Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
DECEMBER 2016  
VOLUME 40, NUMBER 4  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................13  
HIGHLIGHTS  
Ross Miller, Chief Economist, 614-644-7768  
ISSUE UPDATES  
November GRF tax revenue was $99.0 million (5.0%)  
below the Office of Budget and Management's (OBM)  
estimate. Tax revenues have been rather weak for most of  
Student Summit to End Sexual  
Violence ...............................22  
Educational Service Center  
Funding ................................22  
calendar year 2016, but November follows a very weak Infant Mortality Grants .............23  
Underage Drinking and  
Prescription Drug  
October, when tax revenue was $88.1 million (4.7%) below  
estimate. For FY 2017 through November, tax revenue was  
$259.1 million below estimate. Ohio is not alone in this. The  
Prevention Grants................24  
Federal Prescription Drug  
Monitoring Grant...................24  
Nelson A. Rockefeller Institute of Government reported Outdoor Recreational Facility  
Grants ..................................25  
Community Improvement  
that state tax revenue across all 50 states in the second  
quarter of 2016 was 2.1% below revenue during the second  
quarter of 2015. It is unclear at this point to what degree  
Grants ..................................25  
Crime Victim Services  
Grants ..................................26  
Ohio's weak revenues are due to national economic Juvenile Community Corrections  
Facility Renovation Funding ...27  
conditions versus Ohio-specific factors.  
Through November 2016, GRF sources totaled $14.00 billion:  
TRACKING THE ECONOMY  
The National Economy ............28  
The Ohio Economy..................31  
Revenue from the personal income tax was  
153.4 million below estimate;  
$
Sales and use tax receipts were $108.7 million  
below estimate.  
Through November 2016, GRF uses totaled $15.61 billion:  
Legislative Service Commission  
Program expenditures as  
484.7 million below estimate, due primarily to  
Medicaid ($484.8 million);  
a
whole were  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
$
Telephone: 614-466-3615  
Several other spending categories had smaller  
negative variances, that were roughly offset by a  
timing-related positive variance of $61.8 million in  
Primary and Secondary Education.  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of November 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on December 1, 2016)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$106,332  
$98,900  
$7,432  
7.5%  
Nonauto Sales and Use  
Total Sales and Use Taxes  
$741,660  
$781,300  
-$39,640  
-5.1%  
$847,992  
$880,200  
-$32,208  
-3.7%  
Personal Income  
$611,286  
$24  
$682,100  
$0  
-$70,814  
$24  
-10.4%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
$1,117  
$21,623  
$26,878  
$4,028  
$274,225  
$0  
-$6,600  
$19,200  
$23,900  
$4,400  
$284,500  
$0  
$7,717  
$2,423  
$2,978  
-$372  
-$10,275  
$0  
116.9%  
12.6%  
12.5%  
-8.5%  
-3.6%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
$82  
$200  
-$118  
$0  
-58.8%  
---  
$0  
$0  
$0  
$0  
$0  
---  
$80,135  
$4,336  
$3,782  
$86  
$78,700  
$4,200  
$3,800  
$0  
$1,435  
$136  
1.8%  
3.2%  
-0.5%  
---  
Alcoholic Beverage  
Liquor Gallonage  
-$18  
Estate  
$86  
Total Tax Revenue  
$1,875,592  
$1,974,600  
-$99,008  
-5.0%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$3  
$546  
$0  
$570  
$3  
-$24  
---  
-4.2%  
$1,065  
$1,615  
$1,645  
$2,215  
-$580  
-$600  
-35.2%  
-27.1%  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
---  
---  
---  
TOTAL STATE SOURCES  
Federal Grants  
$1,877,207  
$828,767  
$1,976,815  
$1,180,737  
$3,157,552  
-$99,608  
-$351,969  
-$451,578  
-5.0%  
-29.8%  
-14.3%  
TOTAL GRF SOURCES  
$2,705,974  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
December 2016  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2017 as of November 30, 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on December 1, 2016)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
TAX REVENUE  
Auto Sales  
$582,302  
$588,900  
-$6,598  
-1.1%  
$567,267  
2.7%  
Nonauto Sales and Use  
$3,777,244  
$3,879,300  
-$102,056  
-2.6%  
$3,744,058  
0.9%  
Total Sales and Use Taxes  
$4,359,546  
$4,468,200  
-$108,654  
-2.4%  
$4,311,325  
1.1%  
Personal Income  
$3,207,096  
-$736  
$3,360,500  
$0  
-$153,404  
-$736  
-4.6%  
---  
$3,352,811  
$9,854  
-4.3%  
-107.5%  
-8.3%  
-7.3%  
6.6%  
Corporate Franchise  
Financial Institution  
Public Utility  
-$9,902  
$47,387  
$160,438  
$16,439  
