Ohio's $800 million budget surplus to fund tax cuts, guard against unexpected Medicaid costs

Ohio ended its budget year with an as-expected surplus of nearly $800 million, money set aside to fund tax breaks and any unexpected Medicaid expenses resulting from the federal health care overhaul, the state budget director said Wednesday.

The state beat projections for the fourth consecutive fiscal year through spending cuts and better-than-expected tax revenues, budget director Tim Keen said. Overall, revenues lagged the previous year because of tax cuts in Republican Gov. John Kasich's current two-year budget, he said.

Besides $300 million earmarked for a Medicaid reserve, the funds will pay for $76 million in tax credits for low- and middle-income Ohioans; $91 million in accelerated income-tax cuts; and $229 million for expanded income-tax breaks for small-business owners.

What's left carries over to the new fiscal year that began Tuesday.

Keen said beating projections for four years running doesn't indicate the state's projections under Kasich have been overoptimistic, but that the state is managing its budget properly.

The surplus represents just 2.8 percent of Ohio's $28.9 billion general revenue fund, so Keen said it's a reasonable amount to have left over at the end of a fiscal year.

"We intend to produce slightly conservative economic and revenue forecasts," he said. "And so our revenue estimates are about 1 percent over the estimate, the last couple of years we've come in about 2 percent over the estimate. In the grand scheme of things, that's pretty good."

Democrats, the minority party in both legislative chambers, have been critical of Republicans for holding back money that could be spent on other priorities, particularly schools and local governments.

After last year's budget surplus was announced, for instance, Senate Democrats said the $397 million could have provided an additional 88,000 children with access to high-quality preschools. In 2012, Democratic state Reps. Dan Ramos and Connie Pillich introduced legislation that would have diverted Ohio's budget surplus to a local government job fund.

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