July 14, 2006

Most Underrported Story of the Week in Ohio

Filed under: Economy,Taxes & Government — Tom @ 3:40 pm

Ohio’s Rainy Day Fund Exceeds $1 Billion:

Ohio Gov. Bob Taft said the state is making a deposit of $394 million to the Budget Stabilization Fund, also known as the state’s rainy day fund. This deposit will push the fund’s balance past the $1 billion mark for the first time in five years.

The rainy day fund serves as the state’s savings account. The balance will be increased to $1.01 billion, the highest it has been since July 2001, according to a Thursday news release.

The deposit was made possible by a combination of stronger-than-estimated state fiscal year 2006 tax receipts and significant underspending by state agencies, the governor’s office said in the release.

That’s quite a contrast to how The Toledo Blade’s editorial board presented it earlier this week:

Instead of siphoning $390 million from a state budget surplus for the fiscal year ending June 30 for up-front costs of a new tax cut timetable, why not save the whole thing?

Ohio’s rainy day fund, depleted early in the decade to balance the books, needs to be replenished. The state would be better off putting the entire $390 million into its reserves, said state Sen. Teresa Fedor. The Toledo Democrat is right to call Mr. Taft’s move “shortsighted.”

“Conveniently,” neither The Blade nor Ms. Fedor acknowledged that the tax cut represents only half of what could have been put into the rainy day fund. You would almost think from reading the editorial that nothing, or almost nothing, was going into the fund.

I don’t know how much flexibility the law actually gives him, but financially Taft could have reduced the state’s income tax by 16.8% instead of 8.4% and energized Ohio’s economy even further. He might as well have, since he’s getting no credit, or even acknowledgment, from Ohio’s major newspapers for doing a perfectly reasonable 50-50 split.

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2 Comments

  1. It strikes me as odd that a state can even have a “savings account”. Is that part of Ohio’s constitution or something?

    Comment by eLarson — July 14, 2006 @ 9:12 pm

  2. #1, I doubt it. It’s in the constitution that the state can’t run a deficit, and the rainy day fund can be seen as a way to keep that from happening. Voter pressure would appear to be the only thing that could keep the politicians from hoarding too much.

    Comment by TBlumer — July 14, 2006 @ 9:18 pm

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