Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
JANUARY 2016  
VOLUME 39, NUMBER 5  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................13  
HIGHLIGHTS  
Ross A. Miller, Chief Economist, 614-644-7768  
ISSUE UPDATES  
GRF tax revenue tracked the Office of Budget and  
Recovery Housing Grants........20  
Management's September estimate very closely through the Changing Campus Culture  
Initiative................................20  
Ohio Automated Rx  
first half of FY 2016. Through six months, such revenue is  
$
1.8 million (or less than 0.1%) above estimate. On the  
Reporting System.................21  
Autism Online Training ............22  
Alcohol Manufacturing  
Permits.................................22  
Ohio Tourism Promotion..........23  
Job Skills Assessment for  
spending side of the budget, Medicaid expenditures are  
well below estimate, and most other program categories of  
spending are below estimate as well. The GRF thus ended  
the first half of the fiscal year in good shape.  
Graduation............................24  
BMV Self-Service  
The Federal Reserve, the nation's central bank, announced  
a widely expected policy shift in December. The Federal  
Reserve raised its target for the federal funds rate (a  
short-term interest rate) by 0.25 percentage point. Monetary  
policy remains supportive of economic growth (see page 26);  
the Federal Reserve described policy as remaining  
Terminals..............................24  
TRACKING THE ECONOMY  
The National Economy ............26  
The Ohio Economy..................30  
"accommodative" in its December 16 announcement.  
Through December 2015, GRF sources totaled $17.53 billion:  
Revenue from the personal income tax was  
79.5 million below estimate;  
$
Sales and use tax receipts were $70.3 million above  
estimate.  
Legislative Service Commission  
Through December 2015, GRF uses totaled $19.0 billion:  
Program expenditures were $337.4 million below  
estimate, due primarily to Medicaid  
$226.4 million) and Health and Human Services  
$61.0 million).  
7
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Columbus, Ohio 43215  
Telephone: 614-466-3615  
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Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of December 2015  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on January 4, 2016)  
STATESOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$108,704  
$814,469  
$923,173  
$102,200  
$6,504  
6.4%  
Nonauto Sales and Use  
Total Sales and Use Taxes  
$825,100  
-$10,631  
-1.3%  
$927,300  
-$4,127  
-0.4%  
Personal Income  
Corporate Franchise  
Financial Institution  
Public Utility  
$849,668  
$3,216  
$783  
$840,900  
$0  
$8,768  
$3,216  
$1,183  
$220  
1.0%  
---  
-$400  
$300  
295.9%  
73.4%  
-6.7%  
---  
$520  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
$21,094  
$0  
$22,600  
$0  
-$1,506  
$0  
$10,339  
$2,012  
-$9,682  
$0  
$9,000  
$1,500  
-$500  
-$100  
$0  
$1,339  
$512  
14.9%  
34.1%  
-$9,182 -1836.4%  
$100  
$12  
100.0%  
---  
$12  
$91,218  
$4,021  
$3,593  
$37  
$84,600  
$5,400  
$3,700  
$0  
$6,618  
-$1,379  
-$107  
$37  
7.8%  
-25.5%  
-2.9%  
---  
Alcoholic Beverage  
Liquor Gallonage  
Estate  
Total Tax Revenue  
$1,900,003  
$1,894,300  
$5,703  
0.3%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$3  
$652  
$0  
$1,850  
$1,502  
$3,352  
$3  
-$1,198  
$314  
---  
-64.8%  
20.9%  
-26.3%  
$1,816  
$2,471  
Total Nontax Revenue  
-$881  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$7,512  
$7,512  
$0  
$0  
$0  
$0  
$7,512  
$7,512  
---  
---  
---  
TOTAL STATESOURCES  
Federal Grants  
$1,909,986  
$1,092,033  
$3,002,019  
$1,897,652  
$1,062,192  
$2,959,844  
$12,334  
$29,841  
$42,175  
0.6%  
2.8%  
1.4%  
TOTAL GRFSOURCES  
*Estimates of the Office of Budget and Management as of September 2015.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
January 2016  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2016 as of December 31, 2015  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on January 4, 2016)  
Percent  
Change  
STATESOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY2015  
TAX REVENUE  
Auto Sales  
$675,971  
$4,558,527  
$5,234,498  
$650,500  
$25,471  
3.9%  
1.0%  
1.4%  
$653,917  
3.4%  
4.6%  
4.5%  
Nonauto Sales and Use  
$4,513,700  
$44,827  
$4,357,013  
Total Sales and Use Taxes  
$5,164,200  
$70,298  
$5,010,930  
Personal Income  
Corporate Franchise  
Financial Institution  
Public Utility  
$4,202,479  
$13,070  
-$8,360  
$51,619  
$171,617  
$17,164  
$612,755  
$3,362  
$4,282,000  
$0  
-$79,521  
$13,070  
$5,040  
$1,119  
$1,617  
$64  
-1.9%  
---  
$4,141,908  
-$25,738  
-$22,826  
$36,837  
$144,330  
$18,427  
$421,936  
$1,944  
1.5%  
150.8%  
63.4%  
40.1%  
18.9%  
-6.9%  
45.2%  
73.0%  
-5.2%  
-95.5%  
111.0%  
28.2%  
0.2%  
-$13,400  
$50,500  
$170,000  
$17,100  
$632,800  
$3,000  
37.6%  
2.2%  
1.0%  
0.4%  
-3.2%  
12.1%  
-6.4%  
-92.8%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-$20,045  
$362  
$145,911  
$344  
$155,900  
$4,800  
-$9,989  
-$4,456  
$42  
$153,834  
$7,638  
$42  
$0  
$20  
$468,091  
$28,976  
$22,407  
$823  
$446,000  
$28,100  
$22,000  
$0  
$22,091  
$876  
5.0%  
3.1%  
1.9%  
---  
$365,138  
$28,924  
$21,576  
$2,186  
Alcoholic Beverage  
Liquor Gallonage  
Estate  
$407  
3.9%  
$823  
-62.4%  
6.4%  
Total Tax Revenue  
$10,964,797  
$10,963,000  
$1,797  
0.0%  
$10,307,063  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$7,932  
$9,837  
$5,450  
$14,639  
$33,368  
$53,457  
$2,482  
-$4,801  
$4,731  
$2,411  
45.5%  
-32.8%  
14.2%  
4.5%  
$5,069  
$9,267  
56.5%  
6.1%  
$38,099  
$55,868  
$21,733  
$36,069  
75.3%  
54.9%  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$182,688  
$182,688  
$0  
$177,300  
$177,300  
$0  
$5,388  
$5,388  
---  
3.0%  
3.0%  
$0  
---  
$11,785 1450.2%  
$11,785 1450.2%  
TOTAL STATESOURCES  
Federal Grants  
$11,203,354  
$6,322,788  
$17,526,141  
$11,193,757  
$6,429,496  
$17,623,253  
$9,597  
-$106,708  
-$97,112  
0.1%  
-1.7%  
-0.6%  
$10,354,917  
8.2%  
28.8%  
14.8%  
$4,908,483  
TOTAL GRFSOURCES  
$15,263,400  
*Estimates of the Office of Budget and Management as of September 2015.  
Detail may not sum to total due to rounding.  
January 2016  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Jean J. Botomogno, Principal Economist, 614-644-7758  
Overview  
Through December, FY 2016 GRF sources1 of $17.53 billion were  
$97.1 million below the estimate released by the Office of Budget and  
Management (OBM) in September 2015, due to a negative variance of  
FY 2016 GRF  
sources were  
$
106.7 million in federal grants, a shortfall related to underspending  
$
97.1 million  
2
primarily in the Medicaid program. (See the EXPENDITURES section of  
this publication.) State-source receipts were $9.6 million above estimate,  
with positive variances of $5.4 million for transfers in, $2.4 million for  
nontax revenue, and $1.8 million for GRF tax sources. Tables 1 and 2  
show GRF sources for the month of December and for FY 2016 through  
December, respectively.  
below  
estimate.  
For the month of December, GRF sources of $3.0 billion were  
$
42.2 million above estimate, with federal grants and state sources ahead  
of projections by $29.8 million and $12.3 million, respectively. Transfers  
in and GRF tax sources were above estimates by $7.5 million and  
$
5.7 million, respectively, but nontax revenue experienced a negative  
variance of $0.9 million.  
