COLUMBUS - Gov. Ted Strickland's heavy dependence on one-time money in his proposed budget means lawmakers could face a budget hole as wide as $7.9 billion two years from now, the state auditor warned yesterday.
Auditor Mary Taylor made the announcement the same day that House Democrats proposed revamping the governor's formula to fund K-12 education over the next two years, a move that dramatically shifts more aid toward poorer districts and delays some elements of the governor's proposed reforms.
Ms. Taylor projected that the use of one-time federal stimulus aid, the draining of Ohio's budgetary reserves, and projected growth in Medicaid, debt service, and property tax relief could put state revenues and spending out of balance by fiscal years 2012 and 2013.
"We cannot continue to push our problems off until tomorrow, because the huge shortfall we project for 2010 and 2011 won't go away simply by ignoring it," said Ms. Taylor, a Republican. "We need to get ongoing spending in line with ongoing revenues. That will require action and tough decisions."
The $7.9 billion projection was Ms. Taylor's worst-case scenario. A more conservative estimate, which assumes flat spending across all of state government, put the deficit at $4.9 billion.
Holding a rare evening press conference, Mr. Strickland shot back last night after returning from discussions with the Big 3 automakers in Detroit. He challenged Ms. Taylor and Republican legislative leaders to say what taxes they would raise or services they would cut as an alternative to using federal stimulus money.
"This is 2009," he said. "I'm working on the 2010-2011 budget, and I'm being asked to tell everyone what I'm going to do to craft the budget for 2012 and 2013 We are in the midst of a serious, serious recession. I'm trying to deal with problems as I am confronted by them."
The governor stopped short of taking a no-new-taxes pledge for the 2012-2013 biennium, but he said tax hikes would not be his preference.
"I want us to deal with this by growing our economy," he said.
A two-year budget must be adopted before the start of the next fiscal year on July 1. The governor's proposal is currently pending in the House, where fellow Democrats yesterday offered what they characterized as improvements to the governor's proposed K-12 reforms.
Whatever passes in the House is likely to change again as it moves through the Republican-controlled Senate. The governor said he supports the Democratic changes.
The House Democratic plan would limit funding increases to school districts next year to 1.9 percent of what they received this year. It would also guarantee that no district would receive less in the first year than it currently receives and no less than 98 percent of that in the second year.
The state would spend roughly $5.9 billion each of the two years.
Despite dropping enrollment, Toledo Public Schools would receive better treatment under the House Democrats' plan.
Counting federal stimulus dollars, the district would receive an 8.5 percent increase in the first year before being hit with a 1.8 percent cut in the second. Mr. Strickland's plan would have flat-funded Toledo the first year and cut aid by 2 percent in the second.
House Democrats would also phase in many reforms over 10 years as opposed to the eight Mr. Strickland proposed. The plan would factor a higher amount of teacher pay into the funding formula, and would gradually lower from 23 mills to 20 the amount that the formula assumes school districts are levying in local property taxes.
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Gov. Ted Strickland's heavy dependence on one-time money in his proposed budget means lawmakers could face a budget hole as wide as $7.9 billion two years from now, the state auditor warned Thursday.