Kasich delivers good and bad news

By Marc Kovac | July 4, 2012 at 12:00a.m.

COLUMBUS

Gov. John Kasich and his budget director had good news and bad news Tuesday, the day after the start of the state’s new fiscal year.

The good: The administration added another $235 million to the state’s rainy-day fund, bringing the balance to about $482 million. That compares to less than a dollar when Kasich took office last year.

And the bad: Administration officials are estimating $1 billion in new costs, anticipated as a result of last week’s U.S. Supreme Court validation of the federal Affordable Care Act, as Ohioans currently eligible for subsidized health care are added to the Medicaid roles.

But Kasich told reporters in a conference call he has no intention of dipping into the budget stabilization funds, or rainy-day fund, to pay for increase Medicaid or other costs.

Instead, he indicated there could be additional cuts to Medicaid and other programs to better control costs and additional tax reform to make the state more attractive for business growth.

“We’re going to do what every family does, trying ... to get more bang for the buck,” he said, adding, “We want to manage this state like a family manages its budget.”

The total surplus was affected by higher-than-expected collections of sales, personal income and other taxes and lower-than-expected general spending, said Tim Keen, Kasich’s budget director.

But federal health care reform is expected to add about $950 million in Medicaid costs over the next two years, Kasich said, painting a grim picture for the next biennial budget.

“They’re setting priorities for us in Washington, and it challenges us as we put this next budget together,” Keen said.

Kasich added, “It is going to force us to go back and look inside the Medicaid program at the kind of benefits we provide. ... Everything will be on the table.”