Friday, September 26, 2008


Ohio not alone in budget troubles

With economic indicators providing a bleak outlook, Congress considering a new economic stimulus package, and negotiation of a mammoth bailout for financial firms taking place in Washington, fiscal concerns have risen to the forefront of our public consciousness. Ohio is far from alone in its budget troubles.

Already 22 states have reduced services for residents as a result of budget problems, according to an updated report released today by the Center on Budget and Policy Priorities. Ohio is one of the states enacting budget cuts that will affect services for children, the elderly, the disabled, and families, as well as the quality of education and access to higher education.

  • Ohio’s closure of two mental health facilities makes it one of 11 states that have cut programs for the elderly and disabled.
  • Governor Strickland protected Medicaid and SCHIP programs during the latest round of cuts, but 14 other states have implemented or proposed cuts that will affect eligibility for health insurance programs or access to health care services.
  • Twelve states, including Ohio, have reduced funding for K-12 education programs.
    While 17 states have cut funding to public colleges and universities, the tuition freeze enacted in HB 119 remains in place in Ohio.
  • Ohio is one of 19 states reducing their state workforce, which is likely to impact the ability of residents to access state services. Fully 14 percent of positions in ODJFS are estimated to be eliminated or left unfilled.

Because Ohio and other states cannot run a deficit, they must draw down reserves, cut expenditures, or raise revenues (or a combination of the three) to balance their budgets. With revenue collections continuing to fall below estimates, the increasing girth of Ohio’s budget shortfall will require the state to consider enacting temporary or permanent tax increases and drawing more from the Rainy Day fund to avert deeper cuts in vital services.

Fifteen states, including Ohio’s neighbor Michigan, have already enacted tax increases, closed loopholes, restricted tax credits, or implemented other revenue raising measures. New Jersey has begun means testing its homestead exemption, eliminating property tax rebates for families earning over $150,000. Maryland enacted a $1.35 billion tax increase. Rhode Island and California have moved to limit or eliminate certain corporate tax breaks, while Massachusetts and New York have closed corporate tax loopholes.

Ohio must keep its options open to ensure that vital services are available in this time of economic hardship when residents need them most.

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