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Kasich Budget Chief Explains Spending Plan

Thursday, March 31, 2011 at 3:42 PM

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The state’s two-year budget is never an easy thing to understand. But plenty of people were puzzled as to how Ohio got out of an 8 billion dollar hole and increased spending without raising taxes. Ohio Public Radio’s Karen Kasler sat down with the budget director to ask him about that, and why some causes are getting a lot less money than they’d hoped.

When he and Gov. John Kasich introduced it, budget director Tim Keen had said the spending plan was hard to explain.  He’s now able to explain at least the part about the 8 billion dollar hole in the budget in 10 seconds.

“We closed the $7.7 billion structural imbalance three-quarters through spending reduction and restraint and one-quarter through revenue changes,” Keen says.

Keen says the last budget was balanced, but that was done with one time money – so it’s not technically a deficit.  But what about the five billion dollars in increased state spending?

“There are some revenue streams that we examined that were previously used for other purposes – primarily to distribute revenue to local governments and schools – that we have redirected into the General Revenue Fund to support our school funding foundation formula, our colleges and universities, the Medicaid program and other state services.”

Local governments have howled over a 25% in the first year of the budget and a 50% slashing in the second, totaling more than half a billion dollars.  But school districts are also protesting, saying they’ll get $1.3 billion less in this budget.  Keen says Kasich’s foundation formula for state aid to schools calculated the ability of local districts to raise revenue through property or income taxes and awarded aid based on that.  And he says the money in that pool increased.  But Keen says some districts are getting a lot less because federal stimulus dollars aren’t being replaced and because some reimbursements based on tax law changes have been phased out, and they should have seen that coming and prepared for it.

“State law had in place a phase-out schedule for those state payments, and school districts should not be surprised that those dollars are going away,” he says.

Several people in the Kasich administration have railed against the use of one-time money.  Keen says there’s no one-time money in the second year of the budget – but there’s nearly a billion dollars in the first year.  That includes the sale of five prisons and the privatization of liquor profits to fund JobsOhio, the public-private partnership that eventually will be the Department of Development.  But Keen says that’s not all negative.

“You’ll never find me saying one-time money in and of itself is a bad - it’s not optimal, but it’s not the end of the world necessarily,” Keen says. “The problem with one-time money in the current budget is the magnitude of one-time money and the problem it presented to us.”

And while the governor has said the worst pain in the budget is in the first year, Keen says he doesn’t feel the budget isn’t too optimistic in the second.

“I certainly hope not and I do not think so,” Keen says. “I believe we have conservative revenue estimates that are the basis of this budget.  We do assume that the economy will continue to grow at a modest level, but we think that’s reasonable.”

One thing that could change in the budget is the cut to nursing homes.  Those cuts have been proposed in previous budgets, but were never as deep in the end of the process as they were in the beginning.  But Keen says he’s confident lawmakers and the governor will be able to preserve those cuts, which he says will allow the state to put more money into in-home care.  Another thing that could change could be cost-savings assumptions based on collective bargaining reform reforms, since a repeal of those changes will likely be on the fall ballot.

Tags

Government/Politics, Statehouse News Bureau

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