Report: Ohio lacks the money to pay its bills

While Ohio’s financial situation improved in 2024, it still lacks sufficient funds to cover its bills, and every Ohio taxpayer would have to contribute $1,300 to help pay off the state’s $5.3 billion debt.

That’s the finding from Truth in Accounting’s new Financial State of the States report. The group, which found that Ohio had $71.4 billion to pay $76.7 billion in bills, gave the Buckeye State a “C” grade, one of seven states to receive the middle-of-the-road grade.

“Most of the improvements in Ohio’s finances came from money earned by its universities and unrealized gains from pension investments,” the group said in its report. “In 2023, the primary government took in $8.2 billion more than it spent.

“But in 2024, that excess dropped to just $2.6 billion,” the group added. “Revenue increased by $1.1 billion, while spending rose by $6.7 billion—mainly due to higher costs in education, Medicaid, public assistance, transportation, and the Lottery Commission.”

Federal Money Helped Ohio’s Bottom Line

Like many states, Ohio’s financial outlook improved with the influx of federal tax dollars amid the COVID-19 pandemic.

The group found that the Buckeye State could lose $8.6 billion in federal funding, 9% of its expenses, should allocations return to 2019 levels adjusted for inflation. That could “present challenges for maintaining services and balancing the budget,” Truth in Accounting found.

“I would go ahead and make sure that the public is aware that even though we calculate our budget using what I call political math, they need to be aware that they’re $5 billion in the hole and plan revenue and expenses according to that, not according to their short-sighted budget calculations,” Sheila Weinberg, founder & CEO of Truth in Accounting, told Ohio.News.

Still, Ohio fared better than its neighboring states, including Michigan, which also received a “C” and had a taxpayer burden of $4,100. Kentucky received a “D” and had a taxpayer burden of $11,500, while Pennsylvania received a “D” and had a taxpayer burden of $9,400.

Overall, Ohio ranked 28th. North Dakota topped the list with a taxpayer surplus of $63,300, while New Jersey ranked at the bottom with a taxpayer burden of $44,500.

Pensions Remain a Problem

“I would also be very mindful of the pension plans. Obviously, those are still underfunded,” Weinberg added. “It’s like a credit card — you can pay off your credit card over time. If you have money, shouldn’t you maybe put more money into that credit card and not go on a vacation or increase your food bill? The same thing with the state.

“They may have a plan, and who knows if it’s going to work to pay off the pension liability over time,” Weinberg added. “But wouldn’t it be advisable to pay that off instead of expanding your government spending?”

Earlier this month, a Franklin County judge handed down a temporary restraining order preventing changes to the board overseeing the pension fund for Ohio’s active and retired public educators from taking effect after three teachers’ unions sued. As part of an amended version of House Bill 96, the state’s two-year budget, Buckeye State lawmakers changed the 11-member State Teachers Retirement System board’s makeup.

There have been warning signs that the current trajectory of the STRS was untenable. According to a recent report from the Equable Institute, STRS had roughly $20 billion to $30 billion in pension debt.