Like Many States, Ohio Reaches for A Lifeline
Saturday, December 27, 2008
COLUMBUS, Ohio -- As the economy sputters and tax revenue plummets, governors and mayors across the United States are lining up to ask President-elect Barack Obama and the new Congress for hundreds of billions of dollars to plug holes in their budgets, arguing that services will suffer and joblessness will rise if Washington does not come to the rescue.
In Ohio, which has shed 100,000 jobs in the past year, Gov. Ted Strickland (D) and his budget team spend a lot of time delivering bad news to constituents and plotting ways to wring money from the federal government. He announced $640 million in cuts for the budget year ending June 30, for a total of $1.9 billion since the economic crisis began.
"We're not crying wolf. This is real," Strickland said in an interview in his statehouse office, pointing to charts that project the most serious erosion of state income in 40 years and a two-year budget deficit of $7.3 billion. Revenue shortfalls in the upcoming two-year budget could amount to about 25 percent of the state's discretionary spending.
Strickland recently picked up the telephone and called Rahm Emanuel, the incoming White House chief of staff. When he heard the recorded voice of his former congressional colleague, he left a message: "Rahm, it's Ted. You've never failed me and I need $5 billion."
Obama has promised money, contending that the need for a stimulus justifies an expansion of the record federal deficit. Vice President-elect Joseph R. Biden Jr. last week promised a down payment on a middle-class tax cut, plus spending to improve roads, bridges and water systems. He called the package the new administration's "most urgent order of business."
"There is no question about it," said John Habat, a budget specialist at Cleveland's Center for Community Solutions. "At this point in the financial crisis, federal aid is the only lifeline left for Ohio."
As negotiators prepare to gather shortly after New Year's Day to weigh competing claims and figure out what could work, months of worsening news has expanded the sense of urgency in Ohio, while limiting hopes that an infusion will do much to brighten the economy. Strickland said the stimulus is foremost a matter of stopping the bleeding.
Many things Ohio spends money on are becoming more expensive, Medicaid most prominently. In the 2007 budget year, Medicaid costs devoured 24.2 percent of the state's general fund, or $4.3 billion. Four years earlier, the figures were 20.5 percent and $3.7 billion. While Strickland hopes a 6 percent increase in Medicaid will be part of a federal stimulus package, the relentless math of a balanced-budget mandate forces cuts.
One emblematic conundrum was the decision to rescind a $930,000 annual tobacco settlement grant from 16 central Ohio centers where 1,100 smokers got help quitting last year.
"We're going to have a long-term impact of sicker people who are going to need increased Medicare and Medicaid, which the state will pay," warned Marie Collart, president of the nonprofit Breathing Association, who recognized Strickland's dilemma and supported his choice. "Yes, we need the money for the stimulus package. Yes, we need the centers to get addicted people off drugs."
Strickland said he and budget director J. Pari Sabety met 15 corporate leaders at the governor's residence this month, "just to pick their brains." The guests favored spending that would produce long-term benefits, from transportation projects and training programs to a campaign to insulate thousands of drafty old homes, reducing energy use and utility bills.
Strickland, who has recently looked for inspiration and historical analogies in Franklin D. Roosevelt's depression-era speeches, is preparing a pitch for three chunks of money for the states.