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Posted: 9:28 p.m. Friday, Dec. 28, 2012

Fiscal cliff effect on local/state governments

Cuts could hurt agencies and programs suffering from years of lean budgets

By Randy Tucker

Federal spending cuts will not obliterate states and local governments, but they will hurt agencies and programs suffering from years of leaner budgets and reduced revenues.

Ohio receives about $24 billion in federal grants each year. More than $20 billion pay for federal welfare programs, such as Medicaid and food stamps, which are exempt from the pending cuts. At risk are about $3.6 billion for discretionary programs, such as child welfare services and substance abuse treatment for prisoners.

Ohio could lose $312.6 million in the first year of cuts to federal grants that are not exempt, according to estimates by the state’s nonpartisan Legislative Service Commission.

State coffers would not benefit from the average tax increase of $2,679 estimated by the conservative-leaning Heritage Foundation http://www.heritage.org/research/projects/taxmageddon-interactive-map. Gary Gudmundson, spokesman for the Ohio Department of Taxation, said any increased tax revenue in Ohio would be delayed until after April 2014 - the filing deadline for 2013 returns.

Ohio provides a state tax credit linked to the federal Child and Dependent Care Credit for taxpayers with income below $40,000. Eliminating the credit would generate $6.3 million, according to estimates by the Ohio Department of Taxation. State taxes are based on the taxpayer’s federal adjusted gross income, so taxpayers could move up a tax bracket if line deductions are eliminated or altered.

Ohio’s affected grants include money that supports law enforcement, wildlife preservation, mental health, education and other public services. More than 19,000 Ohio jobs tied to those grants would be lost, according to a study by the George Mason Center for Regional Analysis.

Policy Matters Ohio found Ohio’s cuts would hit education and health services hardest, but touch a dozen state departments.

“It’s not just one big thing going under the knife; it’s a host of things,” said Zach Schiller, research director at Policy Matters.

Tim Keen, director of the state Office of Budget and Management, said his office is monitoring the fiscal cliff debate and is prepared in the case an agreement cannot be reached, though details were not released.

Among the state departments affected in Ohio would be agriculture ($18.5 million,) the Environmental Protection Agency ($12.2 million) and homeland security ($1.3 million).

Kent Scarrett, director of communications for the Ohio Municipal League, said Ohio cities and townships would not have the money to continue services if the federal cuts take effect.

Ohio communities stand to lose an estimated $11 million from the Community Development Block Grant, which is used for job training, financial assistance and other programs intended to assist people hurt by the recession and boost local economies.

“It’s just this massive game of chicken, and I don’t think anybody’s in a good spot,” Scarrett said. “Everybody’s got something to lose in this.”

Read more about those in jeopardy in Ohio:

Fiscal cliff effect on local:   Agriculture  |  Health care  |  National security  | Local/state governments  |  Jobless benefits  |  Financial markets  |  K-12 education  | Colleges and universities

Read more about the fiscal cliff:              

               Your opinion: Who's to blame for no solutions?

               With "cliff" solved, taxes to increase in 2013

               Over the fiscal cliff: Soft or hard landing?

               What exactly is the fiscal cliff?    

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