Now we're seeing red!

Yesterday, Governor Ted Strickland announced that the State was expecting a budget shortfall of between $733 million and $1.9 billion for the fiscal biennium ending June 30, 2009. Since the Ohio Constitution (thankfully) forbids the State from ending a biennium with a deficit, State officials were left with a choice between cutting programs, cutting staff, and raising taxes.

Gov. Strickland wisely decided that Ohio would not get out of its recession if funding for his long-range economic initiatives were cut, and certainly not if taxes were to be increased; so he was left with selective cuts in program and staff in other areas. Today, he announced a staff reduction of between 1,500 and 3,700 State employees, to come from natural attrition, retirements (both voluntary and forced), and "several hundred" layoffs.

Most analysts would agree that there is currently very little waste in State government. This round of cuts will definitely take out muscle, and maybe even a few bones. Ohio is not alone in facing budget shortfalls, but ours may be one of the most severe.

Let me give you one of the reasons we (and other States) are in this fix: unfunded Federal mandates! The National Council of State Legislatures (NCSL) estimates that in Federal fiscal years 2004-2007, unfunded mandates accounted for $100 billion in State expenditures. The NCSL list of Federal programs that impose unfunded mandates is 44 pages long. In my research, I was unable to come up with the dollar impact on Ohio; but if we consider that Ohio accounts for approximately 4% of the U.S. population, a biennial shortfall of $2 billion would not be unreasonably high -- and is more than chump change in a $52 billion budget.

In other words, the Congress is passing its deficits onto the States. The Federal funds we do receive, ($1.03 per dollar in taxes in 2005) are nothing more than the hard-earned dollars we sent in with our 1040s and corporate tax returns, returned to us after the puzzle palaces on the Potomac have taken theirs.

This overhead and the unfunded mandates will be eliminated once the Ohio Republic is established, and is one of the principal reasons that I favor our independence.