$610,656  
$1,542  
-$8,200  
$50,700  
$141,900  
$17,000  
$630,500  
$1,200  
$156,700  
$400  
-$1,702  
-$3,313  
$18,538  
-$561  
-20.8%  
-6.5%  
13.1%  
-3.3%  
-3.1%  
28.5%  
2.7%  
-86.7%  
---  
-$9,144  
$51,099  
$150,523  
$17,164  
$602,417  
$1,350  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-4.2%  
1.4%  
-$19,844  
$342  
14.2%  
3.5%  
$160,973  
$53  
$4,273  
-$347  
$155,593  
$344  
-84.5%  
-2408.6%  
-4.6%  
2.4%  
-$678  
$0  
-$678  
$29  
$359,411  
$25,542  
$19,400  
$334  
$355,700  
$23,400  
$18,600  
$0  
$3,711  
$2,142  
$800  
1.0%  
9.2%  
4.3%  
---  
$376,873  
$24,955  
$18,814  
$785  
Alcoholic Beverage  
Liquor Gallonage  
3.1%  
Estate  
$334  
-57.5%  
-1.2%  
Total Tax Revenue  
$8,957,502  
$9,216,600  
-$259,098  
-2.8%  
$9,064,794  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$14,194  
$11,343  
$51,047  
$76,583  
$8,500  
$9,975  
$5,694  
$1,368  
$5,457  
$12,518  
67.0%  
13.7%  
12.0%  
19.5%  
$7,929  
$9,185  
79.0%  
23.5%  
40.7%  
43.4%  
$45,590  
$64,065  
$36,283  
$53,397  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$15,309  
$15,309  
$0  
$22,300  
$22,300  
$0  
-$6,991  
-$6,991  
---  
-31.4%  
-31.4%  
$0  
$175,176  
$175,176  
---  
-91.3%  
-91.3%  
TOTAL STATE SOURCES  
Federal Grants  
$9,049,393  
$4,952,292  
$14,001,685  
$9,302,965  
$5,412,454  
$14,715,419  
-$253,572  
-$460,162  
-$713,734  
-2.7%  
-8.5%  
-4.9%  
$9,293,367  
$5,230,755  
$14,524,123  
-2.6%  
-5.3%  
-3.6%  
TOTAL GRF SOURCES  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
December 2016  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Jean J. Botomogno, Principal Economist, 614-644-7758  
Overview  
The year-long weakness in GRF tax revenue continued in  
GRF tax  
November 2016. GRF tax revenues this month were $99.0 million (5.0%)  
below OBM's estimate. Poor performance this month increased the  
negative variance for the fiscal year to date to $259.1 million (2.8%), up  
from $160.1 million through October 2016. Additionally, federal grants  
were $352.0 million below estimates in November, raising that category's  
yearly negative variance to $460.2 million (8.5%), up from $108.2 million  
through October. November GRF sources as a whole were $451.6 million  
below estimates, pushing up the fiscal year's shortfall to $713.7 million  
revenue was  
$
99.0 million  
below estimate  
in November.  
(
the end of October. Tables 1 and 2 above, show GRF sources for  
November and for FY 2017 through November, respectively.  
4.9%), more than doubling the year-to-date deficit of $262.2 million at  
1
Through  
Underperformance of the GRF's two dominant sources of tax  
revenue also continued in November. For the month, the personal  
income tax (PIT) and the sales and use tax had shortfalls of $70.8 million  
and $32.2 million, respectively.  
November, GRF  
tax receipts had  
a shortfall of  
For the fiscal year through November, the shortfall in revenue  
from the sales and use tax totaled $108.7 million. Regarding the PIT,  
excluding results in April 2016, this tax had its worst performance  
relative to estimate in any month of this biennium, and its deficit was  
$259.1 million.  
$
153.4 million at the end of November. The PIT and the sales and use tax  
ended FY 2016 below estimates by a total of about $243.0 million, and  
year to date in FY 2017, their combined shortfall was about  
FY 2017 federal  
grants through $262.0 million. This performance is concerning because FY 2017 revenue  
estimates for both tax sources were adjusted downward to take into  
account FY 2016's lackluster results, but they have failed to meet those  
lowered expectations.  
Although the PIT and the sales and use tax were the main  
culprits for the underperformance of tax revenue in November, the  
commercial activity tax (CAT), the third largest GRF tax source, was  
November  
were  
2
$
460.2 million  
below  
estimates.  
1
GRF sources consist of state-source receipts (tax revenue, nontax  
revenue, and transfers in) and federal grants, which are typically federal  
reimbursements for Medicaid and other programs.  
2
Updated OBM revenue estimates for FY 2017 were released in  
August 2016.  
Budget Footnotes  
4
December 2016  
Ohio Legislative Service Commission  
also below anticipated receipts by $10.3 million. However, most of the  
remaining tax sources had better results, including positive variances of  
7.7 million for the financial institutions tax (FIT), $3.0 million for the  
$
kilowatt-hour tax, $2.4 million for the public utility tax, and $1.4 million  
for the cigarette tax.  
