KSU prepares for Ohio budget fallout

DKS Editors

Gov. Ted Strickland warned of a potential $7.3 billion deficit for the upcoming state budget, news that doesn’t bode well for Ohio’s college students.

“Right now our biggest concern is what’s going to happen with the state budget,” President Lester Lefton said. “With the economy going so bad, we may have to slow down or delay (new landscaping) and other projects that we have in mind.”

For example, the intramural athletic fields that were slated to replace Small Group housing, which will still be demolished on schedule, won’t be finished

on time.

Besides putting off construction projects, the state’s budget woes also mean students may be asked to pay more tuition. Kent State administrators have been predicting that since at least early November.

“If we are allowed to increase tuition, we obviously have to,” Lefton

said Nov. 6.

State institutions are under a state-mandated freeze on tuition through the end of this school year.

But given the current $640 million state budget gap Strickland announced Monday, that is likely to change.

The state is facing an unprecedented economic crisis that will only get worse without direct federal help, Strickland said. The governor flatly ruled out a tax increase, saying it could make things worse under the current conditions.

Strickland continues to press the federal government for direct aid to the states he said could prevent further cuts to the current budget, which has already seen $1.3 billion in reductions. He sent President-elect Barack Obama a letter Monday asking for $100 billion in block grants to the states and $3.2 billion to help with welfare expenditures and another economic recovery


For the first time, Strickland said the state would likely have to dip into the rainy-day fund – which currently has about $750 million – to deal with the economic slowdown. He has previously said the rainy-day fund should be saved for even worse times ahead.

“We share this with you and with people of Ohio because we believe that this is the time for all Ohioans to join together in an extraordinary partnership in order to meet the challenges before us,” Strickland said during a somber news conference.

Budget Director Pari Sabety said Ohio is facing losses in tax revenue of historic proportions. And there’s even worse news: During the next two years, Ohioans could see overall reductions in how much they take home in salaries and wages for the first time in

state history.

The erosion in tax revenues is the worst in 40 to 50 years, Sabety said.

Among other grim news Sabety and Strickland delivered Monday:

– Even if state agencies reduce their budgets by 10 percent next year and in 2010, the state would still face a $4.7 billion deficit.

– Ohio likely faces an extended state recession through the end of this calendar year and all of 2009.- The state is facing a three-year decline of $1.4 billion in personal income tax collection, the worst since the tax was implemented in 1972. Revenue from sales taxes will be $490 million less in 2010 than this year, the first such decline since 1950.

Adding to the drama of the announcement, Strickland stepped before microphones to announce the news that was just then flashing around the world: The U.S. officially went into a recession in December 2007.

“I am calling upon Ohioans during this particular season of the year to look out for each other, try to be a good neighbor, a good friend, and to try to share whatever resources they have with those who are most in need,” he said.

State Rep. Armond Budish, the Beachwood Democrat who will take over as House speaker when the Democrats take control of the chamber in January, echoed Strickland’s call for cooperation.

“We all need to come together – Democrats and Republicans in the Legislature, working with the governor and our congressional delegation in the spirit of bipartisanship – to meet these tough challenges,” Budish said.

Republicans said Strickland had spent too much time on the campaign trail instead of paying attention to the financial crisis and had cast too much blame instead of taking responsibility.

“Not unlike his 12 years in Congress, the governor has yet to propose anything bold or visionary, and he will not deliver on his promise to turn around Ohio’s economy unless he does,” said Kevin DeWine, Ohio Republican Party deputy chairman.

Zach Schiller, research director for the left-leaning Policy Matters Ohio, said the state’s budget difficulties were too great to be overcome with just cuts. He said lawmakers should at least be considering the idea of freezing current tax levels in place instead of continuing a five-year tax reform process that has hurt budget coffers in the short run.

“It simply underlines how we are going to be unable to balance our budget in the next biennium and even begin to maintain the level of services we need without increased revenue,” Schiller said. “The idea we can cut our way to $7 billion strikes me as very ill-conceived.”

But Senate President Bill Harris, an Ashland Republican who will remain in his leadership position when the new Legislature meets in January, said the state’s business climate would be worse off without the phasing out of some business taxes.

“Our focus has got to be based on stimulating job growth,” Harris said.

Contact administration reporter Ben Wolford at [email protected].