All departments in Hamilton County government are being asked to prepare for drastic budget cuts next year in case state funding is slashed and two special lev ies on November's ballot fail.

        County Administrator Dave Krings said Monday that he will ask all county departments to prepare 2002 budgets that reduce spending by 20 percent in case the worst happens.

        The worst — called the “Armageddon scenario” — would be if the state government diverts tens of millions for education and the county levies, which pay for mandated programs such as health care for the poor and children's services, are voted down.

        Even if the two levies pass, the county will need to cut its budget because of rocky economic times. Sales tax revenues are coming in lower than expected and the state will give the county less money for its general fund when it passes its budget at the end of June.

        No one knows exactly how much county money will be diverted for education by the state. Legislators and Gov. Bob Taft face an impending deadline from the Ohio Supreme Court to find a new school funding scheme.

        “The message for today to all county departments is sharpen your pencils,” Commissioner Tom Neyer said. “We've got to look thoroughly and constructively at all budgets as we move forward.”

        There are an array of reasons for concern:

        • Sales tax revenue for riverfront construction and for the county's general fund is expected to come in a combined $3.4 million lower than expected. The county continues to estimate that sales tax receipts will grow at a 3 percent rate for the remainder of the year.

        “We are concerned that even this may be an optimistic projection,” says a report prepared for county commissioners Monday.

        • Mr. Taft's proposed two-year budget would cost Hamilton County $5.3 million in revenue in the first year alone. The county could be out even more money if proposed budgets in the House or Senate pass. Those budgets divert more money from counties for education.

        • State funding of the public defender, which is supposed to cover 50 percent of the county's cost, is likely to be reduced to 42 percent next year and 42 percent in 2003.

        • The estimated impact to the county's general fund should voters in November reject the two levies is $50 million.

        • The county's Department of Human Services, which provides help to poor people, is looking at $45 million in lost funding.

        Mr. Krings suggested to commissioners that they reinstate a real estate transfer tax, which was eliminated last year at the behest of then-Commissioner Bob Bedinghaus, who was up for re-election. Reinstating the tax could raise an additional $3.9 million this year.

        Mr. Neyer, who is up for re-election in 2002, said that was a bad idea.

        “I'm not willing to make our first official action to raise taxes,” Mr. Neyer said. “That sends the wrong message.”

        Mr. Krings said the county will look carefully at all open positions before filling them, to make sure they are immediately needed.

        The DHS already has frozen hiring and cut spending on new equipment, travel and training. The agency also has terminated service contracts paid with one-time welfare money. DHS officials are reviewing all contracts.

        Don Thomas, director of the DHS, said the state could release more than $70 million in welfare reserves that would ease the pain this year.

        “But we'd be spending one-time money,” Mr. Thomas said. “So there will still be a day of reckoning.”

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