As stated above, GRF tax sources and federal grants were both  
below anticipated revenues for the first five months of FY 2017. For the  
remaining GRF categories, though transfers in were $7.0 million below  
expectations, nontax revenue experienced a positive variance of  
$
12.5 million. The chart below illustrates the cumulative performance of  
total GRF sources relative to estimates each month in FY 2017. Total GRF  
sources have been below estimate every month this fiscal year, generally  
due to a combination of tax revenue shortfalls and smaller than expected  
federal grants, the latter primarily related to the level of spending in the  
Medicaid program, which has generally been lower than expected.3  
Chart 1: Cumulative Variances of GRF Sources in FY 2017  
(
Variance from Estimates, in millions)  
$
100  
$
0
Jul-16  
Aug-16  
Sep-16  
Oct-16  
Nov-16  
-$100  
-$200  
-$300  
-$400  
-$500  
-$600  
-$700  
-$800  
Federal Grants  
Tax Revenue  
Total GRF Sources  
Compared to the corresponding period in FY 2016, GRF sources  
through November were $522.4 million lower. Federal grants, tax receipts,  
and transfers in were, respectively, $278.5 million, $107.3 million, and  
$
159.9 million below their respective amounts in FY 2016. Regarding  
FY 2017 tax receipts, nearly all of the decrease can be attributed to the  
PIT which has collected $145.7 million less in FY 2017 than one year ago,  
3 GRF Medicaid expenditures were $484.8 million below estimate through  
November in FY 2017.  
December 2016  
5
Budget Footnotes  
Ohio Legislative Service Commission  
in part due to legislative policy changes.4 In addition, year-over-year  
receipts fell for the cigarette tax ($17.5 million), the corporate franchise  
5
tax ($10.6 million), and the public utility tax ($3.7 million). Partially  
offsetting those declines, sales and use tax revenue grew $48.2 million  
from one year ago. Revenue also grew noticeably for the kilowatt-hour  
tax ($9.9 million), the CAT ($8.2 million), and the foreign insurance tax6  
(
$5.4 million).  
Sales and Use Tax  
The sales and use tax in November again missed estimates, as it  
had each prior month of FY 2017. A larger negative variance from the  
nonauto sales tax was partially offset by a smaller positive variance from  
the auto portion of the tax. Overall, monthly sales and use tax revenue  
was $32.2 million (3.7%) below estimate, continuing a trend of  
underperformance that began last fiscal year. November revenue was  
Through  
November,  
sales and use  
tax receipts  
were  
$
7.8 million (0.9%) above revenue in the same month last year, however.  
For the fiscal year to date, sales and use tax receipts of $4.36 billion were  
108.7 million (2.4%) below projections (with both sources below  
$
108.7 million  
$
below  
estimates), but $48.2 million (1.1%) above receipts in FY 2016 through  
November. November marked the eighth straight month, and ninth out  
of the 11 months in calendar year (CY) 2016, that sales and use tax  
receipts were below estimate. The sales and use tax is the largest state  
sourced revenue stream to the GRF.  
estimates.  
For analysis and forecasting, the 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 auto taxes arising from leases  
4 H.B. 64 reduced income tax rates by 6.3%, leading to a 3.1% reduction in  
the PIT withholding rate, which did not take effect until August 2015. Based on  
this, July 2016's PIT withholdings would be expected to be 3.1% lower than in  
July 2015, though growth in wages would typically offset at least part of that  
decrease.  
5
The corporate franchise tax was eliminated at the end of FY 2013;  
however, adjustments to previous year's tax filings resulted in additional receipts  
in subsequent years, including $33.2 million in FY 2016.  
6 Ohio insurance taxes apply to premiums received for policies covering  
Ohio risks; if the company receiving the premium is organized under Ohio law,  
they pay the domestic insurance tax; otherwise, they pay the foreign insurance  
tax.  
Budget Footnotes  
6
December 2016  
Ohio Legislative Service Commission  
are paid at the lease signing and are mostly recorded under the nonauto  
tax instead of the auto tax.7  
Nonauto Sales and Use Tax  
Nonauto sales and use tax collections were $741.7 million in  
November, which was $39.6 million (5.1%) less than projected, Nonauto sales  
intensifying the string of monthly shortfalls. Collections from this segment  
of the tax have been below estimate each month this fiscal year.  
Comparing revenue, month by month, to revenue from the same month a  
year ago has revealed growth, but growth that was steadily declining.  
and use tax  
revenue has  
been below  
That growth turned negative in November, when tax receipts were estimate in  
$
through November, nonauto sales and use tax revenue of $3.78 billion was  
$
$
3.2 million (0.4%) below revenue in the same month in 2015. For FY 2017  
each month in  
FY 2017.  
102.1 million (2.6%) below expectations, though receipts were  
33.2 million (0.9%) above receipts in FY 2016 through November. The  
chart below illustrates the slowing year-over-year growth of nonauto sales  
and use tax collections and its failure to meet estimates throughout  
CY 2016.  
Chart 2: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
Nonauto sales  
and use tax  
7
6
5
4
3
2
1
0
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Actual  
Estimate  
revenue was  
$
102.1 below  
estimate  
through  
November in  
FY 2017.  
7 Taxes arising from leases are paid immediately upon the lease signing.  
The clerks of court generally make auto sales and use tax payments on Mondays  
for taxes collected during the preceding week on motor vehicles, watercraft, and  
outboard motors titled. Therefore, auto sales and use tax receipts mostly, but not  
perfectly, reflect vehicles sold and titled during the month.  
