COLUMBUS - Ohio officials worry about what Wall Street
thinks of their new state budget. But they are able to point out that they ended the
fiscal year on Monday with $180.7 million in the bank.
Amounting to less than four-tenths of 1 percent of the new
$49 billion two-year budget, the unexpected surplus will be set aside in the state’s
rainy day fund as a hedge against a repeat of the budget shortfalls seen over the last two
years.
"It’s important that this money is reserved in a
rainy day fund," said Budget Director Tom Johnson. "From [the credit
agencies’] outlook and mine also, this is not nearly enough. When we had a full
amount of reserve at 5 percent, it was over $1 billion, but I used the example that that
was like a family with an income of $40,000 setting aside $2,000."
Much of the surplus came from earlier-than-expected federal
Medicaid reimbursements and spending cutbacks initiated when May tax collections prompted
the Office of Budget and Management to project a $200 million shortfall for the final
month of the 2003 fiscal year.
Tax collections, however, ended up $77 million higher than
the newly lowered projections, although still below original expectations. More than half
of that came from unexpected income tax returns that arrived Monday, just under the wire.
Mr. Johnson said only time will tell whether that late
tax-dollar infusion was a matter of timing or a sign Ohio’s economy has turned the
corner.
He felt the numbers were important enough to call the major
credit-rating agencies to advise them of the surplus. But they remain concerned that much
of state’s nearly $4 billion increase in spending is balanced with one-time federal
aid and a "temporary" two-year 1-cent increase in the state sales tax.
The $180.7 million surplus nearly made the state’s
decision to drawn down $193 million in federal aid in June unnecessary.
The money was part of $770 million included in the recent
federal economic stimulus package to help Ohio’s budget fund Medicaid and other state
services. The General Assembly is counting on the rest to balance the current budget.
The Ohio Civil Services Employees Association argued some
of the surplus should be used to keep Lima Correctional Institution open, along with
mental retardation developmental centers in Springfield and Apple Creek that are also
targeted for closing.
House Democratic leader Chris Redfern (D., Catawba Island)
agreed. "We’re talking about 400 families [at Lima] that would be forced out of
a job," he said. "With much of the state mired in economic hardship and
struggling to create jobs, we must do all we can to protect the ones that already
exist." |
