Instead of either helping out distressed cities or counties?
Or even cutting taxes?
The money is being held by some of the states….
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.
Notably, West Virginia concluded a budget cycle with a surplus — without having to resort to midyear budget cuts — for the first time in six years. California, with a $9 billion surplus, sent about $6 billion to its rainy-day fund. Virginia, which had a $551 million surplus, placed all of it in reserve. And more than three-quarters of Maine’s $101 million surplus was set aside…..