December 2016  
7
Budget Footnotes  
Ohio Legislative Service Commission  
A small portion of the FY 2017 shortfall can be attributed to  
Medicaid health insuring corporations (MHICs). Sales tax receipts from  
these corporations have been flat to below their levels in FY 2016 in  
recent months. This portion of sales tax collections is generally correlated  
to Medicaid spending, not necessarily broader consumer spending  
trends. Collections from these corporations have made up less than 9% of  
nonauto sales and use tax revenue in FY 2017. In previous years, revenue  
from the sales tax on MHICs grew by double digits each year until  
FY 2016 when growth slowed to 1.5%; and, through November in  
FY 2017, revenue from these corporations has declined 0.7% compared to  
receipts in the corresponding period in FY 2016.  
Auto Sales and Use Tax  
The GRF received $106.3 million in revenue from the auto portion  
of the sales and use tax in November, $7.4 million (7.5%) above  
expectations, and $11.0 million (11.6%) above receipts in November 2015.  
However, for the fiscal year through November, GRF revenue of  
Auto sales and  
use tax  
revenue was  
$
$
FY 2016. As the chart below illustrates, the pace of collections growth fell  
off sharply in the spring of 2016, and year-over-year growth in FY 2017  
has slowly picked up in recent months.  
582.3 million from the tax was $6.6 million (1.1%) below estimates, but  
15.0 million (2.7%) above revenue in the corresponding period in  
$
6.6 million  
below estimate  
through  
November in  
FY 2017.  
Chart 3: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
1
0.0%  
Actual  
Estimate  
8
6
4
2
0
.0%  
.0%  
.0%  
.0%  
.0%  
-2.0%  
-4.0%  
-6.0%  
Motivated by promotional activity and strong demand for light  
trucks, the pace of nationwide light vehicle (auto and light truck) sales  
remained at a healthy level in November. Sales of light trucks have  
Budget Footnotes  
8
December 2016  
Ohio Legislative Service Commission  
continued at the record-setting pace begun in the fall of 2015. Those sales  
in November were 10.87 million units (seasonally adjusted at annual rate),  
buoyed by low fuel prices, low interest rates, and high discounting. On  
the other hand, sales of cars were 6.88 million units (seasonally adjusted at  
annual rate). For CY 2016 through November, though the total number of  
light vehicles sold was roughly the same as in the corresponding period in  
2
015, car sales declined by about 9%, while sales of light trucks grew  
about 7%. With one month remaining this year, light vehicle sales may  
match or surpass 2015 levels. The mix of sales has driven average sales tax  
collected per purchase higher, helping to maintain revenue as the number  
of new vehicles sold and titled in Ohio slows.  
Personal Income Tax  
Similarly to the sales and use tax, the second largest state sourced  
revenue stream to the GRF has underperformed in FY 2017. PIT GRF  
FY 2017 PIT  
revenue was $70.8 million (10.4%) below estimate in November, the fourth revenue was  
straight month the tax has missed projections. Receipts were also  
$
153.4 million  
$
November, GRF revenue from the PIT of $3.21 billion was $153.4 million  
11.0 million (1.8%) below revenue in November 2015. Through  
below estimate  
through  
(4.6%) below OBM's estimate, and $145.7 million (4.3%) below PIT  
revenue in the corresponding period in FY 2016.  
November  
PIT revenue is comprised of gross collections, minus refunds and  
distributions to the Local Government Fund (LGF). Gross collections  
8
consist of employer withholdings, quarterly estimated payments, trust  
payments, payments associated with annual returns, and other  
miscellaneous payments. The performance of the tax is typically driven by  
employer withholdings, the largest component of gross collections. This  
component missed projections in November by a substantial amount,  
$
58.1 million (8.0%), and growth in employer withholdings was just 1.4%  
compared to November 2015. Refunds had been another PIT component  
responsible for poor revenue this year, and for the month, refunds were  
$
10.7 million (29.5%) higher than anticipated. Through November, the PIT  
revenue shortfall was also led by monthly employer withholdings, which  
were $109.8 million (3.2%) below estimate, and refunds, which were  
$
49.0 million (22.2%) higher than expected. In addition to the shortfall in  
employer withholding, collections from miscellaneous payments and  
8 Quarterly estimated payments are made by taxpayers who expect to be  
underwithheld by more than $500. Payments are due in April, June, and  
September of an individual's tax year and January of the following year. Most  
estimated payments are made by high-income taxpayers.  
December 2016  
9
Budget Footnotes  
Ohio Legislative Service Commission  
trusts were also below anticipated revenue, by $10.9 million and  
2.6 million, respectively. On the other hand, revenue was higher than  
expected for quarterly estimated payments ($9.1 million) and annual  
returns ($6.5 million).  
$
Revenue from  
employer  
withholding  
was  
Payrolls continue to grow year over year. Policy changes, which  
led to reduced withholding rates, took effect in August 2015 and limited  
year-over-year growth of employer withholdings throughout FY 2016.  
The chart below illustrates the growth of monthly employer  
$
109.8 million  
below estimate withholdings relative to one year ago. The pace of growth increased early  
in FY 2017 as the effects of policy changes were phased out of the year-  
over-year calculations. However, growth remains sluggish and below  
OBM's FY 2017 estimates. Through November, FY 2017 withholding  
growth was just 1.1%, less than a third of the estimated withholding  
growth of 4.4%.  
in FY 2017  
through  
November.  
Chart 4: Monthly Withholding Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
8
7
6
5
4
3
2
1
0
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Actual  
Estimate  
FY 2017 revenues through November from each component of the  
PIT relative to estimates and to revenue received in the corresponding  
period of FY 2016 are detailed in the table below.  