Regarding December GRF tax revenues, the personal income tax  
FY 2016 GRF  
tax receipts  
were  
halted a string of poor monthly performances and came in $8.8 million  
above estimate. In addition, the cigarette tax, the corporate franchise tax  
$1.8 million  
(CFT), the commercial activity tax (CAT), and the financial institutions  
above  
tax (FIT) had positive variances of $6.6 million, $3.2 million, $1.3 million,  
and $1.2 million, respectively. On the other hand, the foreign insurance  
tax was $9.2 million short of anticipated revenue, and the negative  
variance for the sales and use tax was $4.1 million. Also, the  
kilowatt-hour tax and the alcoholic beverage tax were $1.5 million and  
estimate.  
$
1.4 million below estimate, respectively.  
Chart 1 below shows FY 2016 cumulative variances against  
estimates for federal grants, tax revenue, and total GRF sources. As stated  
above, federal grants were below estimate and all other GRF categories  
were above anticipated receipts. GRF tax receipts were essentially on  
1 GRF sources consist of state-source receipts, which include tax revenue,  
nontax revenue, and transfers in, and federal grants, which are federal  
reimbursements for Medicaid and certain other human services programs.  
2 Medicaid GRF expenditures were $226.4 million below estimate through  
December 2015.  
Budget Footnotes  
4
January 2016  
Ohio Legislative Service Commission  
target for the fiscal year to date but with contrasting performances from the  
most important tax sources. The personal income tax and the CAT had  
negative variances of $79.5 million and $20.0 million, respectively.  
However, the sales and use tax and the cigarette tax were above estimates FY 2016 federal  
3
by $70.3 million and $22.1 million, respectively. Also, the CFT, the FIT, the  
kilowatt-hour tax, and the public utility tax were ahead of projections by  
$
grants were  
$
106.7 million  
13.1 million, $5.0 million, $1.6 million, and $1.1 million, respectively. On  
below  
the other hand, sizable negative variances of $10.0 million and $4.5 million,  
most likely due to refunds from tax credit claims, were recorded for the  
foreign insurance tax and the domestic insurance tax, respectively.  
Variances for the remaining tax sources were relatively small.  
estimate.  
Chart 1: Cumulative Variances of GRF Sources in FY 2016  
(
Variance from Estimates, in millions)  
$
$
$
$
$
$
600  
500  
400  
300  
200  
100  
$
0
Jul-15  
Aug-15  
Sep-15  
Oct-15  
Nov-15  
Dec-15  
-$100  
-$200  
-$300  
-$400  
Federal Grants  
Tax Revenue  
Total GRF Sources  
Compared to the first half of FY 2015, FY 2016 GRF sources  
FY 2016 GRF  
increased $2.26 billion. Federal grants were higher by $1.41 billion, tax  
4
receipts by $657.7 million, transfers in by $170.9 million, and nontax sources were  
revenues by $19.8 million. The increase in federal grants is due largely to  
an accounting change related to Medicaid expenditures: in this fiscal year,  
expenditures for individuals who became eligible for Medicaid through  
the Affordable Care Act are made from the GRF, though such  
$
2.26 billion  
higher than  
FY 2015 GRF  
expenditures were debited from the Health Care Federal Fund sources.  
(Fund 3F00), a non-GRF fund, in FY 2015.  
3
This tax was eliminated in 2013, and though GRF receipts are not  
anticipated from the CFT, adjustments to tax filings in previous years are likely to  
result in nonzero revenue in FY 2016.  
4 OBM transferred $158.0 million from the Medicaid Reserve Fund to the  
GRF in July 2015.  
January 2016  
5
Budget Footnotes  
Ohio Legislative Service Commission  
Revenue from most GRF tax sources was higher in FY 2016.  
Receipts from the sales and use tax, the CAT, the cigarette tax, and the  
personal income tax increased $223.6 million, $190.8 million,  
103.0 million, and $60.6 million, respectively. The increases in sales and  
$
use tax and income tax receipts reflect a generally improving economy  
over last year, though growth in income tax revenue is restrained due to a  
reduction in tax rates provided in H.B. 64 (the budget act for the current  
biennium). Revenue growth for the CAT and the cigarette tax are due,  
similarly, to changes enacted in H.B. 64, which increased the share of CAT  
5
receipts credited to the GRF from 50% to 75%, and raised the cigarette tax  
rate from $1.25 per pack of 20 cigarettes to $1.60 per pack. The budget act  
also credited all kilowatt-hour excise tax revenue to the GRF, instead of  
88% of the receipts as in prior law. This change boosted FY 2016 revenue  
from that tax, which grew by $27.3 million, when compared to the first six  
months in FY 2015. The public utility tax was another tax with strong  
growth, as FY 2016 revenue grew $14.8 million from the corresponding  
period last year (when a large tax refund was issued in September 2014).  
Revenue grew by $38.8 million for the CFT and $14.5 million for the FIT in  
FY 2016, as fewer net refunds to financial institutions were made this year  
compared to last. On the other hand, receipts fell by a total of $15.2 million  
for the insurance taxes, compared to first-half receipts in FY 2015; the  
6
estate tax and the MCF tax experienced revenue declines of $1.4 million  
and $1.3 million, respectively.  
Personal Income Tax  
FY 2016 GRF  
income tax  
After three consecutive months of revenue shortfalls, the personal  
income tax experienced a positive variance of $8.8 million (1.0%) in  
December. The latest monthly performance decreased the fiscal year's  
negative variance for the tax to $79.5 million (1.9%) from $88.3 million in  
the first five months. Personal income tax receipts of $849.7 million this  
month were also $33.1 million (4.1%) above those of December 2014.  
receipts were  
$79.5 million  
below  
estimate.  
5 Correspondingly, H.B. 64 reduced the share of CAT revenue credited to  
the School District Tangible Property Tax Replacement Fund (Fund 7047) from  
3
Replacement Fund (Fund 7081) from 15% to 5%. These changes were effective  
July 1, 2015.  
5% to 20% and the share credited to the Local Government Tangible Property Tax  
6 H.B. 153 of the 129th General Assembly eliminated the estate tax starting  
with dates of death on or after January 1, 2013. However, due to the length of  
time required for settling certain estates, estate tax payments have continued.  
That revenue is shared by the state GRF (20%) and the municipality or township  
in which the decedent resided (80%).  
Budget Footnotes  
6
January 2016  
Ohio Legislative Service Commission  
Personal income tax revenue is equal to gross collections after subtracting  
both refunds and distributions to the Local Government Fund (LGF). Gross  
collections are the sum of employer withholding, quarterly estimated  
7
payments, trust payments, payments associated with annual returns, and  
miscellaneous payments.  
The performance of this tax was driven by positive variances of  
$19.1 million in employer withholding and $2.2 million in payments by  
trusts, which were partially offset by negative variances of $13.1 million for  
quarterly estimated payments and $2.7 for payments with annual returns.  
In addition, refunds were $2.7 million less than anticipated for the month.  
FY 2016 GRF  
income tax  
For the fiscal year through December, GRF receipts from the  
personal income tax totaled $4.20 billion. That amount was 1.9% below  
estimate but $60.6 million (1.5%) above FY 2015 first-half revenue.  
receipts were  
60.6 million  
Quarterly estimated payments, miscellaneous receipts, and annual return $  
payments had negative variances of $13.4 million, $8.2 million, and above FY 2015  
$
3.2 million, respectively. Those negative variances were partly offset by  
revenue.  
overages of $3.5 million for employer withholding and $6.7 million for  
trust payments, resulting in a shortfall of $14.7 million in gross collections.  
However, the fiscal year-to-date negative variance was driven primarily  
by refunds, which were $66.7 million higher than projected. The table  
below summarizes year-to-date FY 2016 income tax revenue variances  
from estimates and annual changes by component.  
FY 2016 Year-to-Date Income Tax Revenue  
Variances and Changes by Component  
Year-to-Date Variance  
from Estimate  
Year-to-Date Changes  
from FY 2015  
Category  
FY 2016  
employer  
withholding  
was  
Amount  
$ in millions)  
Percentage  
(%)  
Amount  
($ in millions)  
Percentage  
(%)  
(
Withholding  
$3.5  
-$13.4  
$6.7  
0.1%  
-3.1%  
51.3%  
-2.8%  
-18.9%  
-0.3%  
35.4%  
-1.0%  
-1.9%  
$98.1  
-$0.9  
$5.7  
2.5%  
-0.2%  
41.1%  
1.7%  
Quarterly Estimated Payments  
Trust Payments  
$3.5 million  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
-$3.2  
$1.9  
-$8.2  
-$9.6  
$95.2  
$22.7  
$11.9  
$60.6  
-21.4%  
2.1%  
above  
-$14.7  
$66.7  
-$1.8  
estimate.  
Less Refunds  
9.8%  
Less LGF Distribution  
Income Tax Revenue  
6.8%  
-$79.5  
1.5%  
7 Quarterly estimated payments are made by taxpayers who expect to be  
underwithheld by more than $500. Payments are due on or before April 15,  
June 15, and September 15 of the tax year and January 15 of the following year.  
