State facing $2.3 billion budget deficit

6/11/2009

COUMBUS Lawmakers trying to craft a state budget for the next two years will need some big shovels as they suddenly found themselves Thursday at the bottom of a hole roughly $2.3 billion deep looking up.

J. Pari Sabety, Gov. Ted Strickland s budget director, painted a "bleak" picture of the state s economic situation before the six-member House-Senate conference committee, noting that actual tax collections have been so woefully off from her office s estimates that she now expects a gap of $3.2 billion from the governor s original budget proposal unveiled in February.

Considering adjustments already made by the Senate in the latest version of the budget, the remaining hole is expected to be "in the neighborhood of $2.3 billion.

Given the apparent commitment by leaders of the Republican-controlled Senate, Democratic-controlled House, and Democratic governor that a tax increase is not a good idea in the current economic environment, that means the potential of major new cuts, a prospect that has advocates of human service and other programs shuddering.

"The picture I have painted for you is bleak but realistic," Ms. Sabety said.

She said the size of the gap could vary depending on how the committee deals with education and Medicaid, two areas of major difference between the Senate- and House-passed budgets.

"The erosion in Ohio wage and salary income growth across the last three decades is a strong and driving force in the fiscal crisis facing our state," Ms. Sabety said. "In previous recessions, wage and salary growth was positive, although declining. In this recession, our wage and salary growth is moving into negative territory.

"As our economy realizes real losses in paychecks, we have entered a different world for tax forecasts," she said.

Lawmakers must get a budget to Mr. Strickland s desk no later than the end of the current fiscal year on June 30. The plan as most recently revised by the Senate last week would have spent about $54 million over two years.

The Senate cut $650 million from what the House had proposed to spend, but those cuts will now largely be considered a down payment on what s to come. The Senate version of the budget is serving as the starting point for conference committee talks.

The conference room was packed with lobbyists, human-service advocates, and African American pastors, all of whom have a stake in the outcome of the talks over the next 19 days. African-American lawmakers have protested what they characterize as the disproportionate hit their constituents have taken in the Senate cuts, particularly the stripping of $950,000 proposed by Mr. Strickland to target high-school graduation rates among black males from the general fund budget.

Rep. Vernon Sykes (D., Akron), the conference committee s chairman, told the pastors that the cuts that will be coming will be "heart-wrenching."

At least until now, the only sacred cows of the budget process have been a continuation of a freeze on tuition at colleges and universities begun two years ago and basic education subsidies for K-12 schools, even if the Senate and House differ wildly on proposed education reforms pushed by Mr. Strickland.

At the end of the critical income-tax collection month of April, Ms. Sabety had reported a $912 million shortfall in the current fiscal year, most of which is expected to be plugged with budgetary reserves that lawmakers had initially expected to be available for spending in the next two years.

Contact Jim Provance at: jprovance@theblade.com, or 614-221-0496.