Like guardrails on a straight, level highway, Gov. Ted Strickland thinks Ohio’s laws safeguarding the budget are only needed in good times. On the twisting, steep inclines of this year’s budget, he’s asked the Legislature to take away the guardrails.At issue is an obscure Ohio law that says the director of OMB can run a negative cash balance in the general revenue fund, but that it can’t be more than 10% of last year’s revenue.
So, if last year’s GRF was $20 billion, the red ink can’t be more than 2 billion. That’s quite a cushion, and more than enough to allow the state to manage its cash flow. (A purist might point to the constitutional provision requiring a balanced budget, and argue that this statute is unconstitutional, but let’s not quibble.)
Mr. Strickland is asking the Legislature to waive this requirement in the current budget bill, to allow the state to run as big a deficit as he pleases.The argument for waiving the law is that, if it’s not waived, the state could reach a point where it had to suspend issuing checks until more money came in. It is unclear why, in the face of a couple billion dollars in red ink, this would be a bad idea.
Like a car going over the cliff, it’s not the fall that kills you – it’s the sudden stop at the end. If this requirement is waived, the state could easily deficit spend its way into a $5 billion hole by the beginning of the next budget. Forget about not having a rainy day fund left – the budget will start under water.
Of course, that’s after the 2010 statewide election.
The guardrails might tear up your car pretty badly if you happen to hit some bad weather and slick pavement. But the guardrails are there for a reason, and that reason is more important when the weather’s bad. And it's ugly out there right now.