Most estimated payments are made by high-income taxpayers.  
January 2016  
7
Budget Footnotes  
Ohio Legislative Service Commission  
Compared to FY 2015, employer withholding grew $98.1 million  
this fiscal year. Trust payments and annual return payments increased by  
5.7 million and $1.9 million, respectively. In contrast, miscellaneous  
payments and quarterly estimated payments declined $9.6 million and  
0.9 million, respectively; both refunds and distributions to the LGF were  
$
$
higher, by $22.7 million and $11.9 million, respectively, than in the first  
six months of FY 2015.  
As stated in previous editions of Budget Footnotes, the budget act  
reduced income tax rates for all brackets by 6.3%, for taxable years  
beginning in 2015. The Department of Taxation issued new withholding  
tables, reflecting a 3.1% reduction in withholding rates previously in  
effect for 2014, to be used for payrolls that end on or after August 1, 2015.  
These changes imply that percentage growth in withholding receipts will  
understate actual payroll growth in future months, and more generally  
they will restrain any growth in revenue from the tax.  
Chart 2 illustrates the trend in employer withholding receipts in  
2
015. It shows receipts growth decreasing due to both the recent  
reduction of withholding rates and weak payroll growth this fiscal year,  
though Ohio payrolls have continued to expand. However, December  
results helped reverse the slump in receipts growth in recent months.  
Chart 2: Monthly Withholding Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
6
5
4
3
2
1
0
%
%
%
%
%
%
%
-1%  
Budget Footnotes  
8
January 2016  
Ohio Legislative Service Commission  
Sales and Use Tax  
GRF receipts from the sales and use tax of $923.2 million in FY 2016 sales  
December 2015 were $4.1 million (0.4%) below estimate but $36.5 million  
(
4.1%) above receipts in December 2014. For analysis and forecasting, the and use tax  
sales and use tax is separated into two parts: auto and nonauto. Auto sales  
and use tax collections generally arise from the sale of motor vehicles, but  
receipts were  
8
$70.3 million  
auto taxes arising from leases are paid at the lease signing and are mostly  
recorded under the nonauto tax instead of the auto tax. In the first half of above  
estimate.  
FY 2016, GRF sales and use tax receipts totaled $5.23 billion, $70.3 million  
1.4%) above estimate, with both the nonauto tax and the auto tax ahead  
of estimates. Total GRF sales and use tax receipts were also $223.6 million  
(
(4.5%) above receipts in the corresponding period in FY 2015.  
Nonauto Sales and Use Tax  
Nonauto sales and use tax GRF revenue of $814.5 million in  
December 2015 was $10.6 million (1.3%) below estimate and $36.4 million  
4.7%) above revenue in the same month in 2014. This monthly FY 2016  
performance reduced the fiscal year to date variance to $44.8 million nonauto sales  
(
(
1.0%), down from $55.5 million through November. Through December,  
FY 2016 GRF receipts of $4.56 billion from the nonauto sales and use tax and use tax  
were $201.5 million (4.6%) above receipts in the first half of FY 2015. receipts were  
Generally, sales taxes paid by Medicaid health insuring corporations boost  
$44.8 million  
yearly growth in nonauto sales tax revenue. However, compared to the above  
corresponding period last year, those payments were essentially flat  
through December 2015.  
Chart 3 shows increases in nonauto sales and use tax monthly  
estimate.  
receipts against prior year receipts in the same month. The chart shows  
receipts growth decreasing: the rate of growth in the second fiscal quarter  
of FY 2016 was, on average, about 3.5%, compared to the corresponding  
quarter in FY 2015. In the first quarter of FY 2016, that growth rate was  
about 5.8%.  
8 The clerks of court generally make auto sales and use tax payments on  
Monday for taxes collected during the preceding week on motor vehicles,  
watercraft, and outboard motors titled. Therefore, auto sales and use tax receipts  
largely reflect vehicles sold and titled during the month.  
January 2016  
9
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 3: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
1
1
2%  
0%  
8
6
4
2
0
%
%
%
%
%
FY 2016 auto  
sales and use  
tax receipts  
were  
Auto Sales and Use Tax  
GRF receipts from the auto sales and use tax of $108.7 million in  
December were $6.5 million (6.4%) above estimate and nearly equal to  
receipts in the same month last year. Through December in FY 2016, the  
auto sales and use tax has performed well with GRF receipts totaling  
$
25.5 million  
$
676.0 million, above estimate by $25.5 million (3.9%). Year-to-date  
above  
revenue was also $22.1 million (3.4%) above receipts in FY 2015 through  
December. Chart 4 below compares FY 2016 monthly auto sales and use  
tax receipts with year-ago receipts in the same period. It indicates the  
rate of growth in the second fiscal quarter of FY 2016 was, on average,  
about 1.6%, compared to the corresponding quarter in FY 2015. In the  
first fiscal quarter of FY 2016, the growth rate was about 8.9%.  
estimate.  
Chart 4: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
1
1
2%  
0%  
8
6
4
2
0
%
%
%
%
%
Budget Footnotes  
10  
January 2016  
Ohio Legislative Service Commission  
Nationwide, light vehicle (auto and light truck) sales dipped to  
1
1
7.3 million (at a seasonally adjusted annual rate) in December, from  
8.2 million units in November. However, sales in calendar year (CY) 2015  
totaled 17.39 million units, up 5.8% from 16.43 million units in the prior  
year. The combination of the strengthening labor market, improved credit  
access, and plummeting gasoline prices contributed to the strongest light  
vehicle sales on record, slightly above the previous mark of 17.35 million  
units achieved in CY 2000. Sales of light trucks increased 12.7% to  
9
7
.9 million units (57% of total sales) but those of autos declined 2.1% to  
.5 million (43% of total sales). The increase in the share of light truck sales  
pushed the average new car transaction price to record levels, which helps  
buoy tax receipts.  
Commercial Activity and Petroleum Activity Taxes  
December receipts from the CAT were $10.3 million, $1.3 million  
(14.9%) above estimate, and $4.4 million (73.0%) above revenue in  
December 2014. For the fiscal year through December, CAT revenues to the  
GRF totaled $612.8 million, $20.0 million (3.2%) below estimate. CAT  
revenue credited to the School District Tangible Property Tax Replacement  
FY 2016 GRF  
Fund (Fund 7047) was $163.0 million, and the Local Government Tangible CAT receipts  
Property Tax Replacement Fund (Fund 7081) received $40.8 million. The  
shortfall in CAT revenue was due primarily to unexpected increases in  
credit claims against the tax but also slow growth of the tax base. Through  
December, refunds totaled $74.9 million, about $31.8 million more than in  
FY 2015. GRF receipts from the CAT were $190.8 million (45.2%) above  
receipts in the corresponding period of FY 2015 because of the 50% increase  
were  
$20.0 million  
below  
estimate.  
9
in the GRF share of CAT receipts enacted in H.B. 64.  
Beginning July 1, 2014, the CAT as applied to receipts from the sale  
or exchange of motor fuel was replaced by the petroleum activity tax  
(PAT). Total PAT revenue (on an all-funds basis) in the first half of  
FY 2016 was $42.9 million. Of that total, the GRF received $3.4 million, an  
amount $0.4 million (12.1%) above estimate, and $1.4 million (73.0%)  
above PAT GRF revenue through December in FY 2015. Of the  
year-to-date GRF revenue, $2.0 million was booked in December 2015, an  
amount nearly equal to that received by the GRF in December 2014.  
9
On an all-funds basis, FY 2016 first-half CAT revenue was below  
FY 2015 revenue, due to nearly $28.1 million in revenue from motor fuel sales  
that year (for taxable gross receipts in the second quarter of 2014), prior to the  
imposition of the petroleum activity tax (PAT). Excluding the effect of motor fuel  
sales receipts, FY 2016 all funds CAT receipts would be about 0.5% above  
revenue in the corresponding period last year.  
January 2016  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Cigarette and Other Tobacco Products Tax  
GRF receipts from the cigarette and other tobacco products tax of  
91.2 million in December 2015 were $6.6 million (7.8%) above estimate,  
$
and $13.7 million (17.6%) above revenue in December 2014. Through  
December, total tax receipts of $468.1 million were $22.1 million (5.0%)  
above estimate. Revenue from the "floor tax" was $16.1 million, receipts  
from cigarette sales were $419.5 million, and sales of other tobacco  
products (OTP) yielded $32.5 million. FY 2016 receipts increased  
1
0
FY 2016  
cigarette tax  
receipts were  
$
103.0 million (28.2%) from the corresponding period in FY 2015.  