Budget Footnotes  
10  
December 2016  
Ohio Legislative Service Commission  
FY 2017 Year-to-Date Personal Income Tax Revenue  
Estimate Variances and Year-over-Year Changes by Component  
Year-to-Date Variance  
from Estimate  
Year-to-Date Changes  
from FY 2016  
Category  
Amount  
$ in millions)  
Percentage  
(%)  
Amount  
($ in millions)  
Percentage  
(%)  
(
Withholding  
-$109.8  
$9.1  
-3.2%  
4.8%  
$36.1  
-$93.3  
-$4.9  
1.1%  
-31.9%  
-31.7%  
-23.5%  
-22.9%  
-2.5%  
Quarterly Estimated Payments  
Trust Payments  
-$2.6  
-19.5%  
9.0%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
$6.5  
-$24.1  
-$6.2  
-$10.9  
-$107.7  
$49.0  
-$3.2  
-34.4%  
-2.9%  
22.2%  
-2.0%  
-4.6%  
-$92.4  
$50.0  
$3.3  
Less Refunds  
22.8%  
2.2%  
Less LGF Distribution  
GRF PIT Revenue  
-$153.4  
-$145.7  
-4.3%  
Compared to the first five months in FY 2016, gross collections in  
FY 2017 fell $92.4 million, mostly due to decreases of $93.3 million in quarterly  
estimated payments and $24.1 million in payments due with annual returns.  
Refunds, $50.0 million higher than in FY 2016, helped increase the year-over-  
year decline in PIT net collections. On the other hand, employer withholding  
grew $36.1 million (1.1%).  
Commercial Activity Tax  
The second CAT payment of this fiscal year was due in November  
for quarterly return taxpayers. For the month, GRF receipts from the CAT  
were $274.2 million, $10.3 million (3.6%) below estimate, and $0.7 million  
FY 2017  
revenue from  
the CAT was  
0.3%) below revenue in November 2015. For the fiscal year, GRF receipts  
(
of $610.7 million were $19.8 million (3.1%) below estimate. FY 2017  
revenue was $8.2 million (1.4%) above FY 2016 receipts through  
November, but only because refunds claims were $21.7 million less this  
fiscal year.  
$
19.8 million  
below  
estimate.  
The performance of the CAT has been lackluster in recent fiscal  
quarters, and due to poor performance in FY 2016, OBM reduced its  
estimate of yearly revenue growth for FY 2017 for this tax. The CAT was  
$
25.6 million (2.0%) below estimates in FY 2016, including a negative  
variance of $14.2 million in the last fiscal quarter, and actual all-funds  
revenue was slightly below FY 2015's total. Weakness in collections has  
continued this fiscal year. GRF CAT revenue was below estimates through  
November, and, according to OAKS, gross collections were about 1.0%  
below those in the corresponding period in FY 2016. The CAT is the third  
largest GRF source.  
December 2016  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Cigarette and Other Tobacco Products Tax  
November GRF revenue from the cigarette and other tobacco  
products tax of $80.1 million was $1.4 million (1.8%) above estimate, and  
FY 2017  
$
0.5 million (0.7%) above revenue in November 2015. For FY 2017  
revenue from  
the cigarette  
tax was  
through November, receipts from the tax were $359.4 million,  
$3.7 million (1.0%) above estimate. Of the total revenue, $333.1 million  
was from cigarettes and $26.3 million was from sales of other tobacco  
products. Compared to FY 2016 through November, receipts in FY 2017  
were $17.5 million (4.6%) lower. Generally, cigarette tax receipts are  
$
3.7 million  
above  
9
trending downward long-term; however, legislative changes led to  
estimate.  
increased receipts in the early months of FY 2016. Thus, the year-over-  
year decline in FY 2017 revenue is larger in percentage terms than the  
trend rate of decline.  
9
H.B. 64 increased the cigarette tax from $1.25 to $1.60 per pack of  
2
cigarettes in inventory at the time the new tax rate went into effect. Excluding the  
0 cigarettes, effective July 1, 2015. This led to the payment of a "floor tax" for  
effect of the floor tax, the year-over-year decline in tax revenue was about 0.6%.  
