With the announcement that the state could tap into emergency funding to balance this year's budget, Ohio University budget planners said the deficit might finally force substantial cuts to higher education.
Ohio's top budget official announced that this year's tax revenue is $397 million short of projections, leaving a deficit between $600 million and $900 million with only two months remaining in the current fiscal year. Revenue in the month of April alone was $322 million short.
The fact that April did not go so well is very significant
said John Kohlstrand, communications director for the Ohio Department of Taxation. Kohlstrand explained that because tax revenue in April includes the final tax returns for the previous year it is more significant than other months.
Gov. Ted Strickland's budget director, Pari Sabety, said the state may tap into it's $942 million rainy-day fund to stop the bleeding, but using those funds would require drastic cuts to the proposed two-year budget for 2010-11, which will go into effect July 1.
If the rainy-day fund is used to balance the current budget, Strickland's $54 billion 2010-11 budget proposal - which relies heavily on those funds - would have to be drastically re-tooled, Kohlstrand said.
In the past, Strickland has not ruled out the possibility of another round of budget cuts, but another cut may be unlikely because much of this year's remaining spending consists of fixed costs, Sabety said.
Strickland has slashed the state budget three times this fiscal year, removing about $1.9 billion, largely sparing higher education each time.
While it is unknown how utilizing the rainy day fund to balance the current budget would specifically impact the next biennium, the state senate could be forced to trim the $55 billion budget that has already seen a cut in federal funding.
It is pretty close to the end of the fiscal year so I'd anticipate this deficit will effect the upcoming two-year budget said Rebecca Vazquez-Skillings, assistant vice president for budget planning and analysis. (If there are cuts to the budget proposal) there will be an impact on higher education.
OU is currently working to close a deficit of $13.4 million in next year's budget, which anticipates about $126 million in state funding, a 4 percent increase from this year.
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Wesley Lowery