$
22.1 million  
Cigarette revenue increased by $87.3 million, while receipts from OTP  
decreased by $0.4 million; there were no receipts during FY 2015 from  
the floor tax. Generally, cigarette tax receipts experience a downward  
trend, while revenue from OTP is closely tied to price changes of those  
products. However, H.B. 64 increased the cigarette tax from $1.25 to  
above  
estimate.  
$
1.60 per pack of 20 cigarettes, a 28% increase, and thus monthly  
cigarette revenue is very likely to be higher in FY 2016 when compared to  
FY 2015.  
10 The "floor tax" is the additional $0.35 tax paid by tobacco dealers for  
cigarettes in inventory (for which the old tax rate had been paid) when the new  
went into effect on July 1, 2015.  
Budget Footnotes  
12  
January 2016  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of December 2015  
($ in thousands)  
(Actual based on OAKS reports run January 6, 2016)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$600,631  
$179,831  
$4,638  
$606,888  
-$6,257  
-$1,165  
-$73  
-1.0%  
$180,996  
$4,711  
-0.6%  
-1.5%  
-0.9%  
Other Education  
Total Education  
$785,100  
$792,595  
-$7,495  
Medicaid  
$1,551,827  
$110,609  
$1,480,930  
$111,322  
$70,896  
-$713  
4.8%  
-0.6%  
4.4%  
Health and Human Services  
Total Welfare and Human Services  
$1,662,435  
$1,592,252  
$70,183  
Justice and Public Protection  
General Government  
$151,129  
$23,065  
$132,898  
$26,658  
$18,231  
-$3,593  
$14,638  
13.7%  
-13.5%  
9.2%  
Total Government Operations  
$174,193  
$159,556  
Property Tax Reimbursements  
Capital Outlay  
$864  
$0  
$42,527  
$0  
-$41,663  
$0  
-98.0%  
---  
Debt Service  
$16,617  
$17,481  
$17,073  
$59,600  
-$456  
-2.7%  
-70.7%  
Total Other Expenditures  
-$42,119  
Total Program Expenditures  
$2,639,210  
$2,604,003  
$35,207  
1.4%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$0  
$0  
$0  
$13,000  
$13,000  
$0  
-$13,000  
-$13,000  
---  
-100.0%  
-100.0%  
TOTAL GRFUSES  
$2,639,210  
$2,617,003  
$22,207  
0.8%  
*
October 2015 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
January 2016  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2016 as of December 31, 2015  
($ in thousands)  
(Actual based on OAKS reports run January 6, 2016)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY2015  
Primary and Secondary Education  
Higher Education  
$4,086,573  
$1,113,119  
$38,575  
$4,117,299  
$1,121,465  
$38,779  
-$30,726  
-0.7%  
-0.7%  
-0.5%  
-0.7%  
$3,690,330  
$1,072,684  
$31,587  
10.7%  
3.8%  
-$8,346  
-$204  
Other Education  
22.1%  
9.3%  
Total Education  
$5,238,267  
$5,277,543  
-$39,276  
$4,794,601  
Medicaid  
$9,302,506  
$662,487  
$9,528,917  
$723,511  
-$226,411  
-$61,024  
-$287,435  
-2.4%  
-8.4%  
-2.8%  
$8,023,849  
$698,158  
15.9%  
-5.1%  
14.3%  
Health and Human Services  
Total Welfare and Human Services  
$9,964,993  
$10,252,428  
$8,722,007  
Justice and Public Protection  
General Government  
$1,017,087  
$184,762  
$1,005,155  
$199,103  
$11,932  
-$14,341  
-$2,409  
1.2%  
-7.2%  
-0.2%  
$955,782  
$177,759  
6.4%  
3.9%  
6.0%  
Total Government Operations  
$1,201,849  
$1,204,258  
$1,133,541  
Property Tax Reimbursements  
Capital Outlay  
$898,795  
$0  
$904,910  
$0  
-$6,115  
$0  
-0.7%  
---  
$907,658  
$0  
-1.0%  
---  
Debt Service  
$880,798  
$1,779,593  
$882,974  
$1,787,885  
-$2,177  
-$8,292  
-0.2%  
-0.5%  
$854,938  
$1,762,596  
3.0%  
1.0%  
Total Other Expenditures  
Total Program Expenditures  
$18,184,702  
$18,522,114  
-$337,412  
-1.8%  
$16,412,744  
10.8%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$425,500  
$388,234  
$813,734  
$425,500  
$375,031  
$800,531  
$0  
$13,203  
$13,203  
0.0%  
3.5%  
1.6%  
$0  
$582,809  
$582,809  
---  
-33.4%  
39.6%  
TOTAL GRFUSES  
$18,998,436  
$19,322,645  
-$324,209  
-1.7%  
$16,995,553  
11.8%  
*
October 2015 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
January 2016  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on January5, 2016)  
Month of December 2015  
Year to Date Through December 2015  
Estimate* Variance Percent Variance Percent  
Department  
Medicaid  
Actual  
Actual  
Estimate*  
$1,805,390 $1,762,833  
$42,557  
$70,380  
-$27,823  
2.4% $11,094,819 $11,540,436  
-$445,617  
-$228,761  
-$216,856  
-3.9%  
-2.5%  
-9.4%  
GRF  
$1,502,259 $1,431,879  
4.9%  
$9,003,048  
$2,091,771  
$9,231,809  
$2,308,627  
Non-GRF  
$303,130  
$330,954  
-8.4%  
Developmental Disabilities  
$176,900  
$40,245  
$220,438  
$41,050  
-$43,538  
-19.8%  
$1,161,407  
$250,450  
$910,957  
$1,243,662  
$247,843  
$995,819  
-$82,255  
$2,607  
-6.6%  
1.1%  
GRF  
-$805  
-2.0%  
Non-GRF  
$136,654  
$179,387  
-$42,733 -23.8%  
-$84,862  
-8.5%  
Job and Family Services  
$23,864  
$8,627  
$24,027  
$7,419  
-$163  
$1,208  
-$1,371  
-0.7%  
16.3%  
-8.3%  
$116,498  
$44,400  
$72,097  
$109,863  
$44,619  
$65,244  
$6,634  
6.0%  
GRF  
-$219  
-0.5%  
Non-GRF  
$15,238  
$16,608  
$6,853 10.5%  
-$340 -2.6%  
$331 20.4%  
-$670 -6.0%  
-$509 -13.8%  
$20 1.2%  
Health  
GRF  
$1,408  
$294  
$2,123  
$255  
-$715  
-33.7%  
$12,487  
$1,951  
$12,827  
$1,620  
$39  
15.2%  
Non-GRF  
$1,114  
$1,868  
-$754 -40.4%  
$10,537  
$11,207  
Aging  
$482  
$301  
$181  
$500  
$263  
$238  
-$19  
-3.8%  
$3,182  
$1,699  
$1,483  
$3,691  
$1,679  
$2,012  
GRF  
$38  
14.6%  
Non-GRF  
-$57 -24.0%  
-$529 -26.3%  
Mental Health and Addiction  
$547  
$101  
$446  
$365  
$65  
$182  
$36  
49.7%  
54.8%  
48.6%  
$2,309  
$958  
$3,171  
$1,347  
$1,824  
-$861 -27.2%  
-$388 -28.8%  
-$473 -25.9%  
GRF  
Non-GRF  
$300  
$146  
$1,351  
Total GRF  
$1,551,827 $1,480,930  
$456,763 $529,355  
$2,008,589 $2,010,285  
$70,896  
-$72,592  
4.8%  
$9,302,506  
$3,088,196  
$9,528,917  
$3,384,733  
-$226,411  
-2.4%  
-8.8%  
Total Non-GRF  
-13.7%  
-$296,537  
Total All Funds  
-$1,696  
-0.1% $12,390,702 $12,913,650  
-$522,948  
-4.0%  
*Estimates are fromthe Department of Medicaid.  
Detail may not sumto total due to rounding.  
