Friday, May 15, 2009

Reality Check - State Sen Keith Faber comments on state budget negotiations

The Ohio Senate already had a tough row to hoe in passing a state budget for the next two years, but last week, that job got a lot more difficult. Governor Strickland’s Office of Budget and Management announced that as a result of declining tax revenues, the state will be short approximately $1 billion. That means for Ohio ’s current fiscal year -- FY2009, which ends in June -- the state has a significant revenue shortfall and very little time to address it to meet the constitutional requirement that the state budget be balanced.

There are few options on the table, other than to tap the state’s “Rainy Day” savings account, which currently stands at $1.01 billion. This is available, by the way, thanks to the foresight of previous Republican-controlled General Assemblies that resisted the calls to spend that revenue during better economic times and socked the money away for a rainy day.

There is no question that it is raining in Ohio and around the country; however, the reason this is such a major factor as we work to pass Ohio ’s budget for fiscal years 2010-2011 is that the Governor and the Ohio House, had already built the Rainy Day revenues into the bill. Now that it looks as though we’ll need the Rainy Day fund in the next two months, the Senate begins its work on the state budget more than $1 billion in the red.

That’s not the only problem. When the Democrats in the Ohio House passed their version of the budget, incidentally, just days before the announcement that the sky was falling, they actually spent $1.6 billion MORE than the Governor had proposed. In the Senate, we had already been concerned about the use of nearly $7 billion in one-time money, including the Rainy Day Fund and federal stimulus dollars. Our fear has been that if we use money that won’t be available two years from now to fund ongoing state expenses, it would set our state up for a massive tax increase that Ohio families cannot afford and that will make it more difficult to turn our economy around. We had already been looking to scale back state spending from the Governor’s original proposal to more fiscally-conservative levels. Then, despite the warning signs that Ohio revenues would continue to decline, the House has made the problem even worse by spending more.

They say that with great challenges come great opportunities and that is how I look at the significant job we have ahead of us in the Senate. We will need to start from scratch, look carefully at everything the state spends money on today and determine if we can afford to fund those programs not only tomorrow, but well into the future. This won’t be easy. There are many worthy programs that will need to be cut and that will affect the lives of Ohio families. But on the other hand, just as many families are having to cut their personal budgets to get by in this economy, state government also needs to learn to live within its means. Not to mention that we certainly cannot go down a path that will require a tax increase on the backs of the same struggling Ohioans two years from now.

As a member of the Finance & Financial Institutions Committee, the panel which reviews the state budget bill for the Senate, I know that the next few weeks will require some very difficult decisions. Though it is unfortunate that we are starting our budget process with a major shortfall, we have a responsibility to pass a realistic, sustainable budget for Ohio for the next two years. I believe the Senate will prove it is up to the task.

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