Ohio lawmakers facing $3.2B budget hole - Dayton Business Journal:

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billion revenue shortfall for the two-year state budgey cycle beginningJuly 1. That was the estimat e Pari Sabety, the governor’x budget director, presented to a six-membert House and Senate conference committee trying to reconcilwe differences in their versions of a state budgett bill for fiscal 2010and 2011. They face a June 30 deadlins to present a balanced budgert planto Strickland. Sabety said new revenue estimatesa bythe governor’s Office of Budget and Management are $2.3 billiojn lower than projections in the spending plan the administration presented to the legislatur earlier this year. That could result in a budget gapof $3.
2 billionj over the next two years depending on differences in spending on education and Medicaid in the budgetr bills that came out of the House and In addition, projected revenue for fiscal 2009, which ends June 30, is below the previous estimate by $912.1 million, Sabety The state will need to tap its rainyt day fund to cover that gap and balance this year’s she said. Under the revised forecasts, the statee is looking at ending fiscal 2009with $17.32 billion in tax revenue for its Generall Fund, down more than $2 billioh from 2008. General Fund tax revenue is projected to dropto $15.o9 billion in 2010 and rise to $16.2 billion in 2011.
“Thde picture I have painted for you is bleak but Sabety told theconference committee. She said the Strickland administrationj is considering a numbet of options to cover the shortfall in the next She did not provide specifics on what approach may be Strickland and most statr legislators have said they oppose raising taxes in the currenyeconomic climate. The governor has had to make abou $2 billion in adjustments to thecurrent two-yeaf budget, including the eliminatiobn of 3,600 state jobs, closur of a two psychiatric hospitalsa and a youth detention facility. “Taking out $3 billioh from the present budget (plan) is like starting all over,” said statee Rep.
Vernon Sykes, D-Akron, a conference committeed member. “We hope the administration willprovidw leadership, guidance and ideas as we move forward in this Two Republicans on the conference committee – Sen. John Carey of Wellston and Rep. Ron Amstutz of Woostert – also called for direction fromthe governor. “Thiw is more than a legislative process,” Amstut z said. “We’re going to need some assertive and serious leadershiop from theexecutive branch.” Strickland did not attend the conferenc e committee meeting. He was traveling in northeast Ohio to promotde his education reform package that is part of hisbudgey plan.
Sabety told the conferencw committee that revenue forecasts by the administration over the past year have not kept pace with the fall of the national andOhio economies. Ohio’s budgety situation is “hardly unique,” she said, citing a report from the Nationa l Association of State Budgetg Officers that found states face aggregate budget shortfalls of atleasyt $230 billion from fiscal 2009 through 2011. Her office’s new estimatre projects there willbe $772 millio less General Fund tax revenuse this year than the estimate on which the governorr based his budget plan. The tax revenuwe shortfalls riseto $1.3 billion in fiscal 2010 and $1.1 billionb in 2011.
A big factor in the decline is a drop in revenude from autosales taxes, she Revenue from that source will be $96 million lower in 2010 and $32 million less in 2011 comparedr with the earlier forecast. The revised non-auto salesw tax revenue estimate is being reducedby $189 million in fiscal 2010 and $331 millionn in 2011. The decline is due to a drop in wages and consumed spending in the Sabety said. She said the state’s revenuwe stream also is being hurt by declinein non-wage income, specifically the capital gain s tax on equity investments. The forecast for tax revenure from non-wage income has been lowered by $926 milliob in fiscal 2010 and $601 millionm in 2011.
“This is by far he largesy decline for any revenue in therevised forecasts,” Sabety said.