Ohio Handles One Budget Shortfall, But Another Deficit Is Looming Soon

Jun 10, 2020

Using three quarters of a billion dollars in cuts and some reserve cash and federal Medicaid funding, the state of Ohio has staved off a budget deficit for the fiscal year that ends on June 30. But there’s a huge shortfall ahead for the year that begins on July 1.

With tax revenue predicted to be down by more than 9 percent from the projections that created the state budget last year, budget director Kim Murnieks estimates the deficit for next fiscal year is just over $2.4 billion.

That means a hiring freeze, no pay or step increases for non-union state workers, who will also have 10 furlough days, and cuts in agency directors’ salaries.

“We are already taking action to close that gap. But a significant portion of closing that gap will be continuing to contain our overall staffing costs for state government," Murnieks said.

Union leaders are expected to start negotiations with the state on Monday. Gov. Mike DeWine has said he expects to tap the state’s $2.7 billion rainy day fund at some point, but not yet.

And Murnieks also said if there were another significant outbreak of coronavirus in Ohio, that could would potentially impact the economy even harder and lead to a greater shortfall than the slow recovery that’s being predicted now.

“Kind of an economic model that looks sort of like a Nike swoosh. It is possible if there is an additional outbreak of coronavirus, then our economic model could look more like a W with another significant downturn," Murnieks said.

Gov. Mike DeWine has said he doesn't want to have to cut K-12 schools, higher education or Medicaid, which took the brunt of $775 million in cuts he ordered last month. But he has ruled out a tax increase as a possibility to deal with a deficit.