Gov. Strickland's budget relies on pay cuts, $3 billion from feds

2/2/2009

COLUMBUS - The state would force many Ohioans to pay higher fees, would refinance some of its debt to delay payments, slash funding for some state agencies, and move more non-violent offenders away from state prisons to community programs under Gov. Ted Strickland's proposed $56 billion, two-year budget unveiled Monday.

The budget anticipates pay cuts for state employees of between 3 and 5 percent. The contract for most state workers for the next three years is currently negotiated.

The budget relies heavily on about $3 billion in one-time budget stabilization aid from the federal government that is currently pending before Congress.

To deal with prison overcrowding, Mr. Strickland's budget includes plans to move more non-violent offenders away from state institutions into community and alternative sentencing programs. Without the sentencing reforms, the governor's office warned that another state prison would have to be closed in 2011.

Even with these changes, the state proposes increasing spending for the Department of Rehabilitation and Correction by $100 over the next two years.

The state would delay some of its debt payments into later years by refinancing school constructions bonds, costing the state some $400 million in fees in the process.

The governor's State of the State Address last week was for the most part the good news - a greater role for the state in funding schools, more tuition freezes for college students, expanded health coverage for uninsured children, and more tax credits for job creation.

Reality set in Monday with Governor Strickland's two-year budget proposal as his budget director, J. Pari Sabety, explained how the state would pay for it while also patching a projected a revenue hole that could stretch as wide as $7.3 billion over the next two-year budget.

The budget would spend $56 billion over two years. A new budget must be in place when the new fiscal year begins on July 1.

While the governor technically delivered on his promise not to raise taxes or impose new ones to help dig out of the hole, the budget includes a series of higher licensing, permitting, and regulatory fees.

The budget also left the door open for the Ohio Department of Transportation to place tolls on new construction projects.

Twenty state funds would see funding increases while six would be frozen at current levels. That would spread budget cuts among 33 remaining agencies with six being eliminated altogether.

The budget, however, would maintain existing Medicaid programs, the federal-state health insurance program of last resort for the poor and infirm.

"While various services will be impacted by reduced funding, steps have been taken to preserve the safety net,'' said J. Pari Sabety, the governor's budget director. "This is a high priority for the governor, especially in fact of an economic situation unlike any we have faced in the past 50 years.''

While Ms. Sabety was delivering the grim news, Mr. Strickland was 140 miles away pitching his education reform proposals at Toledo Public Schools' Grove Patterson Academy.

The school already has a longer school year than the state and national average of about 180 days but not as long as the 20 additional days that the governor wants for all Ohio schools within 10 years.

Mr. Strickland has also proposed replacing the state's unpopular Ohio Graduation Test with the ACT college assessment exam; requiring student projects, passage of end-of-course standardized tests, and community service as conditions for graduation; and reducing the minimum number of property tax mills that schools must levy from 23 to 20 mills with the state picking up the difference.

Basic education subsidies would be boosted by $321.5 million in the first year and $603.5 million in the second, but Ms. Sabety said reductions would take place elsewhere in the Department of Education She said the state's share of local education would climb to 59 percent by 2017 if Mr. Strickland's education reforms are fully embraced by lawmakers.