Budget Footnotes  
12  
December 2016  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of November 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run December 2, 2016)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$370,096  
$376,949  
-$6,853  
-1.8%  
$197,034  
$3,251  
$198,600  
$3,347  
-$1,566  
-$95  
-0.8%  
-2.8%  
-1.5%  
Other Education  
Total Education  
$570,381  
$578,895  
-$8,514  
Medicaid  
$1,331,768  
$110,146  
$1,721,514  
$100,314  
-$389,747  
$9,832  
-22.6%  
9.8%  
Health and Human Services  
Total Welfare and Human Services  
$1,441,914  
$1,821,829  
-$379,915  
-20.9%  
Justice and Public Protection  
General Government  
$148,263  
$32,301  
$139,116  
$32,400  
$9,147  
-$98  
6.6%  
-0.3%  
5.3%  
Total Government Operations  
$180,564  
$171,516  
$9,048  
Property Tax Reimbursements  
Debt Service  
$144,625  
$19,493  
$120,966  
$19,607  
$23,659  
-$114  
19.6%  
-0.6%  
16.7%  
Total Other Expenditures  
$164,118  
$140,573  
$23,545  
Total Program Expenditures  
$2,356,977  
$2,712,813  
-$355,836  
-13.1%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$14,718  
$14,718  
$0  
$0  
$0  
$0  
$14,718  
$14,718  
---  
---  
---  
TOTAL GRF USES  
$2,371,695  
$2,712,813  
-$341,118  
-12.6%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
December 2016  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2017 as of November 30, 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run December 2, 2016)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
Primary and Secondary Education  
Higher Education  
$3,463,940  
$960,421  
$38,331  
$3,402,136  
$61,804  
1.8%  
$3,485,942  
$933,289  
$33,936  
-0.6%  
2.9%  
$970,442  
$40,353  
-$10,021  
-$2,022  
$49,761  
-1.0%  
-5.0%  
1.1%  
Other Education  
12.9%  
0.2%  
Total Education  
$4,462,692  
$4,412,931  
$4,453,167  
Medicaid  
$7,464,106  
$568,381  
$7,948,945  
$606,434  
-$484,839  
-$38,053  
-$522,892  
-6.1%  
-6.3%  
-6.1%  
$7,750,679  
$551,878  
-3.7%  
3.0%  
Health and Human Services  
Total Welfare and Human Services  
$8,032,486  
$8,555,378  
$8,302,558  
-3.3%  
Justice and Public Protection  
General Government  
$895,149  
$166,538  
$910,857  
$177,078  
-$15,709  
-$10,540  
-$26,249  
-1.7%  
-6.0%  
-2.4%  
$865,958  
$161,697  
3.4%  
3.0%  
3.3%  
Total Government Operations  
$1,061,687  
$1,087,936  
$1,027,656  
Property Tax Reimbursements  
Debt Service  
$898,887  
$890,393  
$883,566  
$891,050  
$15,321  
-$656  
1.7%  
-0.1%  
0.8%  
$897,931  
$864,181  
0.1%  
3.0%  
1.5%  
Total Other Expenditures  
$1,789,280  
$1,774,615  
$14,665  
$1,762,112  
Total Program Expenditures  
$15,346,144  
$15,830,860  
-$484,715  
-3.1%  
$15,545,492  
-1.3%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$29,483  
$238,587  
$268,070  
$29,483  
$250,623  
$280,106  
$0  
-$12,036  
-$12,036  
0.0%  
-4.8%  
-4.3%  
$425,500  
$388,234  
$813,734  
-93.1%  
-38.5%  
-67.1%  
TOTAL GRF USES  
$15,614,214  
$16,110,965  
-$496,751  
-3.1%  
$16,359,226  
-4.6%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
December 2016  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on December 5, 2016)  
Month of November 2016  
Year to Date Through November 2016  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
-$1,517  
-$389,085  
Percent  
Actual  
Estimate*  
Variance  
Percent  
$1,948,686  
$1,276,053  
$672,633  
$1,950,203  
$1,665,138  
$285,065  
-0.1%  
$8,880,539  
$7,187,396  
$1,693,142  
$9,537,177  
$7,654,772  
$1,882,405  
-$656,638  
-6.9%  
GRF  
-23.4%  
-$467,376  
-6.1%  
Non-GRF  
$387,568 136.0%  
-$189,263 -10.1%  
Developmental Disabilities  
$203,340  
$48,125  
$196,894  
$47,362  
$6,446  
$763  
3.3%  
1.6%  
3.8%  
$1,053,798  
$237,905  
$815,893  
$1,104,412  
$239,958  
$864,454  
-$50,614  
-$2,053  
-4.6%  
-0.9%  
-5.6%  
GRF  
Non-GRF  
$155,215  
$149,532  
$5,683  
-$48,561  
Job and Family Services  
$28,071  
$6,811  
$30,746  
$8,339  
-$2,674  
-$1,527  
-$1,147  
-8.7%  
-18.3%  
-5.1%  
$94,061  
$34,134  
$59,927  
$130,442  
$49,882  
$80,561  
-$36,382 -27.9%  
-$15,748 -31.6%  
-$20,634 -25.6%  
GRF  
Non-GRF  
$21,260  
$22,407  
Health  
GRF  
$2,998  
$293  
$1,385  
$254  
$1,613 116.4%  
$39 15.4%  
$1,574 139.1%  
$11,582  
$1,524  
$10,660  
$1,364  
$9,296  
$921  
$160  
$761  
8.6%  
11.7%  
8.2%  
Non-GRF  
$2,705  
$1,131  
$10,058  
Aging  
$515  
$309  
$206  
$514  
$282  
$232  
$2  
$28  
0.3%  
9.8%  
$3,201  
$1,598  
$1,602  
$3,503  
$1,549  
$1,954  
-$303  
-8.6%  
GRF  
$50  
3.2%  
Non-GRF  
-$26  
-11.1%  
-$352 -18.0%  
Mental Health and Addiction  
$467  
$176  
$291  
$397  
$140  
$257  
$69  
$36  
$34  
17.4%  
25.5%  
13.0%  
$2,409  
$1,548  
$861  
$1,977  
$1,420  
$557  
$431  
$128  
$303  
21.8%  
9.0%  
GRF  
Non-GRF  
54.4%  
Total GRF  
