COLUMBUS (WCMH) – With the coronavirus pandemic significantly affecting government budgets both nationwide and in Ohio, Gov. Mike DeWine announced significant budget cuts to help alleviate the downturn.
“As we all know, the COVID-19 epidemic has had a profound impact on the American economy,” DeWine said. “It has certainly had a profound impact on the Ohio economy as well.”
The governor announced a $775 million budget reduction in general revenue fund spending for the remainder of the 2020 fiscal year, meaning the cuts must come in the next two months.
“Decisions like this are certainly very difficult and unpleasant,” DeWine said. “But they are part of my responsibility as your governor to make.”
For the next two months, the state will reduce:
- Medicaid spending by $210 million
- K-12 Foundation payment by $300 million
- Other education budget line items by $55 million
- Higher education by $110 million
- All other agencies by $100 million
“Any cut to education is difficult, but we have an obligation to do our best to balance these cuts and to protect the most vulnerable of our students, and we intend to do that with these cuts,” DeWine said, adding that if the cuts weren’t made now, they would be more dramatic if made next year.
In addition to schools, all state agencies with the exception of the Department of Rehabilitation and Corrections are having their budgets cut. This is in addition to the governor’s freeze on March 23 of all hiring, pay increases and promotions, new contracts, and a 20 percent budget reduction.
DeWine said all agencies will continue the hiring, pay increase, and promotion freezes. Also, non-essential purchases and contractual services spending not directly tied to responding to the COVID-19 pandemic will remain frozen.
“Those are the decisions we are making for the next two months,” he said. “We have been in contact with the legislature about these. I bear the responsibility. We will continue to discuss with the legislature where we will go with next year’s budget, which will be immediately upon us and I look forward to consultation with the minority leadership as well as the majority leadership in both the House and the Senate.”
DeWine said money from the state’s rainy day fund – estimated at $2.7 billion — will remain in the fund for the remainder of this fiscal year.
“I have decided to not draw down the money from the rainy day fund for the next two months,” he said. “We have decided to make cuts which will enable us to balance the budget for the next two months… Simply stated, we are going to need that money, that rainy day fund, for next year and possibly for the year after.”
He said the state will tap the fund, but just not for the 2020 fiscal year.
“I know that I have said that it is raining, but we really don’t want to tap into that fund yet,” DeWine said. “This rain is not a passing spring shower. It could be, we don’t really know, but it could be a long, cold, lingering storm. We should not use that rainy day funding until we have to.”
DeWine said times where the state needs a social safety net are also times where budget revenues shrink.
“We’re trying to preserve basic services for people while we get through this period,” he said. “One of the things that we’re going to try to achieve is some stability.”
He added the COVID-19 virus does not absolve the state from balancing the budget.
“Making difficult budget decisions now will help us down the road, and will help us as we continue our discussions for the next fiscal year budget,” DeWine said.
Prior to the pandemic, the state’s economy was strong, the governor said.
The state’s budget was also on track, DeWine added. The governor said that by the end of February, state revenues for the fiscal year were ahead of estimates by more than $200 million. For the month of April, year to date fiscal revenue estimates are down by $776.9 million.
“Our fiscal year to date revenues have taken, as you can imagine, a rather dramatic turn just in two months,” DeWine said.
“Just to put this in perspective, a billion dollars per month is what the state pays and spends on primary and secondary education as well as to our state colleges and universities,” he said.
Ohio’s Office of Budget and Management Director Kimberly Murnieks are projecting state revenues to be below budget in the coming months as the state moves through the crisis, according to the governor.
The state operates on a two-year budget cycle, with each fiscal year running from July 1 to June 30. May represents the 11 month of the 24-month cycle. The budget has to be balanced throughout the entire two-year period and has to be balanced at the end of each fiscal year, DeWine said.
“Unlike the federal government, we have to balance our budget and we intend to do so,” he said.