GOP Senate questions budget assumptions

5/8/2009

COLUMBUS - What did the governor know, and when did he know it?

Gov. Ted Strickland's budget director faced frustrated Senate Republicans yesterday who questioned how the governor's office could have watched as fellow Democrats in the House voted to increase spending over the next two years just days before his office unveiled a $900 million budget hole in the current fiscal year.

"Last week, the House passes a budget that increases spending by $600 million, that actually goes with more aggressive revenue numbers than [the Office of Budget and Management] originally had," said Sen. Mark Wagoner (R., Ottawa Hills), a member of the Senate Finance Committee.

"We have the administration saying it supported what the House did, saying they think that some of that growth may have happened, he said. "... Then these numbers come out that are almost diametrically opposed to the scenario that was painted on [April 29]."

Budget Director J. Pari Sabety said Mr. Strickland was briefed on the gloomy outlook on April 28, but she said the state didn't close the books on April, the biggest income-tax collection month of the year, until the end of the month.

"The reality is everyone has been wrong," she told the committee. "No one in the private or public sector has predicted the steepness of this economic drop or its impact on state revenues . Many states were looking at an extraordinary surprise when they opened the [tax return] envelopes on April 15. The surprise was there were fewer of them and there was less in them."

On Tuesday, Ms. Sabety reported that April income-tax collections were $322 million below projections. She estimated a shortfall between spending and revenue for the current fiscal year ending June 30 at between $600 million and $900 million.

The announcement was made nearly a week after House Democrats pushed through a $55 billion, two-year budget for 2010 and 2011 that would spend $622 million more than the governor's proposal.

To partly justify the increased spending, the chamber relied on future revenue estimates that were more optimistic than Ms. Sabety's.

One proposed solution to plug the hole in 2009 is to use some of the $948 million in the state's rainy-day fund reserves. Using that money would punch a hole in the House-passed budget since it relies on that money to help pay the tab over the next two years.

Republicans who control the Senate are promising significant budget cuts in the next two-year budget compared to the House version.

New long-term revenue estimates probably will not arrive from Ms. Sabety's office until the budget reaches a Senate-House conference committee charged with reaching a budget compromise.

That, however, would come too late to provide guidance for Republicans as they sharpen the budget ax.

"Absolutely, I understand their frustrations," Ms. Sabety told reporters after the hearing. "Unfortunately, April 15 is the date people submit their income-tax returns. I do understand their frustrations."

A new budget must be in place by June 30.

Contact Jim Provance at:

jprovance@theblade.com,

or 614-221-0496.