OSCPA staff report
During the recession, Ohio’s rainy day fund was drained down to 89 cents. Gov. John Kasich made the second-largest-ever deposit to the rainy day fund on Wednesday, raising the balance to nearly $2.7 billion. This action aligns with a 2010 OSCPA recommendation to increase the fund against financial volatility.
In its Ohio Budget Advisory Issue Paper, the OSCPA task force recommended “mandating that a baseline amount is available in the state’s rainy day fund based upon a percentage of the total state budget, and work toward replenishing the fund when possible.” In the 2015 budget bill, H.B. 64, the legislature heeded that advice by increasing the amount of money reserved for the rainy day fund from 5% to 8.5% of General Revenue Fund (GRF) revenues for the preceding fiscal year.
This past 2018 fiscal year (July 1, 2017 to June 30, 2018) the state spent less than expected and brought in more taxes, resulting in a $657.5 million deposit to bring the state’s fund to $2.691 billion. Following the deposit, the account now holds 8.3% of last year’s GRF revenues.
The state actually ended FY18 with a cash balance of $1.2 billion. Of the remainder, $371.2 million was reserved for outstanding encumbrances from FY18, $162.4 million funds an ending balance that equals one-half of one percent of the FY18 revenues, and $30 million was transferred to the Medicaid Local Sales Tax Transition Fund to be distributed to counties and transit authorities to help mitigate the loss of the managed care organizations sales tax.
“Ohio is in a stronger fiscal position than it has been in years. At nearly $2.7 billion, the Rainy Day Fund is now at its highest point in Ohio history and is just below its recently-increased statutory target,” said Senate President Larry Obhof, R-Medina. “The state’s improved fiscal condition and growing economy show that conservative policies like tax cuts, regulatory reform, and responsible budgeting are working for Ohio.”