This is the second article in this series on Ohio’s Budget Planning and Management Commission – Read the first one here
COLUMBUS, Ohio –The disquieting news that LSC Deputy Director Wendy Zhan delivered to the six members of Ohio’s Budget Planning and Management Commission (OBPMC) last Tuesday was that, starting in FY2007, state tax revenue flowing to the General Revenue Fund (GRF) failed to grow.
This set of circumstances, triggered by the start of the Great Recession in December of 2007 that can be traced back to the national and international economic melt-down that led the federal government, under leadership of President Barack Obama and his Democratic Congress, to pass a $787 billion bill called the American Recovery and Reinvestment Act (ARRA), that he and his followers argue saved America from a second Great Depression, while his Republican critics have said it did not create the jobs it should have, but did contribute to a dramatic expansion of the national debt.
Everyone who attended the first meeting of the OBPMC, including the six lawmakers whose job it is to make recommendations to the next General Assembly on how the state can balance what is projected to be a very out-of-balance state budget, knows that blood will be running in the streets in Columbus come this time next year, when by law Ohio must enact a balanced budget.
Following the meeting, three of its members – Rep. Ron Amstutz (R-Wooster) and Sens. Shannon Jones (R-Springboro) and Dale Miller (D-Cleveland) – offered their personal responses to what they were told by LSC, as well as their hopes and fears for the next biennial budget.
For Rep. Amstutz, what he heard was not necessarily new, but the fact that the commission is now focused on the bumpy road ahead represented a good start.
“I don’t think a lot of things changed today, but there were some colonels of new or remindful information that was helpful today,” he said after the meeting. “The most important thing is that we actually got some focus started on it today, in a public way. Every day that goes by, our options start to dwindle, and the nasty ones are what will be left if we wait too long,” he said, adding, “the longer we wait, the more painful the remaining options are going to be.”
For Sen. Jones, the next set of documents will be helpful, as they will respond to the questions she and her commission colleagues posed to the six LSC staffers who prepared the presentation and responded to questions as best they could.
“We spent a lot of the discussion asking questions of LSC, that’s going to be providing a lot more research for us. While it was a good broad based overview, it is always stark to see it in black and white, our challenge before us. While it isn’t necessarily new, it is starling,” she said.
Jones said the historic rationale behind federal dollars being in the GRF is unique, because most federal dollars are outside the GRF. “Knowing why that happens might provide us with some education; thinking how dramatically those areas of the budget have grown, but also how much they are going to grow as a result of this new federal health care mandate, it raises concerns. If we have a 5 percent limit, there’s a reason why we have a 5 percent limit, and what should that 5 percent be based on, 5 percent of what, 5 percent of resources we don’t control and that we’re dependent on the federal government to provide to us, or is it 5 percent of the tax and deed collections, and other revenues that we’re responsible for in the state of Ohio,” she said. “That’s a policy question that I didn’t focus on until LSC weighed out what the parameters are.”
Jones expressed what everyone else in the room was thinking. “I think everything is very difficult; pension funds, we talk about the unemployment compensation fund, the absence of additional stimulus funds, everything is going to be a challenge.”
Sen. Dale miller is fearful that people will be hurt, but he knows adjustments must be made. “What I know now is a better list of some of the new one-time challenges we’re going to be facing in the next budget,” he said in his Senate office. “The information about the third year of the collective bargaining agreement is important, and having to pay interest on the unemployment compensation; that’s good information,” he said. “My biggest fear is that we’re continuing to face very difficult times, and I’m just afraid to have to make deep cuts and eliminate services that people very much need. I think we’re just continuing to go through a very difficult time, and I’m just afraid of people getting hurt because they can’t get the help they need from public pension systems.”
Miller said he knows each of the state’s five pension systems will be targeted through bill introductions. “I think that were going to take a close look at those bills, and there are probably some things we’re currently doing that are not sustainable, and we may have to make some adjustments,” he said. As to what those adjustments are, he said, “It’s going to take a lot of careful study and discussion, because they will affect tens of thousands of people.”
Miller said the general overview of the bills to adjust operations of state pension systems will be to “strengthen the financial condition of the pension systems by making some significant but gradual policy changes. He said some of those changes may be directed at “reducing the amount of cost of living adjustments that are paid, increasing the amount of time of service required to receive certain benefits, and other changes of that nature.”
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