January 2016  
15  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 6: All-Funds Medicaid Expenditures by Payment Category  
Actual vs. Estimate  
$ in thousands)  
Actuals based on OAKS report run on January5, 2016)  
December Year to Date Through December  
Estimate* Variance Percent Actual Estimate* Variance Percent  
$5,128,314 $5,266,122 -$137,808  
(
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
$938,452  
$114,332  
$167,165  
$79,811  
$81,611  
$72,198  
$27,755  
$37,033  
$36,582  
$17,582  
$24,249  
$9,240  
$861,341  
$115,856  
$216,035  
$103,430  
$84,521  
$92,038  
$25,561  
$35,011  
$36,967  
$18,304  
$24,533  
$12,596  
$303,786  
$80,307  
$77,112  
-$1,524  
9.0%  
-2.6%  
-3.8%  
-6.1%  
-1.3%  
$682,660  
$709,802  
-$27,142  
-$73,150  
-$48,870 -22.6%  
-$23,620 -22.8%  
$1,127,838 $1,200,989  
$1,127,264 $1,297,151 -$169,887 -13.1%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
-$2,909  
-3.4%  
$528,801  
$411,355  
$158,585  
$236,013  
$219,697  
$133,694  
$145,375  
$63,608  
$567,703 -6.9%  
-$38,903  
-$19,841 -21.6%  
$620,637 -$209,282 -33.7%  
$2,194  
$2,023  
-$385  
-$722  
-$284  
8.6%  
5.8%  
$164,595  
$236,090  
$220,417  
$154,615  
$146,300  
$84,287  
-$6,010  
-$77  
-3.7%  
0.0%  
-0.3%  
-1.0%  
-3.9%  
-1.2%  
-$720  
-$20,921 -13.5%  
-$925 -0.6%  
Medicare Part D  
Home Care Waivers  
ACAExpansion  
All Other  
-$3,356 -26.6%  
-$20,679 -24.5%  
$201,806 12.0%  
$326,727  
$75,851  
$22,941  
-$4,455  
-$1,696  
7.6%  
$1,885,808 $1,684,002  
$541,691 $560,939  
-5.5%  
-$19,248  
-3.4%  
Total All Funds  
$2,008,589 $2,010,285  
-0.1% $12,390,702 $12,913,650 -$522,948  
-4.0%  
*
Estimates are fromthe Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
16  
January 2016  
Ohio Legislative Service Commission  
EXPENDITURES  
Russ Keller, Senior Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
GRF uses for the month of December were $2.64 billion,  
22.2 million (0.8%) above the estimate released by OBM in October 2015.  
$
GRF uses mainly consist of program expenditures but also include  
transfers out. Through December, FY 2016 GRF program expenditures  
were $18.18 billion, $337.4 million (1.8%) below estimate. Year‐to‐date  
transfers out were $813.7 million, $13.2 million (1.6%) above estimate. GRF  
uses as a whole totaled $19.0 billion, $324.2 million (1.7%) below estimate.  
For the first  
half of FY 2016,  
GRF uses  
totaled  
Tables 3 and 4 show GRF uses for the month of December and for FY 2016 $19.0 billion,  
through December, respectively.  
$
324.2 million  
Medicaid accounted for nearly 70% of the total negative  
year-to-date variance in GRF uses. For the first half of FY 2016, GRF  
Medicaid expenditures were $226.4 million (2.4%) below estimate.  
Medicaid spending for December exceeded OBM's monthly estimate by  
(
1.7%) below  
estimate.  
$
70.9 million, which helped narrow the year-to-date variance. Details on  
Medicaid expenditures are provided below.  
Elsewhere, property tax reimbursement payments were below  
estimate in December, by $41.7 million. This negative monthly variance  
reversed the category's year-to-date variance from a positive $35.5 million  
at the end of November to a negative $6.1 million at the end of December.  
The reimbursement payments based on the August 2015 property tax  
settlement were largely completed by the end of November, so  
December's variance was expected. Transfers out also had a negative  
monthly variance in December of $13.0 million, reducing the year-to-date  
positive variance from $26.2 million at the end of November to  
$
13.2 million at the end of December.  
Health and Human Services had the second largest negative  
year-to-date variance after Medicaid at $61.0 million, of which $0.7 million  
occurred in the month of December. Expenditures from the Primary and  
Secondary Education category were $6.3 million below estimate in  
December, which increased the category's negative year-to-date variance  
to $30.7 million. As detailed in previous issues of Budget Footnotes, the  
variances in these two program categories are largely timing-driven.  
January 2016  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
Medicaid  
Medicaid is primarily funded by the GRF although it also receives  
funding from various non-GRF funds. As a joint federal-state program,  
both GRF and non-GRF Medicaid expenditures contain federal and state  
moneys. Overall, the federal and state shares of Medicaid expenditures  
are about 64% and 36%, respectively.  
Through  
December, GRF  
Medicaid  
For the month of December, GRF Medicaid expenditures of  
$
1.55 billion were $70.9 million (4.8%) above the estimate provided by  
OBM while non-GRF Medicaid expenditures of $456.8 million were  
72.6 million (13.7%) below estimate. Across all funds, Medicaid  
expenditures  
were  
$
expenditures of $2.01 billion in December were just slightly below  
estimate by $1.7 million (0.1%). For the first half of FY 2016, GRF  
Medicaid expenditures were $9.30 billion, $226.4 million (2.4%) below  
estimate, while non-GRF Medicaid expenditures were $3.09 billion,  
$
226.4 million  
below estimate;  
non-GRF  
$
296.5 million (8.8%) below estimate. Across all funds, Medicaid  
Medicaid  
expenditures totaled $12.39 billion, $522.9 million (4.0%) below their  
year-to-date estimate.  
expenditures  
were  
The Ohio Department of Medicaid (ODM) is primarily responsible  
for administering Medicaid, with the assistance of five other state  
$296.5 million  
below estimate. agencies Developmental Disabilities, Job and Family Services, Health,  
Aging, and Mental Health and Addiction Services. Table 5 details the  
GRF and non-GRF portions of Medicaid expenditures from each of the  
six agencies that take part in administering Ohio Medicaid. As seen from  
the table, ODM, the largest agency within this program category, also  
had the largest year-to-date variance. For the first half of FY 2016, ODM's  
GRF expenditures totaled $9.0 billion, which was $228.8 million (2.5%)  
below estimate, and its non-GRF expenditures totaled $2.09 billion,  
which was $216.9 million (9.4%) below estimate. Across all funds, ODM's  
expenditures were $445.6 million (3.9%) below their year-to-date  
estimate. GRF and non-GRF Medicaid expenditures from the  
Department of Developmental Disabilities (DDD), the second largest  
agency within this program category, totaled $1.16 billion for the first  
half of FY 2016, which was $82.3 million (6.6%) below estimate. Together,  
ODM and DDD account for about 99% of the Medicaid expenditure total.  
Table 6 details all-funds Medicaid expenditures by payment  
category. As seen from the table, Administration had the largest negative  
year-to-date variance at $209.3 million (33.7%). This negative variance is  
partly the result of the contract for ODM's new eligibility determination  
system, Ohio Benefits, costing less than was budgeted. Additionally,  
expenditures from the prior year encumbrance for Administration were  
slower than expected.  
Budget Footnotes  
18  
January 2016  
Ohio Legislative Service Commission  
Two other payment categories that had significant negative  
year-to-date variances were Hospitals ($169.9 million, 13.1%) and  
Managed Care ($137.8 million, 2.6%). The negative variance for Hospitals  
is due to ODM not experiencing the forecasted increasing cost per claim.  
The negative variance for Managed Care is due to lower than expected Through  
Aged, Blind, and Disabled (ABD) caseloads. Managed Care had a positive  
December,  
variance of $77.1 million in December, which partially offset a large  
negative variance in November due to the timing of a $121.8 million all-funds  
payment for Affordable Care Act (ACA) health insurer fees for managed Medicaid  
care companies. This payment did not occur in November as originally  
anticipated but was processed in December.  
expenditures  
were  
The ACA Expansion category had a significant positive  
year-to-date variance. All funds expenditures from ACA Expansion  
$
522.9 million  
totaled $1.89 billion for the first half of FY 2016, which was $201.8 million below estimate.  
(12.0%) above estimate. This positive variance was due to higher than  
anticipated caseloads. Some individuals currently enrolled into the ACA  
expansion category may later be determined to be eligible under another  
category of coverage instead. If those individuals are recategorized, their  
costs would shift in future months. All individuals who become eligible  
for Medicaid through ACA are mostly served under managed care.  
January 2016  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
OMHAS Awards $2.5 Million for Recovery Housing  
Justin Pinsker, Budget Analyst, 614-466-5709  
On November 23, 2015, the Ohio Department of Mental Health and Addiction  
Services (OMHAS) awarded $2.5 million for recovery housing. Of this total, $2.2 million  
supports 25 projects that will add approximately 200 new recovery housing beds in  
1
8 counties. Seven of these 18 counties had not received recovery housing funds  
previously: Ashtabula, Athens, Fairfield, Fulton, Lake, Licking, and Trumbull. The  
remaining $300,000 was awarded to complete existing projects, provide statewide  
training, and provide policy development and support. A full list of projects receiving  
funding can be found on the News page of OMHAS's website  
(www.mha.ohio.gov/News) under the Press Releases heading.  