$1,331,768  
$852,310  
$1,721,514  
$458,624  
-$389,747  
$393,685  
-22.6%  
85.8%  
$7,464,106  
$2,581,483  
$7,948,945  
$2,839,228  
-$484,839  
-$257,745  
-6.1%  
-9.1%  
Total Non-GRF  
Total All Funds  
$2,184,077  
$2,180,139  
$3,939  
0.2%  
$10,045,588 $10,788,172  
-$742,584  
-6.9%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
December 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 December 5, 2016)  
November Year to Date Through November 2016  
Estimate*  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Variance  
-$41,210  
$1,982  
$327  
Percent  
-4.3%  
1.6%  
Actual  
Estimate*  
$4,488,994  
$613,948  
$1,068,329  
$617,230  
$510,043  
$492,063  
$146,496  
$187,542  
$191,904  
$85,250  
Variance  
-$336,883  
$7,713  
Percent  
-7.5%  
1.3%  
$915,648  
$127,966  
$192,507  
$200,850  
$87,336  
$82,958  
$30,337  
$30,721  
$43,796  
$10,752  
$30,726  
$9,193  
$956,857  
$125,985  
$192,180  
$115,564  
$96,001  
$99,337  
$30,347  
$34,279  
$38,567  
$15,488  
$28,012  
$13,196  
$361,557  
$72,769  
$4,152,111  
$621,661  
$1,017,102  
$517,841  
$470,315  
$391,217  
$145,064  
$167,068  
$219,789  
$76,458  
0.2%  
-$51,227  
-4.8%  
$85,286  
-$8,665  
-$16,380  
-$10  
73.8%  
-9.0%  
-16.5%  
0.0%  
-$99,389 -16.1%  
-$39,727 -7.8%  
-$100,846 -20.5%  
-$1,432 -1.0%  
-$20,474 -10.9%  
$27,885 14.5%  
-$8,792 -10.3%  
$7,055 5.1%  
-$20,201 -28.1%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
-$3,559  
$5,229  
-$4,736  
$2,714  
-$4,003  
-$12,589  
-$448  
-10.4%  
13.6%  
-30.6%  
9.7%  
Medicare Part D  
Home Care Waivers  
ACA Expansion  
All Other  
$145,734  
$51,759  
$138,680  
$71,961  
-30.3%  
-3.5%  
-0.6%  
0.2%  
$348,967  
$72,322  
$1,688,858  
$380,611  
$1,785,278  
$390,457  
-$96,421  
-$9,846  
-5.4%  
-2.5%  
-6.9%  
Total All Funds  
$2,184,077 $2,180,139  
$3,939  
$10,045,588 $10,788,172  
-$742,584  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
16  
December 2016  
Ohio Legislative Service Commission  
EXPENDITURES  
Russ Keller, Senior Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
Tables 3 and 4 show GRF uses for the month of November and for  
FY 2017 through November, respectively. GRF uses mainly consist of Through  
program expenditures but also include transfers out. For the month of  
November, GRF uses totaled $2.37 billion, which was $341.1 million below  
estimate. Through November, FY 2017 GRF uses totaled $15.61 billion,  
which was $496.8 million below estimate. Medicaid is the key culprit for  
these variances. In November, GRF Medicaid expenditures were  
November,  
FY 2017 GRF  
uses were  
$
496.8 million  
$
389.7 million (22.6%) below estimate, which increased the category's  
below estimate  
due mainly to  
Medicaid,  
negative year-to-date variance from $95.1 million at the end of October to  
484.8 million (6.1%) at the end of November. November's large negative  
$
variance in GRF Medicaid expenditures was an anticipated reversal from  
October when more GRF dollars than had been planned were used to  
which was  
make Medicaid payments, due to a delay in collecting hospital assessment $484.8 million  
revenue, a non-GRF funding source for Medicaid. Medicaid is mainly  
funded by the GRF but it also receives funding from several non-GRF  
funds.  
below  
estimate.  
In addition to Medicaid, several other program categories also  
posted relatively large year-to-date variances. Health and Human Services  
had the second largest negative year-to-date variance at $38.1 million,  
followed by Justice and Public Protection at $15.7 million. Primary and  
Secondary Education, on the other hand, had a positive year-to-date  
variance of $61.8 million. The majority of these variances occurred in the  
first four months (July through October) of FY 2017. Please see the  
November issue of Budget Footnotes for more information on the variances  
in these three program categories. Timing accounted for a large portion of  
those variances.  
The remainder of this report will first discuss in more detail the  
variances in both GRF and non-GRF Medicaid expenditures and then  
provide a summary of prior year encumbrance activities as of December 1,  
2
016.  
Medicaid  
Table 5 shows GRF and non-GRF Medicaid expenditures for the  
Ohio Department of Medicaid (ODM) and five other state agencies  
Developmental Disabilities, Job and Family Services, Health, Aging, and  
Mental Health and Addiction Services) that assist ODM in carrying out  
(
December 2016  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
the responsibility of administering Ohio Medicaid. As a joint federal-  
state program, both GRF and non-GRF Medicaid expenditures contain  
federal and state moneys. Overall, the federal government reimburses  
Ohio for about two-thirds of its Medicaid expenditures.  
