Opportunity Ohio Warns of Impending Deficits from Increased Spending

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Ohio’s spending and revenue trends put the state on a path toward a $376,000 deficit in 2015 and a $6.6 billion deficit in 2019, Opportunity Ohio warned in a July 2 study based on Ohio Legislative Service Commission data.

“While the elimination of the severance tax and Medicaid expansion from the state budget was a clear win for the conservative movement, we are still alarmed by the enormous spending increases,” Opportunity Ohio Vice President Mary McCleary wrote in an announcement of the release.

“The increased spending and tax cuts are funded by projected increases in tax revenue,” McCleary added. “The Governor and the General Assembly’s budgeting philosophy can only lead one place in future years: deficits.”

“From Governor Kasich’s first year to his fourth year, Ohio’s budget has grown by 20.1% or 6.7% each year,” Opportunity Ohio President Matt Mayer wrote in his study of state revenue and expenditures since 1975.

“If the next two budgets grow at the same rate as the last two budgets, Ohio’s budget will surpass $41 billion in FY2019,” Mayer explained.

“If revenues grow at the same rate (excluding the high and low years), Ohio’s revenues will hit $34.5 billion in FY2019, resulting in a $6.6 billion one-year deficit and $11.4 billion two-year deficit.”

A summary of the past two fiscal years and the two upcoming fiscal years follows. All dollar figures are in millions.

Fiscal Year General Revenue Fund (State & Fed) GRF Growth All Revenues Revenue Growth Surplus / Deficit
2012 $26,394.6 0.6% $28,897.9 -2.1% $2,503.4
2013 $27,655.6 4.8% $29,836.0 3.25% $2,180.4
2014 $30,263.2 9.4% $30,570.0 2.46% $306.8
2015 $31,698.6 4.7% $31,322.0 2.46% -$376.6

If current spending and tax revenue trends continue, the state’s deficit will be $1.7 billion the fiscal year following Gov. Kasich’s just-signed 2014-2015 budget, $3.2 billion the next year, and $4.8 billion in fiscal year 2018.

See the Opportunity Ohio release – which included General Revenue Fund spending, revenue, percentage growth in both spending and revenue, and annual surpluses or deficits dating back to 1975 – for more details.

“The U.S. has had five recessions from 1975 to today, with one occurring roughly every ten years,” Mayer noted. “Four years have passed since the last recession ended. As with Medicaid expansion, a cyclical recession would make these projections even worse.