Ohio budget director warns Gov. Strickland in financial report of the long trudge to recovery

J. Pari Sabety, Director, Ohio
Office of Budget and Management
(Photo/OBM)

COLUMBUS, Ohio -- The monthly financial report sent to Ohio Gov. Ted Strickland held a warnning that despite an increase in the national GDP of 3.5 percent after four consecutive quarterly decreases, the news Buckeye State leaders should focus on is that there is "little indication of potential 'snap-back' in the economy and strong indications of a long trudge on the path of recovery."

Dated Nov. 10, the report from J. Pari Sabety, Gov. Strickland's director of the Office of Budget and Management, said fewer Ohioans are actively seeking employment because "they are discouraged about job prospects." Ohio's current unemployment is 10.1 percent, down from 10.8 percent in August, but, surprisingly, a hair's breath lower than the national employment rate of 10.2 percent. And when part time workers or those who want to work more are factored in, the rate rises to over 17 percent, a scary number by any standard.

Sabety budget numbers and estimates have no always been on the money, at least according to House Minority Leader William Batchelder, who was miffed during the debate on the budget, and wrote a letter to Strickland asking for her to step down. Batchelder, easily recognized by his Buddy Holly style spectacles, said her estimates were off and criticized her for not being transparent enough.

Sabety provided a section describing Ohio's expected receipt of $8.2 billion in federal stimulus dollars -- American Recovery and Reinvestment Act funds -- over a three-year time span. So far, she said Ohio has received $1.91 billion and has spent $1.86 billion.

Jobs are what Americans, Ohioans and political candidates running for office next year are all focused on. In Ohio, a state that didn't recover from the recession of 2001 and has been hard hit by the Great Recession, 258,200 jobs were lost in the last year alone. According to some, like Strickland's GOP challenger John Kasich, Ohio under the first Democrat to win the office after 16 years of it being controlled by Republicans, the number of jobless Ohioans is even worse.

Sabety's report confirmed what other economic watchers are saying, that labor markets continue to deteriorate even though some economic pundits have declared that the recession ended sometime this summer. Since the peak of the recession in December of 2007, 7.3 million Americans are without employment, but with the addition of pending benchmark revisions, that number probably exceeds 8 million jobs.

The irony for Ohio, a state ranked by Site Selection magazine as the fourth on its "top ten business climates" in 2009 and that has awarded the state top honors for economic development, is that its job losses far out number its job gains. In September, 5,900 jobs were lost; in August, that figure expanded to 24,300. There certainly seems to be an inverse correlation to wining economic development awards and losing jobs.

For a state whose manufacturing might was the envy of many states not too long ago, the continuing loss of thousands of jobs each month and tens of thousands over the course of a year has been a punch in the gut to Ohio towns, whose fortunes are considerably dimmer than when factories and families were humming in syn.

Person income was flat in September and wage and salary income for the second quarter of 2009, released in October, showed a year-to-year decline of 5.3 percent on top of a 4 percent decline for the first quarter. Knowing these figures, it's not hard to understand why consumer attitudes, which the report said reached their nadir last winter, are higher but still worrisome.

This cautious attitude has caused consumers and households to increase saving and reduce their debt, two attributes not normally found in America's go-go lifestyle, where consumer spending represents about two-thirds of the national economy.

American Recovery and Reinvestment Act (ARRA)

In October, Ohio received $301.2 million in ARRA funds, a reduction of 8 percent from September. October disbursements were $301.1 million, a decrease of $34.4 million from September.

In October, there were 49 programs which received and spent ARRA funds, an increase of 8 programs from September. Accounting for 86 percent of funds spent were the departments of Jobs and Family Services, Board of Regents stabilization for Higher Education, Education stabilization for K12, Education IDEA Part B and Transportation Highway Infrastructure.

Other report highlights:

Total General Revenue Fund variance - (-$18.4 million)

Total revenue sources above estimates - $32.6 million
Total revenue sources below estimates - (-$66.3 million)
Primary, Secondary and other Education - YTD, 7.6%
Higher Education - YTD, (-2.1%)
Public Assistance & Medicaid - Oct., (-7.0%)
Medicaid Caseload - Sept., 22,211; 21st consecutive month of growth and the largest single month increase in that span.
Health and Human Services - (-2.7%)
Justice & Public Protection - (-7.1%)
Environmental Protection & Natural Resources - +21.7%
Transportation - (121.9%)
General Government - +3.1%
Community & Economic Development - YTD (-3%)
Tax Relief & Other - +$180.6 million
Debt Service - (-$3.9 million below estimate)
FY2010 GRF fund balance - +$66.8 million