COLUMBUS - Arizona, drowning in red ink, sold government buildings, prisons, and its fairgrounds and eliminated funding for all-day kindergarten in a desperate grab for cash.
California, long the poster child for state fiscal insolvency, enacted $11 billion in new taxes and slashed budgets for two university systems, sending tuition skyrocketing.
Illinois, where revenue and spending gaps amounted to almost half the size of its budget, stopped paying some of its bills. Utah cut its school year short and went to a four-day work week.
Michigan is projected to face a $1.1 billion deficit next fiscal year, which works out to be 13 percent of its total budget.
By comparison, Ohio, at the midpoint of a two-year budget, looks like a sea of tranquility. But storm clouds lie ahead, with some predicting that the Buckeye State may have simply postponed the inevitable as federal stimulus dollars begin to dry up.
Multiple sources inside and outside government have projected a structural budget shortfall that could exceed $8 billion for the next two-year budget that would start on July 1, 2011. That represents 16 percent of a $50.5 billion spending plan that finished its first year on June 30 in the black.
As of March, states faced a combined projected budget shortfall from 2008 through 2013 in excess of half a trillion dollars, accord-ing to the National Conference of State Legislatures.
They've raised taxes a collective $28 billion, the biggest increase since 1981. They've slashed higher education budgets, sold public buildings only to lease them back, temporarily furloughed government workers, sent K-12 students and teachers home for days at a time, eliminated scholarships, closed prisons and hospitals, reduced tax credits, and issued IOUs when bills came due.
"If it can be legally done, states are trying it," said Luke E. Martel, the conference's research analyst for fiscal affairs.
Last month Ohio finished the 2010 fiscal year with $139 million left over, mostly because of lower-than-expected Medicaid spending. For now, the state isn't projecting any major problems for the second half of the budget through June 30, 2011, as long as the so-far tentative economic recovery continues.
But with the current budget propped up by some $8 billion in federal stimulus aid, raids on tobacco and other government funds, debt refinancing, and other options that may not be available to the state in 2012 and 2013, one lawmaker last week suggested other states simply reached the edge of the cliff sooner.
And none of the options on the table - particularly significant tax increases and massive spending cuts - is politically popular, especially during an election year when gubernatorial and legislative candidates are reluctant to be pinned down.
"There is no choice," said John A. Begala, a former state representative and now executive director of the nonprofit Cleveland-based Center for Community Solutions. "This is reality. We can be pragmatic about it or be idealistic about it. If cultural wars continue to blossom around them … it's going to be ugly."
The picture painted for Ohio's next two-year budget is so gloomy that lawmakers on a special commission to recommend potential solutions gasped last week when they saw that Arizona had projected it would raise $735 million by selling its House and Senate buildings, state fairgrounds, a state hospital, and other public assets to help patch a projected shortfall that approaches a third of its entire budget.
Ohio Gov. Ted Strickland has expressed interest in such a proposal. The Ohio Senate recently passed a bill allowing sale-lease back deals for universities, but lawmakers went home for the summer before the House could act.
Outside organizations, legislative staff, and Republican State Auditor Mary Taylor have all estimated the potential shortfall in the next Ohio budget at about $8 billion, give or take a few hundred million. Mr. Strickland's Democratic administration has yet to place a figure on it.
"It's difficult to predict where we will be a year out in the recovery," said J. Pari Sabety, Mr. Strickland's budget director, stressing that so far the projections upon which the current budget was built have largely been on track.
"We may be on track, but we may be on track to go off the cliff," said Rep. Ron Amstutz (R., Wooster), a commission member.
The state is not yet predicting any shortfalls in the fiscal year that has just begun. But that could change if a lawsuit just argued before the Ohio Supreme Court undoes the state's raid of a fund for anti-smoking programs which was its share of the national settlement with major tobacco companies.
The state is banking on $258 million from that now-defunct fund and has been playing a shell game in the meantime to pay for health and other programs to which the money has been promised. It's been keeping its fingers crossed that a decision in the state's favor, or perhaps an extension of enhanced federal Medicaid aid, will come in time to plug the hole.
However, the nonprofit Center for Budget and Priorities in Washington raised red flags last month for a potential shortfall based on what it's seen in Ohio's numbers.
"Our estimate for 2011 is there will be a gap of about $3 billion. That's below the national average, but it's still a chunk of change," said John Schure, deputy director of the center's state fiscal project.
"We often hear that this decision is an either-or situation, cut spending or raise taxes," he said. "That's really a false choice. Most states are doing both. People realize that trying to solve shortfalls with spending cuts alone hurts the economy and people in need. Over 33 states have raised taxes. All 50 have cut spending."
So far, Ohio has bucked the national trend. The state was already in a self-inflicted budget-tightening mode before the worst of the latest recession hit.
In 2005, the state began under Republican Gov. Bob Taft a five-year reform of its tax system, replacing an unpopular tax on business inventory and equipment and a loophole-laden tax on corporate profits with a broader tax on business gross receipts.
