Months of tax revenues coming in under estimates has Gov. John Kasich trimming back his state budget by $800 million. And that has budget watchers wondering what will get the ax.
The state has a $615 million shortfall in this year’s budget, with revenues coming in behind forecasts for eight of the last nine months. With that in mind, Gov. John Kasich announced he’s pulling back his budget proposal by $400 million for each of the two years in the spending plan. But as Kasich made the announcement before a room full of reporters, he wouldn’t get specific about what would get cut. “We’re not going to write the budget here, though you’d like us to do it. We ’ll sit down and look at all the options,” Kasich said.
The budget includes a 17% income tax cut, money for Medicaid expansion, and a slight increase overall for K-12 education, among other things. Kasich said almost nothing was off limits when considering cuts. “Everything has to be under the microscope. You can’t, you just can’t say willy-nilly you’re just going exempt all this,” Kasich said. “But we’ll be sensitive about areas we have to be sensitive about, but decisions have to be made.”
At his announcement, Kasich was flanked by his fellow Republicans, House Speaker Cliff Rosenberger and Senate President Larry Obhof. It seemed to be a show of solidarity as those legislative leaders are developing their own budget proposals. Republicans had been expressing concerns about how to craft a budget when revenues are off by more than a half a billion dollars for the current fiscal year. But from deep in the minority, Democrats have been saying the same thing. Rep. Jack Cera is from Bellaire in eastern Ohio, and said: “We’re anxious to see where those cuts are going to be. I’ll take them at their word that they said everything’s on the table, which is a concern because we wonder how they’re going to be able to do these without really further damaging the needs that we have out there.”
One of the few things Kasich did make clear is that he would not consider dipping into the state’s rainy day fund, which he proudly touts is above $2 billion. Democrats have been urging him to consider doing that to help local communities dealing with falling revenues of their own, and rising costs related to the opioid crisis. Cera notes the House is preparing its version of Kasich’s budget now. “With all due respect to the governor, he’s not the only person in Columbus that gets to have a say over what the budget is.” Cera said. “If the House Republicans and the Senate Republicans want to cut important services to the people of Ohio, then that’s their choice.”
Kasich does say that while he’s trimming the budget by $800 million, there’s still some slight growth in it. And that’s a problem for a conservative think-tank that watches the budget. Greg Lawson speaks for the Buckeye Institute, which recently put out a blueprint of possible cuts in the form of its “piglet book”. That report lists items the group feels should be taken care of by private business or non-profit organizations, including arts funding, tourism promotion and industry-specific groups. But Lawson admitted that maybe now isn’t the time for a tax cut, but that the budget needs to continue to do something toward overall tax and spending reform. “I think we need to be cautious. But I think that we need to also be careful that we don’t fall into the trap of saying, ‘Oh well, let’s stop all of this reform today, not do any more of it,’ or worse than that, ‘let’s increase taxes so we can just keep spending.’ No, let’s look intelligently at some of these things,” Lawson said.
The Buckeye Institute and more moderate groups such as the Center for Community Solutions have called for lawmakers to close loopholes that cost the state billions. Those include no tax on sales to churches, breaks on business purchases from farming equipment to airplanes, and credits for campaign contributions.