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Report: Tapping Rainy Day Fund In Budget Crisis May Not Hurt State's Credit Rating

Karen Kasler
Gov. John Kasich watches his administration’s first official transfer into the state’s rainy day fund in July 2013.";s:

There’s been a lot of discussion about when or if to use the $2 billion in the state’s rainy day fund. A national group has studied the impact of using rainy day funds in budget crises.

Ohio’s tax collections are $773 million below estimates for this fiscal year. The Pew Charitable Trusts looked into what might happen to a state’s credit rating when revenues are short. Jonathan Moody with Pew said in a scenario like Ohio’s when the rainy day fund was used, there was not only no credit rating hit, but the chances of a downgrade decreased.  “Lawmakers shouldn’t be afraid to tap their reserves during a period of downturn if that’s what the reserve is for, and as long as they’re taking the other steps that they should to try to mitigate the effects of a downturn.”

Moody says those steps vary, but likely would include spending cuts or tax increases.

Contact Karen at 614-578-6375 or at
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