Tuesday Update: DeWine Announces $775 Million Worth Cuts to State Budget

Update on Cases

The Ohio Department of Health’s latest report shows the state now has 20,969 total cases of COVID-19 and 1,135 deaths. 3,956 Ohioans have been hospitalized from the coronavirus; 1,123 have been admitted into the intensive care unit. Close to 160,000 Ohioans have been tested for COVID-19. The Buckeye State has a positive test rate of around 13.1%.






State Budget Cuts

Today, Governor DeWine announced a $775 million budget reduction in General Revenue Fund spending for the remainder of Fiscal Year 2020. DeWine says the state will have to obtain the $775 million in cuts over the next two months.

“Decisions like this are extremely difficult, but are part of my responsibility, as your governor, to make,” DeWine said. “While we do not know what the coming months will hold, we do know that COVID-19 is here with us and will be here for quite some time.”

Nevertheless, DeWine says the pandemic does not exempt the state from balancing Ohio’s budget.

“Making difficult budget cut decisions now will help us down the road and will help us while we continue our discussions for the next fiscal year,” said DeWine.

The Governor has decided to not draw money from the rainy day fund to cover the next two months’ deficit. He says the state has decided to make cuts to allow Ohio to balance the budget for the next two months.

“Simply stated, we are going to need the rainy day fund for next year, and possibly the next,” said DeWine. “The cruel nature of an economic downturn is that at the time of when you are in need of the social safety net is also the time when government revenues shrink. We are trying to preserve basic services for people, while we get through this period. That is why we need stability.”

DeWine says these decisions were not easy but had to be made.

“We did not make them lightly, but they are necessary,” said DeWine. “As many of our businesses are making adjustments in this difficult time, so must our government.”

Here are the cuts that were made for two months:

  • Medicaid: $210 million
  • K-12 Foundation Payment Reduction: $300 million
  • Other Education Budget Line Items: $55 million
  • Higher Education: $110 million
  • All Other Agencies: $100 million
  • Total cuts: $775 million

Governor DeWine says of the money in the budget that is Ohio taxpayer-funded, only 9.4% is spent on operating expenses of state agencies. Over 85% goes out across the state as subsidies to schools, higher education, Medicaid services, local governments, etc.

“Most of the budget does not get spent on state agencies, but is a transfer payment that goes out to our local schools and communities,” said DeWine. “If we don’t’ make these cuts now, the cuts we will have to make next year will be more dramatic.”

Each of Ohio’s state agencies (with the exception of the Department of Rehabilitation and Corrections) is taking cuts, including the Governor’s office.

On March 23rd, Governor DeWine instituted an immediate hiring freeze for state employees in state agencies, boards, and commissions. He also ordered a freeze on pay increases and promotions of unclassified and exempt staff, and a freeze on new contract series for the state.

DeWine says he has asked each agency director to continue to identify savings in their budgets for the remainder of this fiscal year and next fiscal year. Moving forward, all state agencies will continue the hiring freeze as well as the freeze on pay increases and promotions.State agencies will continue to operate under the travel freeze already in effect, with exceptions for those staff providing direct response to the emergency.

Further, agencies will immediately freeze new requests for contract services, except for those services that are necessary for emergency response, and will strictly scrutinize the continued need for those services. Also, agencies will suspend purchasing authority for non-essential purchases with continuation of only mission critical contractual services.