Recovery housing is a safe and healthy living environment that promotes an  
alcohol and drug-free lifestyle and enhances participation and retention in clinical  
treatment. Residents in recovery housing receive services such as peer support,  
accountability, relapse prevention, and employment skills training. The General  
Assembly appropriated $5.0 million in both FY 2014 and FY 2015 to increase recovery  
housing capacity. H.B. 64 appropriates an additional $2.5 million in both FY 2016 and  
FY 2017 for this purpose. With this $15.0 million total spending, OMHAS hopes to  
increase recovery housing capacity in Ohio by nearly 1,000 beds over the four-year  
period from FY 2014 to FY 2017.  
Chancellor Announces Sexual Violence Prevention Initiative  
for Higher Education Institutions  
Edward Millane, Senior Budget Analyst, 614-995-9991  
In late October 2015, the Chancellor of Higher Education announced the  
Changing Campus Culture (CCC) initiative to strengthen the ability of colleges and  
1
1
universities to prevent and better respond to sexual assault on their campuses. H.B. 64  
required the Department of Higher Education (DHE), in consultation with public and  
private nonprofit institutions of higher education, to develop model best practices for  
preventing and responding to sexual assault on campus. In response, DHE issued a  
report that offered the following five recommendations for institutions to adopt: (1) use  
11 A report as well as other information on the Changing Campus Culture initiative can  
be found online at: https://www.ohiohighered.org/ccc.  
Budget Footnotes  
20  
January 2016  
Ohio Legislative Service Commission  
data to guide action, (2) empower staff, faculty, campus law enforcement, and students  
to prevent and respond to sexual violence through evidence-based training,  
(3) communicate a culture of shared respect and responsibility, (4) develop a  
comprehensive response policy, and (5) adopt a survivor-centered response. The goal of  
the initiative is to have each of the state's colleges and universities adopt all five  
recommendations by the beginning of the 2016-2017 academic year.  
H.B. 64 appropriates $2.0 million from the GRF in FY 2016 to support the  
initiative. The funds were initially used to develop the report and recommendations. In  
addition to that work, the funds will be used to disseminate a common campus climate  
survey for campuses to administer, support data analysis of the surveys, provide  
training programs, create an online resource portal, host a Campus Sexual Violence  
Prevention Summit, and offer grants to individual institutions to help implement any of  
the recommendations made under the CCC initiative.  
Controlling Board Approves Spending to Enhance Ohio's  
Prescription Drug Monitoring Program  
Robert Meeker, Budget Analyst, 614-466-3839  
On December 14, 2015, the Controlling Board approved the Ohio State Board of  
Pharmacy's requested spending of $525,000 ($325,000 in FY 2016 and $200,000 in  
FY 2017) for the Ohio Automated Rx Reporting System (OARRS). The money comes  
from two Ohio Department of Health (ODH) grants awarded by the U.S. Centers for  
Disease Control and Prevention. ODH will transfer the cash for the Pharmacy Board's  
use over the course of the FY 2016-FY 2017 biennium. OARRS is an electronic database  
established by the Pharmacy Board in 2006 to track the prescribing and dispensing of  
controlled prescription drugs to patients. It is designed to assist in detecting and  
preventing abuse, misuse, and diversion of controlled substances. The Pharmacy Board  
will use the additional funding to (1) develop a proactive reporting system to assist  
prescribers and pharmacists in more quickly identifying patients who may be abusing  
or misusing a controlled substance, (2) develop a batch reporting tool to permit a  
prescriber to request a prescription history report on multiple patients at a single time,  
(
3) contract with a third-party vendor to develop training videos and continuing  
education seminars, (4) contract with a public health evaluator to implement an  
evaluation study of the requirements of H.B. 341 of the 130th General Assembly,  
including the mandated use of OARRS by prescribers who prescribe or furnish opioid  
analgesics or benzodiazepines and pharmacists who dispense controlled substances,  
and (5) provide OARRS data and metrics for public health performance improvements,  
reports, and evaluations.  
January 2016  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
Developmental Disabilities Announces Online Autism Spectrum Disorder  
Training and Certification Program  
Jacquelyn Schroeder, Budget Analyst, 614-466-3279  
On November 23, 2015, the Ohio Department of Developmental Disabilities  
(ODODD) announced that ASD Strategies in Action, a new online training and  
certification program for people who interact with individuals with autism spectrum  
disorder (ASD), is available for use at: https://autismcertificationcenter.org/. The  
program is designed to help users to more effectively care for, support, and work with  
individuals who have ASD. The program provides an introductory course and three  
ten- to 15-hour age-specific courses containing modules covering specific strategies,  
real-life examples, and expert interviews. Each age-specific course provides reflection  
questions, assessments, and certificates upon completion. The program is free for Ohio  
residents and nonresidents who work with individuals with ASD in Ohio. ODODD  
expects the program to be self-sustaining, as users from other states will pay fees to  
access the program online.  
H.B. 483 of the 130th General Assembly required ODODD to establish a  
voluntary training and certification program to ensure that people who provide  
interventions to individuals with ASD are properly trained to work with and meet the  
needs of those individuals. The Office of Health Transformation (OHT) provided  
ODODD with a total of $1.0 million in fiscal years 2015 and 2016 from the Health  
Transformation Innovation Fund for the project. With these funds, ODODD entered  
into an agreement with the Ohio Center for Autism and Low Incidence (OCALI) to  
develop an autism certification center, which includes a video platform and a series of  
training modules for the program. Additionally, the Ohio Department of Education  
(ODE) provided funding to OCALI for the project from the department's federal IDEA  
discretionary funds.  
Division of Liquor Control Issues an All-Time High Number of  
Alcohol Manufacturing Permits in CY 2015  
Shannon Pleiman, Budget Analyst, 614-466-1154  
On November 27, 2015, the Division of Liquor Control (DOLC) within the  
Department of Commerce announced that the number of manufacturers of alcoholic  
beverages in Ohio reached an all-time high in CY 2015. As of November 13 that year,  
the Division issued 579 alcohol manufacturing permits, a 15.1% increase over the  
number of such permits issued in CY 2014. Among the types of manufacturing permits  
issued by the Division, the A-1c permit (beer manufacturers that produce less than  
3
1 million gallons per year) saw the highest year-over-year increase (23.8%) between  
CY 2014 and CY 2015, from 126 to 156 permits. Overall, the largest number of  
Budget Footnotes  
22  
January 2016  
Ohio Legislative Service Commission  
manufacturing permits were issued to wineries under the A-2 permit class. These  
accounted for 232 (40.1%) of the 579 total permits issued by the Division as of  
November 2015. The table below displays the number of alcohol manufacturing permits  
by permit class.  
Number of Alcohol Manufacturing Permits by Permit Class  
Permit Class  
Permit Description  
Permit Fee  
CY 2014  
CY 2015*  
A-1  
Manufacturer of beer (more than 31 million gallons  
per year)  
$3,906  
3
3
A-1A  
A-1c  
Sale of beer or intoxicating liquor by the glass  
$3,906  
$1,000  
117  
126  
144  
156  
Manufacturer of beer (less than 31 million gallons  
per year)  
A-2  
A-3  
Manufacturer of wine  
$76  
217  
10  
232  
10  
Manufacturer of spirituous liquor  
$2 to $3,906  
$2 to $400  
A-3A  
Manufacturer of spirituous liquor (less than 10,000  
gallons)  
27  
31  
A-4  
Manufacture and sale of low proof (21% ABV or  
less) prepared and bottled drinks  
$3,906  
3
3
Total  
503  
579  
*The number of manufacturer permits for CY 2015 as of November 13, 2015.  
Liquor permit fees are collected by DOLC and deposited into the Undivided  
Liquor Permit Fund (Fund 7066), and then distributed to the State Liquor Regulatory  
Fund (Fund 5LP0) used by DOLC (45%), the local taxing district where the permit is  
issued (35%), and the Statewide Treatment and Prevention Fund (Fund 4750) used by  
OMHAS (20%). In FY 2015, DOLC collected approximately $40.2 million for all liquor  
permit fees.  
Controlling Board Approves Additional Funding for Tourism Promotion  
Tom Middleton, Budget Analyst, 614-728-4813  
On December 14, 2015, the Controlling Board approved a Development Services  
Agency (DSA) request to increase FY 2016 funding for tourism promotion from the  
Tourism Fund (Fund 5MJ0) by $1.6 million. The Office of TourismOhio within DSA will  
use the additional funding to buy television, radio, print, and digital advertising in  
conjunction with a new tourism branding campaign called "Ohio. Find it here." The  
increase brings DSA's total funding for tourism promotion to $10.6 million in FY 2016.  
