Things are looking up for state budgets

Mar 29, 2012, 3:33 PM

Associated Press

COLUMBUS, Ohio (AP) – During the darkest days of the Great Recession, Ohio didn’t have enough in its rainy day fund to buy even a candy bar. It held a balance of exactly 89 cents.

Today, the emergency fund has swelled to $247 million. A nearly $8 billion state budget gap has been closed. Unemployment has fallen from a high of 10.6 percent to 7.6 percent. And all three credit rating agencies judge Ohio to be stable.

After a few rough years, Ohio and other struggling states have begun to regain their financial footing, largely through a combination of painful spending cuts, higher tax revenue because of the rebounding economy, and creative ideas such as the sale or lease of prisons, office buildings, roads or other assets.

“It’s definitely coming back,” said state Rep. Ron Amstutz, chairman of the Ohio House budget-writing committee. But he was quick to add: “There’s still a lot of pain out there. I don’t think we should be crowing.”

A recent National Association of State Budget Officers survey found 43 states passed budgets for fiscal year 2012 that will spend more general revenue than the year before.

Michigan went from a decade of facing billion-dollar-plus deficits every year to having a balanced budget and even a $457 million surplus. Republican Gov. Rick Snyder achieved that in part by cutting spending on universities and schools.

Idaho sliced off roughly one-fifth of its budget during the recession. Today the state has a $130 million surplus. Minnesota, likewise, has gone from a $6.2 billion deficit to a projected surplus.

How did Ohio climb out of the hole?

Republican Gov. John Kasich and the GOP-controlled Legislature cut subsidies to local governments and school districts, shrunk the state workforce to a 25-year low, and came up with $1.5 billion in savings by streamlining Medicaid.

Ohio also sold a prison for $73 million and is considering leasing the Ohio Turnpike. And it essentially traded 25 years of future profits from Ohio’s state-run liquor stores for an immediate lump sum of $1.4 billion. Similarly, Kasich’s predecessor, Democrat Ted Strickland, raised $5.4 billion by selling off the state’s share of the nationwide tobacco settlement.

Kasich and Strickland together oversaw six straight years of state budgets without significant tax increases.

The improving economy also played a big role: It has produced 60,000 jobs in an employment upswing over the past seven months. The comeback has been led by the health care sector, which includes heavy-hitting research hospitals such as the Cleveland Clinic and Ohio State University Medical Center, and by retail growth and a bump in auto manufacturing and oil and gas drilling.

Money coming in from taxes is still below pre-recession levels, and Kasich is proposing an interim budget that cuts an additional $30 million in spending. But he is optimistic enough that he is calling for a modest income-tax cut to be paid for by a tax increase on the gas-drilling technique known as fracking.

Altogether, the budget officers’ association calculated that states have called for $667 billion more in spending in fiscal 2012 than the previous year. That remains $20 billion below what states budgeted in 2008, before the recession.

“We’re beginning to see revenues grow, but they went down very, very far, so they have a long way to go to get back to pre-recession levels,” said Elizabeth McNichol at the nonpartisan Center on Budget and Policy Priorities. The organization estimates that will take seven years.


Associated Press writers Kathy Barks Hoffman in Lansing, Mich.; Brian Bakst in St. Paul, Minn.; John Miller in Boise, Idaho; and Marc Levy in Harrisburg, Pa., contributed to this report.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

United States News

(AP Photo/Andrew Harnik, File)...
Associated Press

Ex-Twitter execs to testify on block of Hunter Biden story

Former Twitter employees are expected to testify next week before the House Oversight Committee about the social media platform's handling of reporting on President Joe Biden's son, Hunter Biden.
24 hours ago
FILE - The seal of the Board of Governors of the United States Federal Reserve System is displayed ...
Associated Press

Federal Reserve set to impose smaller hike could hint of fewer increases

The Federal Reserve is poised this week to raise its benchmark interest rate for an eighth time since March.
24 hours ago
(AP Photo/Susan Walsh)...
Associated Press

President Biden announces COVID-19 emergencies to end May 11

President Joe Biden informed Congress on Monday that he will end the twin national emergencies for addressing COVID-19 on May 11.
24 hours ago
(AP File Photo/Geneva Heffernan)...
Associated Press

Valley woman among 3 killed in shooting at Los Angeles rental home

Three women, including one from Buckeye, were killed in a weekend shooting at a short-term rental home in an upscale Los Angeles neighborhood.
24 hours ago
(Arizona Department of Transportation photo)...
Associated Press

Should federal grants be in favor of highway repair over expansion?

Advocates for highway construction are concerned their projects are getting shortchanged in the competition for grant money under the new infrastructure law.
2 days ago
Demonstrators block traffic protesting the death of Tyre Nichols on January 27, 2023 in Memphis, Te...
Associated Press

Memphis police chief disbands unit responsible in beating of Tyre Nichols

The unit is composed of three teams of about 30 officers and had been inactive since Tyre Nichols' Jan. 7 arrest.
3 days ago

Sponsored Articles

(Pexels Photo)...

Sports gambling can be fun for adults, but it’s a dangerous game for children

While adults may find that sports gambling is a way to enhance the experience with more than just fandom on the line, it can be a dangerous proposition if children get involved in the activity.
Day & Night Air Conditioning, Heating and Plumbing

Prep the plumbing in your home just in time for the holidays

With the holidays approaching, it's important to know when your home is in need of heating and plumbing updates before more guests start to come around.
Quantum Fiber

Stream 4K and more with powerful, high-speed fiber internet

Picking which streaming services to subscribe to are difficult choices, and there is no room for internet that cannot handle increased demands.
Things are looking up for state budgets