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Ohio faces difficult choices as it seeks to balance budget
Buckeye Farm News
Ohio’s constitution requires the state to pass a balanced budget. To do that, lawmakers are going to have to fill an $8.4 billion hole in the next fiscal cycle.
So far, leaders of both political parties appear committed to pursuing alternatives to a tax increase. The question will be if they can agree on other options to keep Ohio in the black.
“When it comes to budget spending, Ohio spends a lot of money on three things: we educate, we medicate and we incarcerate,” said Beth Vanderkooi, OFBF director of state policy.
Education and Medicaid alone account for about 75 percent of the state’s current spending, she said. Overall, the state would have to cut spending by about 17 percent to fill the budget gap.
Deep program cuts are not always as easy as they might seem. For example, cutting state dollars to education or Medicaid is particularly challenging because the state could also lose matching funds from the federal government.
To balance the previous budget, lawmakers used a variety of approaches, including the use of one-time federal stimulus dollars, transferring money from the state’s rainy day fund, postponing debt payments and a delay in planned tax reductions, which some said equated to a tax increase.
Vanderkooi said the intuitive answer is to continue to reduce the size of state government, but that is not the complete answer. She noted government has already been operating leaner than in recent years.
“Even if we were to put every single state employee on unpaid furlough for the next two years, we’d only save about $4 billion,” she said.
Another option to help fill the budget gap is to raise fees on state services.
“The question is always where do the taxes stop and the fee increases begin,” Vanderkooi said.
At the same time there is uncertainty about many of the factors that could play a role in putting the budget back on track.
“How quickly will the economy improve? Is there going to be another federal stimulus package,” Vanderkooi said. “And of course, the approach that Ohio takes will depend a lot on who comes out ahead in the November elections.”
OFBF is asking farmers to provide direction on how the organization should address the budget situation.
A budget task force made up of OFBF members met with experts throughout the summer. They considered the budget as it relates to taxes and expenditures as well as state agencies and employees. They also considered the impact of issues such as regulatory reform.
The task force will offer recommendations for the OFBF policy development committee to consider. Farmers at OFBF’s statewide annual meeting will potentially discuss those policies or offer additional policy ideas.
“Agriculture programs could definitely be impacted by budget cuts as could many other services that impact our members. It is important that we have strong policy going into the next year,” Vanderkooi said.