Of this total, DSA estimates that approximately $9.1 million in FY 2016 will be spent on  
purchased personal services, mostly for media buys.  
January 2016  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
The Office of TourismOhio has been operating on a five-year pilot funding  
mechanism that began in FY 2014 and runs through FY 2018. The concept is for  
TourismOhio to be financed based on the growth in sales tax revenue collected from  
certain tourism-related industries. During the five-year pilot funding period, up to about  
$
5
10 million in sales tax proceeds credited to the GRF each year is transferred to Fund  
MJ0. As of the beginning of December 2015, the fund had a cash balance of $15.4 million.  
ODE Contracts for ACT, Inc.'s WorkKeys as Job Skills Assessment  
Anthony Kremer, Budget Analyst, 614-466-5654  
In October 2015, ODE contracted with ACT, Inc. to provide its WorkKeys  
assessment as the state's nationally recognized job skills assessment for high school  
students. H.B. 487 of the 130th General Assembly required ODE to select such an  
assessment as part of the new graduation requirements the act established for students  
entering ninth grade in the 2014-2015 school year (the class of 2018) and beyond. In  
addition to applicable curriculum requirements, such students must satisfy testing  
requirements for a diploma by accumulating a certain number of points on  
end-of-course exams, scoring at a "remediation free" level on a college-admissions test,  
or earning a State Board of Education-approved industry-recognized credential and  
achieving a "workforce readiness score" on the selected job skills assessment. The State  
Board has determined that the latter requirement can be met by earning a total of  
1
3 points (increasing to 14 points for the class of 2020 and beyond) across the WorkKeys  
assessment's three sections, including at least three points on each section. The sections  
are applied mathematics, reading, and locating information. Under the contract with  
ACT, Inc., the assessment will be offered in both online and paper formats at a cost to  
the state of $8.33 per assessment.  
Bureau of Motor Vehicles Completes Installation Phase  
of Self-Service Terminal Pilot Project  
Maggie Wolniewicz, Budget Analyst, 614-995-9992  
On November 3, 2015, the Bureau of Motor Vehicles completed the installation  
phase of its BMV4U pilot project by installing its ninth vehicle registration renewal  
self-service terminal (SST) at a Meijer store located in Cincinnati. BMV4U is a one-year  
pilot program to determine the viability of expanding service delivery for Ohio  
residents by allowing them to obtain vehicle registration renewals and license plate  
stickers from stand-alone terminals located at retail grocery outlets in the Cincinnati,  
Cleveland, and Columbus metropolitan areas. The cost to renew a vehicle registration  
using a SST is the same as if it were renewed at a deputy registrar, by mail, or on the  
Internet.  
Budget Footnotes  
24  
January 2016  
Ohio Legislative Service Commission  
The initial one-time cost of implementing the pilot project totaled $30,495, which  
included the establishment of electrical and data lines, as well as Internet installation, at  
each SST location. Ongoing costs will include a total of $1,127 in monthly Internet fees,  
as well as a $3 fee that is paid to the service and equipment vendor for each SST vehicle  
registration renewal processed. The pilot project's funding is primarily generated by the  
$
3.50 deputy registrar fee that accompanies each vehicle registration renewal processed  
at SSTs, with additional funding appropriated from the State Board of Motor Vehicles  
Fund (Fund 4W40) as necessary. The following table shows vehicle registration activity  
by SST location since the start of the pilot project in March of this year. As of early  
December 2015, 5,378 vehicle registrations had been renewed using SSTs. The BMV  
issues more than 11 million vehicle registrations annually.  
Vehicle Registration Renewal by Self-Service Terminal Location*  
Installation  
Date  
Number of  
Transactions  
Total Amount  
Collected  
Number of Vehicles  
Registered  
Self-Service Terminal Location  
Columbus Area  
Marcs Westerville  
Marcs Columbus  
3/30/2015  
4/21/2015  
10/7/2015  
2,104  
686  
68  
$155,475  
$47,370  
$4,491  
2,673  
818  
79  
Discount Drug Mart Columbus  
Cleveland Area  
Giant Eagle Brook Park  
Marcs Garfield Heights  
Giant Eagle Amherst  
Cincinnati Area  
5/7/2015  
5/14/2015  
7/23/2015  
397  
225  
218  
$24,978  
$14,684  
$12,803  
448  
256  
258  
Meijer Cincinnati  
8/25/2015  
9/9/2015  
11/3/2015  
Total  
361  
224  
$26,809  
$16,396  
$4,587  
482  
287  
Meijer Loveland  
Meijer Hyde Park  
64  
77  
4,347  
$307,593  
5,378  
*Data is current as of December 3, 2015.  
January 2016  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
Amid mixed reports from different sectors of the economy, the  
The Federal  
Reserve raised  
its short-term  
interest rate  
target for the  
first time in  
over nine  
Federal Reserve raised its short-term interest rate target for the first time  
in over nine years. Nationwide job growth in the fourth quarter was  
strong and U.S. auto sales had their strongest year on record in 2015.  
Energy prices continue to fall, adding purchasing power for consumers,  
but hurting the oil and gas industries and keeping overall inflation rates  
below the Federal Reserve's target for the economy. Soft domestic  
production reports and international instability offer reasons for caution  
moving forward.  
years.  
The latest reports on employment gains, state production, and  
income growth all rank Ohio in the top half of the 50 states. However, the  
U.S. Census Bureau's annual population update puts Ohio near the  
bottom of states in population growth for 2015.  
The National Economy  
Monetary Policy  
At the conclusion of its December 15-16 meeting, the Federal Open  
Market Committee (FOMC) decided to raise the target for the federal  
1
2
13  
funds rate to a range of 0.25% to 0.5%. The rise was the first since June  
2
006 and ended an unprecedented seven year stay at near zero rates (see  
chart below). The move comes despite a continuing shortfall of inflation  
from the Federal Reserve's 2% target. Undeterred, the committee  
members continue to project inflation will move towards its long-run  
target in 2016, although the committee did remain cautious about the  
timing of further rises in the future, saying "only gradual increases" are  
likely. Fourteen out of 17 participants deemed a target federal funds rate  
of only 1.5% or below to be appropriate by the end of 2016.  
1
2
The federal funds rate is the short-term interest rate at which depository  
institutions lend reserve balances to other depository institutions overnight. The FOMC  
sets a target rate and the Federal Reserve uses monetary tools with the goal of moving  
the actual rate to the target.  
13 The previous rate target was from 0% to 0.25%.  
Budget Footnotes  
26  
January 2016  
Ohio Legislative Service Commission  
Chart 5: Average Monthly Federal Funds Rate  
Through December 2015  
7
6
5
4
3
2
1
0
%
%
%
%
%
%
%
%
2
000  
2002  
2004  
2006  
2008  
2010  
2012  
2014  
Despite the much-anticipated rise in the Federal Reserve's target,  
rates remain far below historical levels. The FOMC describes the policy  
environment after the rise as remaining "accommodative" and "supportive  
of further improvement in the labor market and a return to 2% inflation."  
Real interest rates remain low by historical standards.1  
4
Inflation  
Energy prices fell in November for the third month out of the last  
four, after a brief respite in October. The consumer price index (CPI) for  
energy fell a seasonally adjusted 1.3%, with gasoline down 2.4%. Overall,  
the consumer price index for all urban consumers (CPI-U) was unchanged  
during the month, as was the price index for personal consumption  
expenditures (PCE), the Federal Reserve's preferred measure of inflation.  
Even the price index for PCE excluding food and energy was up only  
minimally in November, increasing by 0.1% seasonally adjusted.  
Energy prices  
fell in  
November for  
the third  
month out of  
the last four.  
Low energy prices have been a theme for 2015. During the  
1
2 months ending in November, the CPI for energy prices fell 14.7%, with  
the gasoline index down a whopping 24.1%. Caught under that weight,  
CPI for all items rose just 0.5% during that time. Stubbornly low inflation  
has made life tough for the FOMC and will be a key indicator to watch  
heading into 2016.  
14 A real interest rate is calculated as a nominal interest rate minus a measure of  
inflation.  
January 2016  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
Employment and Unemployment  
1
5
The labor market ended 2015 with a roar, adding 292,000 jobs in  
December according to estimates from the U.S. Bureau of Labor Statistics  
(BLS). BLS also revised job gains in October and November upward a  
combined total of 50,000, bringing the average monthly job growth over  
the last three months to 284,000, the highest three-month average since  
January (see chart below). The report also indicated strong U.S. labor  
1
6
force numbers, estimating 966,000 additional people in the labor force  
in December as compared to September. It was the largest three-month  
increase since March 2014.  