The new Commercial Activities Tax has underperformed expectations.
The reform also included a 21 percent across-the-board cut in income taxes paid by individuals and small businesses, the first four increments of which went ahead annually without a hitch. The final increment of 4.2 percent, however, was shelved last year after the state's plan to install and tax slot machines at racetracks was stymied in court.
"Some states have raised income taxes on wealthier people, which we think is a pretty good idea," Mr. Schure said. "Florida raised its cigarette taxes and raised them a lot. We see East Coast, West Coast, Democratic states, Republican states raising different taxes. All kinds of states in all parts of the country governed by both parties raise taxes during a recession."
Neither Mr. Strickland nor his Republican opponent, former congressman John Kasich, has offered many specifics on how they'd deal with the looming shortfall.
Mr. Strickland again urged the federal government to step up with a continuation of additional funds for schools and Medicaid, but so far a bailout-weary and deficit-wary Congress has not come through.
"Many states had built in an expansion of Medicaid dollars from the federal government during this current fiscal year," said Strickland spokesman Amanda Wurst. "As a result, other states are starting to see budget shortfalls now. The governor has advocated for an extension of [the enhanced Medicaid aid], but he did not budget for it, so Ohio is in a better position fiscally than many other states."
As for his approach in the next biennium, look for much of the same whenever possible, Ms. Wurst said.
"During these tough budget times, we've cut the [state] work force by nearly 5,000 and cut billions out of the budget, all the while holding the line on taxes," she said. "His approach to the next budget will be the same as in the current budget. He will make tough choices, but will work to grow Ohio's economy, because ultimately what's good for the economy is good the state budget."
Thanks to federal stimulus aid, K-12 schools, colleges, and universities were largely spared the deep cuts imposed on other parts of the current budget. But it remains to be seen whether this can continue given the gap the state faces over the next two years.
Mr. Kasich has talked about eliminating Ohio's personal income tax, which represents more than 40 percent of state revenues. But he has refused to embrace a House Republican bill that would set a 10-year time frame for doing that and has not set his own timetable.
"It should frighten the living daylights out of Ohioans that Ted Strickland says he'll fix Ohio's budget problems by recycling his past mistakes - raising taxes, bungling management practices, and smoke-and-mirrors accounting," said Kasich spokesman Rob Nichols.
"Strickland's obedience to his special-interest buddies keeps him from pursuing the change that John embraces and which everyone knows are needed to get Ohio back on track and revive the economy - reduce spending, reduce taxes, and reduce red tape."
The state has promised increased funding for education, and the three-year contract with the state's largest employee union, which included a three-year pay freeze and a 10-day unpaid furlough each of the first two years, will expire at the halfway point of the next biennium. It remains to be seen whether the state will seek to continue both in the next contract.
"We have not had any conversations with the administration about that," said Sally Meckling, spokesman for the Ohio Civil Service Employees Association.
Indiana Gov. Mitch Daniels, a second-term Republican mentioned as a potential presidential contender in 2012, eliminated the middleman when he unilaterally imposed a two-year employee pay freeze in his state. In 2005, well before the current crisis, the newly sworn-in governor repealed an executive order that had long been in place, effectively eliminating collective bargaining rights for state employees.
"We have also, since late 2008, had a strategic hiring committee," said Daniels spokesman Jane Jankowski. "Any position that someone wants to fill has to go through the committee. There has to be justification for such a position." She noted that the state has about 5,000 fewer employees than it had when Mr. Daniels took office.
Decertifying the unions allowed the governor to make swift changes in government agencies without first having to clear it with the unions.
Indiana, like Ohio, finished the fiscal year in the black on June 30. As of March, the National Conference of State Legislatures was projecting that Indiana could face a budget gap of nearly $1.3 billion, or about 9 percent of its budget. That was expected to be closed with spending cuts and revenue from the state's still healthy rainy-day fund reserves.
Unlike Indiana, Ohio would have to change state law to affect collective bargaining by public employees, and there's been no movement in that direction. In fact, the Democratic governor, who enjoys strong labor support, has moved in the opposite direction.
Mr. Strickland issued executive orders extending collective bargaining rights for the first time to nurses and independent contractors in Ohio's home health-care sector as well as independent child-care workers contracted by the state.
"Both bargaining and noncollective-bargaining states have been getting freezes and furloughs," Ms. Meckling said.
"We don't think you can cut your way out of this problem. We represent only 10 percent of the state budget. What other state-holder has saved the state a quarter of a billion dollars?"
Indiana's Mr. Daniels also leased operation of the 157-mile Indiana Toll Road to an Australian-Spanish group for 75 years for an up-front lump sum of $3.8 billion. Mr. Strickland characterized the idea as a gimmick in 2006 when his Republican opponent for governor, Ken Blackwell, offered a similar proposal for the 241-mile Ohio Turnpike.
Contact Jim Provance at: email@example.com