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Toledo
Blade...
Kasich cuts wide
swath of items to repair budget
Medicaid
spending to take biggest hit of $3 billion
By Jim Provance
COLUMBUS — More than a week after Gov. John Kasich presented his $55.5
billion budget, his budget director Thursday spelled out how the
administration would close a projected gap that it now says is closer
to $7.7 billion.
Mr. Kasich’s proposed two-year spending plan would rein in Medicaid
spending for the poor, disabled, and infirm by more than $3 billion;
slash aid to local governments, schools, and libraries by more than $2
billion, and count on the sale of five prisons and the selling off
future profits from state liquor sales to close the gap.
Budget Director Tim Keen met yesterday with reporters to go over
details of the spending plan that Mr. Kasich had outlined in general
terms a week ago.
The governor earlier had said the state faced an $8 billion revenue
shortfall.
Mr. Keen said he came up with the $7.7 billion number after projecting
how much the state could collect in taxes and other revenue over the
next two fiscal years beginning July 1, and how much spending would be
expected to climb if no policy changes were made.
“It’s not just a balanced budget,” Mr. Keen said. “[The current budget]
was balanced, but it was balanced with significant [one-time] revenues.
[The 2012-2013 plan] is a structurally balanced budget. There is
one-time money in the first year. The second year there’s essentially
no one-time money, which means to say that ongoing revenues and ongoing
expenditures are matched.”
The budget anticipates $579 million in cuts to the Local Government
Fund over the biennium, $127 million in cuts to public libraries, and
$1.5 billion in cuts to local governments and schools as the state
accelerates the phase-out of reimbursements that made their budgets
whole after the losses of taxes on businesses and utilities.
The state has yet to release district-by-district breakdowns that show
the full impact of all of these changes.
Many school districts had held out hope that the state would earmark
another revenue source to replace the loss of the business and utility
taxes before their day of reckoning. Those hopes have now been dashed.
“As human nature would dictate, they just hoped that it would never go
away,” Mr. Keen said. “They felt like they could go back and continue
the 100 percent hold-harmless or some variation thereof.”
Despite Mr. Kasich’s criticism of his predecessor, Democratic Gov. Ted
Strickland, for his heavy reliance on federal stimulus money, tobacco
settlement money, and other one-time funds to balance the books, Mr.
Kasich’s spending plan does the same thing, although to a much lesser
extent.
The budget counts on $848.5 million in one-time money in its first year
by selling off future profits from state liquor sales to the newly
created JobsOhio, $50 million from the sale of state prisons, debt
refinancing, the tapping of some idle cash in the state’s unclaimed
funds account, and transfers from a variety of fee-driven accounts.
The use of one-time funds in the second year would drop to $115 million.
“Apart from the irony that the same people complaining about the last
administration’s use of one-time money have now used one-time money,
there’s a much broader issue about how they’re closing this gap,” said
Dale Butland, spokesman for Innovation Ohio. The left-leaning
organization was created to counter information released by the new
Republican-controlled administration.
“While nobody disputes that there will have to be cuts and some pain
inflicted, the sacrifice called for should be shared, and everybody
should be asked to pony up,” he said. “The wealthier folks in this
state have not been asked to sacrifice anything.”
The $55.5 billion, two-year budget is $5 billion larger than the
current spending plan that will expire on June 30.
Mr. Keen, however, said the budget growth is based on a number of
Medicaid and other programs that were moved outside of the general fund
two years ago because they were funded by the one-time federal stimulus
money.
Now that the federal dollars are disappearing, some of those programs
are moving back into the general fund and again becoming the state’s
responsibility.
The budget, however, anticipates tax revenue growth of 2.5 percent in
fiscal year 2012 and 4.4 percent in 2013.
Although the budget counts on only $50 million from the proposed sale
of five state-owned prisons in northeast Ohio and Marion County, Gary
Mohr, the director of the Department of Rehabilitation and Correction,
said the sale could bring in $200 million.
If so, some of the remaining $150 million would have to be spent to pay
off some of tax-free bonds used to build and renovate those prisons.
“I said I’ll put in $50 [million into the budget], and when they sell
for what Gary Mohr thinks they’re going to sell, I’ll be surprised and
have a little extra money,” Mr. Keen said.
Read it at the Toledo Blade
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