Chart 6: U.S. Monthly Employment Change  
(
Three-Month Moving Average)  
3
3
2
2
1
1
50  
00  
50  
00  
50  
00  
5
0
0
2011  
2012  
2013  
2014  
2015  
The national unemployment rate stayed unchanged at 5.0%,  
remaining at the lowest point since 2008. Average hourly earnings of all  
1
7
employees rose 2.5% during 2015.  
Production, Shipments, and Inventories  
The manufacturing index of the Institute for Supply Management  
(ISM) indicated a contraction of activity in the manufacturing sector for  
the second straight month in December. Prices, inventories, and backlogs  
of orders have all been decreasing for at least six months based on survey  
responses of the nation's manufacturing supply executives. ISM's  
nonmanufacturing index indicated growth in nonmanufacturing sectors  
but at the slowest rate since April 2014.  
15 Nonfarm payroll employment.  
16 The labor force is the number of U.S. civilians age 16 and over who are either  
currently employed or unemployed but looked for work in the last four weeks.  
17 Private, nonagricultural payrolls.  
Budget Footnotes  
28  
January 2016  
Ohio Legislative Service Commission  
Industrial production decreased for the third straight month in  
November according to the Federal Reserve's industrial production index.  
Industrial production decreased 0.6% in November after falling 0.4% in  
October. It was the largest two-month decrease since June 2009. Large  
decreases came in mining and utilities, while manufacturing was  
unchanged. Total industrial production was down 1.2% in the 12 months  
up to November 2015.  
Manufacturers' inventories decreased as well in November, by  
.3% according to the U.S. Census Bureau. It was the fifth straight month  
0
the report indicated a decrease in inventories. Put together, the reports  
from the ISM, the Federal Reserve, and the Census Bureau offer a bad  
omen for 2015 fourth quarter gross domestic product (GDP), which will  
be first reported on January 29. Inflation-adjusted (real) GDP increased at  
an annual rate of 2% in the third quarter.  
Consumer Spending  
In what has become a familiar storyline, auto sales had a strong  
December, sealing a record-breaking year. In 2015, approximately  
1
7.39 million light vehicles sold, edging 2000 for the highest year of sales on  
record. Sales were driven by low gas prices, an improving labor market,  
and low interest rates for auto loans. The top three selling vehicles in 2015 sales in 2015  
Light vehicle  
were the Ford F-Series, Chevrolet Silverado, and Dodge Ram according to  
data from motorintelligence.com. All three are pickup trucks, illustrating  
the impact that low gas prices have had on the market.  
were the  
highest on  
record.  
Overall, inflation-adjusted personal consumption spending picked  
up in November, increasing 0.3% at a seasonally adjusted rate. It was the  
fifth out of the last eight months that spending grew at 0.2%-0.3% per  
month (about a 3% annual rate). As other parts of the economy begin to  
show signs of abating (e.g., production) consumer spending has remained  
healthy.  
Real Estate  
Existing home sales for October were revised downward and  
initial reports for November had sales dropping another 10.5% at a  
seasonally adjusted annual rate. Together, the back-to-back months of  
decreasing sales resulted in a year-over-year decrease for the first time  
since September 2014, with sales 3.8% below November one year ago. The  
reports bring recent sales of existing homes more in line with sales of new  
homes which, while up in November, have been slower in recent months.  
From September through November, monthly sales of new homes  
averaged a seasonally adjusted annual rate of 467,000 after averaging  
5
06,000 in January through August.  
January 2016  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
Housing starts were a bright spot in real estate data in November,  
rebounding after October posted the slowest month since March. The  
increase in housing starts during the month was driven by multi-unit  
structures in the South region of the United States.  
Average 30-year fixed rate mortgages settled at 4.01% during the  
week of December 31 according to Freddie Mac's Primary Mortgage  
Market Survey. It was the first time the rate was above 4% since July.  
The Ohio Economy  
Employment and Unemployment  
Ohio's nonfarm payroll employment rose by 9,900 (0.2%) in  
November. Employment increased for the tenth out of the last 13  
months, and average monthly job growth for 2015 through November  
Ohio's labor  
force increase  
in November  
was the second  
largest monthly  
increase since  
(6,200) rose above 2014's full-year average (5,908). Continuing long-term  
trends, the accommodation and food services sector together with the  
professional and technical services sector added 9,000 jobs in November.  
Accomodation and food services employment is up 4.1% from November  
2
014, while professional and technical services is up 3.7%.  
2006.  
The unemployment rate in Ohio rose to 4.5% in November, from  
.4% in October, but largely because the labor force increased by  
,600 people. The labor force is the number of people who are either  
4
9
employed or unemployed but have looked for work in the last four weeks.  
The labor force increase was the second largest for Ohio in a single month  
since 2006, and is an encouraging sign for a state economy that lost a large  
number of workers from its labor force during the summer months.  
Population and Demographics  
The U.S. Census Bureau estimates that between July 1, 2014 and  
July 1, 2015, Ohio's resident population increased by 16,425 (0.14%)  
people, bringing Ohio's estimated population to just above 11.6 million.  
The 2015 population increase is a slowdown from estimated population  
growth of 0.18% and 0.21% in 2013 and 2014, respectively, (see chart  
below). Ohio ranked 41st among the 50 states plus the District of  
Columbia in 2015 growth as a percentage of population. Despite growing  
at a slower pace than most, Ohio is still estimated to be the seventh most  
populous state in the nation, encompassing approximately 3.6% of the  
U.S. population.  
Budget Footnotes  
30  
January 2016  
Ohio Legislative Service Commission  
Chart 7: Annual Population Growth  
0
0
0
0
0
0
0
0
0
0
.9%  
.8%  
.7%  
.6%  
.5%  
.4%  
.3%  
.2%  
.1%  
.0%  
2
011  
2012  
2013  
Midwest  
2014  
2015  
Ohio  
United States  
The components used by the Census Bureau to estimate population  
change in 2015 paint Ohio as an aging state that fails to attract enough  
migrants to stimulate substantial population growth. Between July 1, 2014  
and July 1, 2015, Ohio is estimated to have had 12.05 births and  
9
.63 deaths per 1,000 residents. This natural population gain was dragged  
down by an estimated net migration loss of 0.91 per 1,000 residents.  
International immigration to the state was estimated to be low even  
1
8
relative to fellow states in the Midwest (see chart below).  
Chart 8: Estimated Rates of Population Change Components  
from July 1, 2014 to July 1, 2015  
1
1
1
4.0  
2.0  
0.0  
(35*)  
(9)  
8
6
4
2
0
.0  
.0  
.0  
.0  
.0  
(34)  
(39)  
(33)  
-
2.0  
4.0  
-
Births  
Deaths  
Total Net International Domestic  
Migration  
Migration  
Migration  
United States  
Midwest  
Ohio  
*Ohio's rank in each category among the 50 states plus the District of Columbia.  
18 The Midwest region as defined by the U.S. Census Bureau includes the states  
of Illinois, Indiana, Michigan, Ohio, Wisconsin, Iowa, Kansas, Minnesota, Missouri,  
Nebraska, North Dakota, and South Dakota.  
January 2016  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
Personal Income and Production  
Personal income in Ohio grew 1.3% during the third quarter of  
015 according to the Bureau of Economic Analysis (BEA). BEA also  
revised its estimates of second-quarter growth upward to 1.2% from the  
previously reported 0.9%. These two quarters of growth come after  
personal income in Ohio declined during the first quarter by 0.2%. All  
2
Personal  
income in Ohio  
grew 1.3%  
5
0 states experienced personal income growth of at least 0.6% during the  
third quarter. Ohio's 1.3% growth was the 18th highest among the states.  
during the third  
quarter of  
Approximately 68% of the growth came from net earnings (earnings  
2015.  
by place of work), with the remainder from dividends, interest, rent, and  
1
9
transfer receipts. Among nonfarm industries, earnings growth rates were  
highest in the arts, entertainment, and recreation field.  
BEA also reported Ohio's inflation-adjusted GDP to have grown at  
the seasonally adjusted annual rate of 4.5% in the second quarter of 2015,  
which ranked 15th among the 50 states. Ohio's GDP had declined in two  
straight quarters prior, so the rebound is great, if somewhat dated, news.  
The industries of finance and insurance, real estate, and manufacturing  
all made significant contributions to the GDP growth, among others.  
Home Sales  
Ohio home sales in November continued to dip after a strong  
summer but remained 3.7% above sales from one year ago. The average  
sale price in November was a healthy $147,804, the highest average sale  
price in November since 2005. Year-to-date sales are up 9.7% over 2014  
and the average sale price is up 3.8% during the same period.  
19 Excludes forestry and fishing as well as farming.  
Budget Footnotes  
32  
January 2016