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Government/Politics

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

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Karen Kasler
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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.

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