With the financial fallout from the coronavirus pandemic devastating state tax collections, Ohio Gov. Mike DeWine announced “significant” cuts in state spending totaling $775 million on Tuesday.
DeWine said he will not immediately tap the $2.7 billion rainy day fund to offset reductions.
“We are going to need that money, the rainy day fund, for next year and possibly the year after,” he said. “It could be a cold, lingering storm.”
In line for the $775 million in cuts for the weeks ending next June 30: K-12 school basic aid, $300 million; Medicaid health care for the poor, $210 million; higher education, $110 million; other agency spending, $100 million; and other education items, $55 million.
State tax revenue through April was $776.9 million below the fiscal year estimates on which the state budget was built, the governor said. All was well budget-wise, he said, until the virus arrived in Ohio.
“If we don't make these cuts now, the cuts we will have to make next year will be more dramatic,” DeWine said.
“These decisions were not easy. We did not make them lightly, but they are necessary. As many of our businesses are making adjustments in this difficult time, so must our government.“
All agencies are shouldering budget cuts with the exception of the state prison system, DeWine said. More specifics on the budget cuts will come Wednesday, he said.
Cuts to the second-year of the state budget will be dealt with later, he said.
DeWine expressed regrets about cuts to schools, which were ordered closed for the rest of the academic year to nearly 1.7 million pupils, with education switching to an internet model not easily available to many students.
He said he plans to continue about $130 million a year in “wraparound” social-services funding for students to help them learn. Asked if classrooms could reopen this fall, DeWine said it was too soon to tell.
Without offering specifics, DeWine said of the Medicaid cut: “We do not intend to reduce essential services to people who have been hurt by this pandemic” who enrolled to replace employer health coverage lost when they were laid off.
To put the $775 million cut in perspective, the governor said the state spends about $1 billion a month on K-12 schools and public universities and colleges.
Health officials, meanwhile, reported 495 new cases and 79 more COVID-19 deaths statewide on Tuesday.
The statewide total of coronavirus cases grew to 20,969, an increase of 2.4% from Monday. The cases include 1,135 fatalities and 3,956 cumulative hospitalizations.
Here are the latest local case numbers (provided by the state unless otherwise noted):
Summit: Data released Monday afternoon by Summit County Public Health show 744 cases, including 60 deaths (four new) and 260 cumulative hospitalizations. Among the deaths, 41 cases were individuals who resided in long-term care. The case count includes 160 (three new) sickened health-care workers, who account for 21.5% of all Summit County cases. Long-term care residents make up 31.5% of the county’s cases.
Stark: Four new deaths reported. A total of 414 cases (nine new), 102 cumulative hospitalizations and 57 deaths.
Portage: One new death reported. A total of 254 cases (three new), 68 cumulative hospitalizations, 43 deaths.
Wayne: No new deaths reported. A total of 166 cases (five new), 24 cumulative hospitalizations and 33 deaths.
Medina: No new deaths reported. A total of 177 cases (two new), 46 cumulative hospitalizations and 16 deaths.
Ashland: Nine cases, one hospitalization, no deaths.
Holmes: Six cases, two hospitalizations, one death.
Tuscarawas: 133 cases (seven new), 13 hospitalizations, no deaths.
The ordered closure of nonessential businesses during the pandemic and the accompanying loss of nearly 1.1 million jobs devastated Ohio’s economy — and the state’s tax take — while also increasing demand for social services such as Medicaid health care coverage for the poor.
Ohio businesses, of course, can’t withhold income taxes on the wages of employees not working and can’t collect sales taxes on items and services that are not sold, fueling the state budget shortfall.
Forty-six percent of the state general revenue fund is covered by sales taxes, 39% by income taxes. Local governments also have warned of budget cuts due to their decreased collections of the taxes.
Slightly more than three-fourths of the state’s general revenue fund is spent on only four areas: primary and secondary schools (35%), Medicaid (24%), higher education (11%) and prisons (7%).
DeWine on Tuesday also extended his previous orders imposing a state hiring freeze — except for positions critical to dealing with the coronavirus pandemic — forbidding promotions that would carry pay increases and preventing state agencies from awarding new contracts.DeWine since has consulted legislative leaders on how much to cut where.
The first year of the biennial $69.8 billion state budget must be balanced by the end of the fiscal year by June 30, compressing the coming cuts and spending maneuvers into less than two months.
In the longer term, DeWine and lawmakers must deal with reducing spending, and potentially making tax changes, in the second year of the budget ending in mid-2021.
DeWine said the state’s $2.7 billion rainy-day fund is likely to be tapped to fill holes for next budget year. Former Republican Gov. John Kasich guarded the fund against spending while rebuilding it during his eight years in office.
State government faces its worst fiscal crisis since the Great Recession began in 2008. Then-Democratic Gov. Ted Strickland and lawmakers delayed an income-tax cut, imposed 4.5% budget cuts on most agencies and drained the rainy-day fund from $1 billion to 89 cents. Hundreds of state workers were laid off.
Deaths per capita
Cases by county
Cases per capita by county