The New York Times, August 17, 2018: Some states sitting on piles of cash, and cities want a cut
LORAIN, Ohio — Welcome to Lorain, where the mayor, Chase Ritenauer, would like to show you around.
The police car over there? It broke down during a pursuit not long ago, leaving the officer to continue the chase on foot. The new high school? It is part of a school system so badly underfunded that it is now overseen by the state. Traffic signals are kept operating with parts recycled from discarded traffic lights.
This city of 63,000 is in such dire financial straits that it has ceded part of an administrative building to raccoons; repeatedly calling the exterminator was too costly.
But even as Lorain and many other Ohio cities are barely scraping by, the state government is flush with money.
Ohio announced a budget surplus of $657 million in July. State officials have made it clear, however, that none of the windfall will go to Lorain or any other city or town, many of which are struggling because of heavy cuts made by the state over the years.
Instead, Ohio is putting it all away in a rainy-day fund that now totals nearly $2.7 billion.
What’s happening in this political swing state offers a snapshot of what is playing out across the country. As states reap the benefits of an expanding national economy, at least 39 have reported budget surpluses — leaving joyous but somewhat perplexed state officials to figure out what to do with the unexpected cash. Last year, 17 states had surpluses, according to the National Association of State Budget Officers.
Rainy-day funds are pots of money governments can turn to if things go bad. But the funds have a mixed record. In the past, state lawmakers often used them for political expediency — paying for employee raises, for example, rather than making cuts or raising taxes.
But state finances have changed so precipitously since the Great Recession more than a decade ago that there is a general wariness about what might come next. Many state officials have been reluctant to increase spending. Still, the combination of a surplus and fresh revenue means that states that had endured years of involuntary frugality are virtually swimming in cash.
