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Ohio: Showdown Over One-Time Funds to Grow Programs

Ohio is a bellwether state, consistently picking the winning president and leading other states in showing the signs of economic downturn. It has been particularly hard hit by the recession; unemployment has soared to 9.7 percent, putting more pressure on Ohio Medicaid as a source of health coverage. At the same time, state revenue from personal income taxes has dropped significantly, making it more difficult for the state to meet its Medicaid obligations.

Rather than scaling back Medicaid, Ohio Governor Ted Strickland, a Democrat, has proposed increasing eligibility for children from 200 to 300 percent of poverty, using one-time federal stimulus money to cover the cost. Governor Strickland included the Medicaid expansion as a provision in his 2010–11 executive budget, which proposes to use one-time federal stimulus dollars to offset $5.7 billion in state general revenue fund (GRF) obligations, about 10 percent of Ohio's $54.7 billion two-year budget (Figure 2). The governor proposes using one-time state funds to offset another $1.5 billion in ongoing state GRF obligations. Without one-time funds from the federal government and the state, the governor's 2010–11 budget would be $4.7 billion (9.0 percent) below 2008–09 spending levels. The injection of one-time funds, if approved by the legislature, will enable Governor Strickland to expand state spending $2.4 billion (4.6 percent) over the next two years—nearly all of which is accounted for by increased Medicaid spending.


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The Ohio governor's decision to rely so heavily on one-time funds to balance the state's budget has proven controversial. Advocates of specific programs, while grateful that spending cuts have not been deeper, want to be assured that there will be a stable source of funding available to support their programs into the future, and the heavy reliance on one-time funds makes them nervous. "We believe that with continued tough choices we will be able to meet those challenges," said the governor's Budget Director, Pari Sabety. "Right now our concern is to build a budget for 2010 and 2011," she said.

Fiscal conservatives are concerned that the structural imbalance created by reliance on one-time funds will make the next state budget more difficult to balance, and could be twisted into a justification for steep tax increases. The Republican-controlled Ohio Senate has already sounded the alarm against new taxes, and Ohio Auditor Mary Taylor, the only GOP statewide executive officeholder, has said, "This budget should not pass in its current form without a full understanding of the serious, long-term consequences it will have for Ohio and our citizens."2

These circumstances—rooted in an abundance of federal stimulus money—have set up a political showdown in Ohio over promoting program growth using one-time funds (the governor's position) versus spending one-time funds on one-time stimulus efforts and otherwise cutting programs or managing them better to balance the budget (the Senate and State Auditor's position). The reality is, Ohio's economic situation probably necessitates propping up the General Revenue Fund with one-time resources, but there is growing concern among both the governor's supporters and critics that Ohio may have crossed a line, and that over-reliance on one-time funds may ultimately threaten the very programs the governor is working to protect.

For more information

See: Ohio Recovery Web site


2. Ohio Auditor of State Press Release, April 16, 2009:

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