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Published: Thursday, 2/26/2009

Aide vows state won't depend on stimulus

BY JIM PROVANCE
BLADE COLUMBUS BUREAU CHIEF

reg  Budget Director Pari Sabety. Office of Budget and Management, Columbus,  OH. Handout photo from their office.  NOT BLADE PHOTO reg Budget Director Pari Sabety. Office of Budget and Management, Columbus, OH. Handout photo from their office. NOT BLADE PHOTO
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COLUMBUS - Gov. Ted Strickland's budget director yesterday defended the state's reliance on $5.5 billion in federal aid and other one-time funds to "weather the storm" over the next two years.

J. Pari Sabety told the House Finance Committee that Ohio has used "magic bullets" to balance its books in the past.

She pointed to $2 billion in one-time monies to balance the 2002-2003 biennial budget, including redirected tobacco settlement dollars and federal welfare surplus dollars that are now gone.

In the 2004-2005 budget, the state used $3.7 billion in one-time funds. That time the magic bullet was a penny-on-the-dollar temporary sales tax hike, accounting for 65 percent of the one-time funds. Half of that temporary tax ultimately turned out to be not so temporary.

"Times are tough ," she said. "Sometimes you do have to use a silver bullet to account for a majority of what you use to balance the budget in terms of one-time revenues. In our case, the silver bullet has been the [federal] stimulus funding. I don't think this is unusual.

"I do think the circumstances we are in, in terms of magnitude of the downturn we are experiencing and the downturn in the revenues that we have, is unusual," she said.

In all, the federal stimulus package pushed through Congress almost entirely with Democratic votes gives about an $8.2 billion infusion to Ohio, $5.5 billion of which shows up in Mr. Strickland's $54.7 billion two-year budget proposal as increased aid for Medicaid, education, and other government services.

Ms. Sabety insisted this is not setting the state up for a fall in the following two-year budget cycle for 2012 and 2013 when similar federal help is unlikely.

She projected that some economic recovery during that budget cycle should boost state revenues by some $1 billion and said projected reforms in criminal sentencing, Medicaid, and managed care should go a long way toward helping to balance those books.

For Rep. Randy Gardner (R., Bowling Green), a committee member, the numbers don't add up.

"Is there $3.5 billion or $4 billion in savings from a net reduction in government spending [in 2012 and 2013]?" he asked after Ms. Sabety's testimony.

"This isn't just savings based on reducing the amount of growth in the future. It's $3 billion or $4 billion in net state government cuts that must occur to balance the budget based on what we heard."

Some Republican governors have talked about refusing to accept at least part of their shares of the $787 billion stimulus package, arguing that the money would result in program expansions that could not be sustained by state revenues in the long run.

Contact Jim Provance at:

jprovance@theblade.com

or 614-221-0496.



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