Written By: Ishton W. Morton – May 5th, 2020
On Tuesday May 5th, 2020 Ohio Governor Mike DeWine announced a $775 million budget reduction.
Ironically, over the next two months the encumbrance of these cuts shall come to rest on Medicaid and education and shall include the following: (1) Medicaid: $210 million; (2) K-12 Foundation Payment Reduction: $300 million; (3) Other education budget line items: $55 million; (4) Higher education: $110 million, and (5) All other agencies: $100 million thus bringing us to a total cut of $775 million.
Reportedly, around the end of February, state revenues for the fiscal year were estimated well ahead by over $200 million. Although the figures are in through the month of April, Ohio’s fiscal year-to-date revenues seems to have taken a dramatic turn.
According to DeWine; “In these two months, we are now below the budgeted estimates by $776.9 million. As you can see this is close to a 1 billion-dollar swing downward in just two months.”
Also, on Tuesday during his daily coronavirus press briefing, the state announced a $775 million budget reduction from the state’s General Revenue Fund spending for the remainder of the fiscal year. This means Ohio must get hold of the $775 million in cuts over the next two months.
Meanwhile state officials had this to say; “Of the money in the budget, is Ohio taxpayer-funded, with only 9.4% of it is spent on the operating expenses of state agencies. Moreover, over 85% is allocated across the state as subsidies to schools, higher education, Medicaid services, local governments, etc, etc.
The governor added; “If we don’t make these cuts now, the cuts we will have to make next year will be more dramatic.”
Back on Monday March 23, 2020 DeWine instituted a hiring freeze within all state agencies, boards and commissions.
However, in addition to his hiring freeze each state agency with the exception of the Department of Rehabilitation and Correction will be taking cutting hits including the governor’s office.
Also, DeWine ordered a freeze on pay increases and promotions of unclassified and exempt staff and a freeze on new contract series for the state.
Subsequently, each agency director has been asked to identify savings in their budgets for the remainder of this fiscal year and the next.
Furthermore, the governor said, state agencies will continue to operate under the travel freeze which is already in effect. However, exceptions are extended for those staff providing direct response to the emergency. Supplementary, agencies will immediately freeze new requests for contract services, except for those services that are necessary for emergency response, and will strictly scrutinize the continued need for those services. Additionally, agencies will suspend purchasing authority for nonessential purchases with continuation of only mission-critical contractual services.
DeWine contended, “Decisions like this are extremely difficult, but are part of my responsibility, as your governor, to make. While we do not know what the coming months will hold, we do know that COVID-19 is here with us and will be here for quite some time.”
DeWine said he decided not to draw money from the state’s rainy day fund to cover the next two months’ deficit, instead of making cuts to allow the state to balance the budget for the next two months.
The governor continued to say; “Simply stated, we are going to need the rainy day fund for next year, and possibly the next. The cruel nature of an economic downturn is that at the time of when you are in need of the social safety net is also the time when government revenues shrink.”
The state $775 million budget reduction has plundered the folks of Ohio onto the star of some very bitter and gloomy days to come. Just today an Ohioan said very profoundly to me; “I have been broke before, but I was never dead before.”