Ohio faces $7 billion budget deficit

COLUMBUS — The federal government has made it official: We’re in a recession.

It’s no surprise to most Ohioans, and certainly not to Gov. Ted Strickland, who decreed Dec. 1 that Ohio faces a $7 billion budget deficit in the upcoming 2010-2011 budget.

“Our great state is confronted with challenges of historic proportions,” Strickland said.

$640 million in red

Mirroring the national economy, Ohio’s economic circumstances have deteriorated rapidly. A $640 million shortfall is now projected for the remainder of the current fiscal year, Strickland said.

The governor said the need to initiate additional cuts to balance the current budget will be largely determined by whether considerable state aid is included in the federal government’s recovery package and if robust activity occurs in retail holiday sales.

Any further reductions to the current budget will be in addition to the $1.27 billion in budget adjustments already under way.

Based on current economic and revenue indicators, an approximate $7.3 billion deficit is forecast for the FY 2010-11 operating budget.

Even after assuming a 10 percent reduction to all state agency budgets, based on the February 2008 recalibrated spending levels, the projected deficit is approximately $4.7 billion.

“There will be shared sacrifice,” Strickland said, “but we also recognize that historic opportunities lie on the other side of our current economic challenges.”

The governor and Budget Director J. Pari Sabety addressed members of his cabinet, legislative leadership, Ohio’s public employee union leadership and representatives of the business community Dec. 1.

More cuts likely

Strickland asked his cabinet to begin conversations with all of their stakeholders to consider 2009 cuts.

The administration has already reduced the state workforce from 63,568 employees in March 2007 to 60,540 employees as of Dec. 1, and has also initiated spending reductions, programmatic cuts and the closure of state institutions.

However, the administration is pursuing an agenda of job creation through a $1.57 billion bipartisan job stimulus bill and recently enacted energy bill.

Need federal help

Repeating his call for an aggressive federal economic recovery package to include direct aid to states (read Strickland’s letter to President-elect Obama), Strickland said he believes significant federal help is essential to avoid the potentially severe effects of the projected budget shortfalls.

“I believe that significant federal aid to states, and a willingness to make tough choices here in Ohio, are absolutely necessary to address this crisis in a way that will enable Ohio to continue investing in what matters to move our economy forward.”