unified longterm care budget, the timeline for Medicaid enrollment expansions, postponement of increased provider rates, and unrealized Medicaid cost containment savings.
Governor Strickland congressional testimony
Governor Strickland testified before the U.S. House of Representatives Committee on Energy and Commerce, Subcommittee on Health, February 26, 2008. He opposed the President’s cuts in Medicaid spending and state flexibility and CMS regulations that would cut program funding (which Congress has put a moratorium on), saying that they’re budget cuts made outside the legislative process that have been disguised as regulation.
Revenues – Although General Revenue Fund (GRF) tax receipts were above estimate by $31.9 million in January, they remain below estimate so far this state fiscal year by $86.6 million (.8%), and OBM and LSC do not expect the January surplus to continue. OBM reported that the tax reforms of H.B. 66 continue to phase in and affect year-over-year revenue growth.
Expenditures – Expenditures have been $171.4 million under estimate so far this state fiscal year (1%) and came in $33.1 million (1.5%) below estimate in January, according to OBM. All spending categories came in under estimate in January except for Tax Relief, however, they are expected to come in closer to estimate once December and January payroll close. Medicaid GRF spending was $27.7M (3.5%) below estimate in January per OBM, at least partly because expansions and rate increases that were planned for January 1 have not happened, however, expenditures are about $5.6 million above estimate year-to-date (.1%) because of increased caseloads, especially in the Aged, Blind and Disabled category. The good news is that Ohio’s federal share is set to increase in federal fiscal year 2009 by about $40 million over the budgeted amount because of an increase in Ohio’s federal matching FMAP rate. Ohio continues to work with the federal government to expand Medicaid to serve the increasing need and to maximize federal matching funds. TANF spending was over-estimate $6.2 million in January and $7.1 million year-to-date. OBM reports that TANF will only fund Prevention, Retention and Contingency services and Child Care from the TANF general revenue fund for the rest of this fiscal year.
OBM testimony
J. Pari Sabety, OBM Director, testified in front of Ohio’s House Finance Committee on February 26 about a shortfall of between $733 million and $1.9 billion for the current biennium budget. Director Sabety outlined three possible scenarios for Ohio’s economic picture – low growth, no growth, and recession. Based on its analysis, OBM found the low growth scenario the most likely ($733 million shortfall) and used it to balance the budget. Strategies to correct the budget deficit include budget cuts (52%), lapses to the General Revenue Fund (21%), transfer to the General Revenue Fund ($50.3 million), additional tobacco securitization interest income ($25 million) and proceeds from enhanced lottery proceeds including keno ($73 million). Director Sabety explained that the Governor’s plan maintains his priorities to maintain tax cuts and to avoid new or increased taxes or fees. Most of the savings would be accomplished through administrative action, but some pieces will require legislative authority, probably in April or May. The two main reasons given for the shortfall were reduced revenues and increased Medicaid spending for reasons including unrealized savings from Medicaid cost containment ($51 million in SFY 2008 and $164 million for SFY 2009). Medicaid caseloads have exceeded estimates for six consecutive months. Director Sabety answered Committee questions about the reliability of the latest projections, the extent a downturn will impact Medicaid and cash assistance caseloads, plans for an increasing older population, the unified longterm care budget, the timeline for Medicaid enrollment expansions, postponement of increased provider rates, and unrealized Medicaid cost containment savings.
Governor Strickland congressional testimony
Governor Strickland testified before the U.S. House of Representatives Committee on Energy and Commerce, Subcommittee on Health, February 26, 2008. He opposed the President’s cuts in Medicaid spending and state flexibility and CMS regulations that would cut program funding (which Congress has put a moratorium on), saying that they’re budget cuts made outside the legislative process that have been disguised as regulation.