For the month of November, GRF Medicaid expenditures of  
$
1.33 billion were $389.7 million (22.6%) below estimate while non-GRF  
expenditures of $852.3 million were $393.7 million (85.8%) above  
estimate. All-funds Medicaid expenditures of $2.18 billion in November,  
however, were essentially on target with the estimate ($3.9 million or  
0
.2% above estimate). As indicated earlier, the imbalance in GRF and  
non-GRF Medicaid expenditures for November was an expected reversal  
of the imbalance in the GRF and non-Medicaid expenditures for October.  
FY 2017 hospital assessment revenue, which is deposited into non-GRF  
funds to make quarterly supplemental Upper Payment Limit (UPL)  
payments and to help offset GRF Medicaid expenditures, was finalized  
in November instead of October as originally anticipated. As a result,  
more GRF dollars were used in October for Medicaid expenditures than  
had been planned. The first quarterly supplemental UPL payments for  
hospitals totaling $162.2 million also were delayed from October to  
November. UPL allows the state to direct supplemental payments, up to  
the difference between the Medicare and the Medicaid payment  
amounts, to service providers.  
Through November, FY 2017 GRF Medicaid expenditures of  
$
7.46 billion were $484.8 million (6.1%) below estimate while non-GRF  
For the first  
five months of  
FY 2017, all-  
funds Medicaid  
expenditures  
were  
Medicaid expenditures of $2.58 billion were $257.7 million (9.1%) below  
estimate. Across all funds, Medicaid expenditures of $10.05 billion were  
$742.6 million (6.9%) below the year-to-date estimate. As expected, the  
majority of these variances occurred in ODM. ODM's GRF Medicaid  
expenditures of $7.19 billion were $467.4 million (6.1%) below the year-  
to-date estimate while its non-GRF Medicaid expenditures of  
$
1.69 billion were $189.3 million (10.1%) below the year-to-date estimate.  
$
742.6 million  
Including both GRF and non-GRF, ODM's all-funds Medicaid  
expenditures of $8.88 billion were below the year-to-date estimate by  
below  
$
656.6 million (6.9%). All-funds Medicaid expenditures from the  
estimate.  
Department of Developmental Disabilities (DDD), the second largest  
agency within this program category, totaled $1.05 billion through  
November, which was $50.6 million (4.6%) below estimate. DDD's GRF  
Medicaid expenditures of $237.9 million were $2.1 million (0.9%) below  
the year-to-date estimate while its non-GRF year-to-date expenditures of  
$
and DDD account for about 99% of the Medicaid expenditure total.  
815.9 million were $48.6 million (5.6%) below estimate. Together, ODM  
Budget Footnotes  
18  
December 2016  
Ohio Legislative Service Commission  
Table 6 shows all-funds Medicaid expenditures by payment  
category. Managed Care continued to post the largest negative year-to-  
date variance at $336.9 million (7.5%), followed by Administration  
($100.8 million, 20.5%), Hospitals ($99.4 million, 16.1%) and ACA  
Expansion ($96.4 million, 5.4%). Together, these four categories accounted  
for 85.3% of the total negative year-to-date variance in all-funds Medicaid  
expenditures.  
As reported in prior issues of Budget Footnotes, the negative  
variance in the Managed Care payment category is expected to increase  
through the end of this calendar year as actual managed care rates for  
2
016 are lower than the ones used in the estimate, particularly those for  
the MyCare program, which provides managed care services for  
individuals who receive both Medicaid and Medicare benefits. Lower  
than expected managed care rates were also the driving force behind the  
negative variance in the ACA Expansion payment category.  
ACA expansion enrollees generally receive services through managed  
care although some of them may temporarily enroll in fee-for-service for  
a short period of time. ACA expansion enrollments were about 25,000  
higher than expected. However, the category's expenditures were below  
the year-to-date estimate as the caseload effect on expenditures was  
completely offset by the managed care rate effect. Managed care rates are  
established annually. Federal law requires these rates to be actuarially  
sound. New rates for calendar year 2017 will take effect on January 1.  
Approximately $86 million of the $100.8 million negative year-to-  
date variance in the Administration payment category was attibutable to  
unspent federal incentive grants. Expenditures for Ohio Benefits, a one-  
stop portal for Ohioans to check their eligibility for Medicaid and other  
public benefits, were approximately $25 million below estimate. The  
federal government funds about 90% of the costs for implementing Ohio  
Benefits. Expenditures for several other support service contracts were  
also lower than anticipated.  
Due largely to UPL payment timing issues, expenditures from the  
Hospitals payment category were $85.3 million (73.8%) above estimate in  
November. This positive monthly variance narrowed the category's  
negative year-to-date variance from close to $185 million at the end of  
October to $99.4 million at the end of November. As indicated earlier, the  
first quarterly hospital UPL payments totaling $162.2 million that were  
planned for October were actually disbursed in November. However, the  
estimate for November anticipated another $43 million in UPL payments  
for hospital-based physicians. These payments did not occurr as planned,  
December 2016  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
which narrowed the category's positive monthly variance somewhat and  
contributed to the category's negative year-to-date variance.  
Prior Year Encumbrances  
As reported in the July issue of Budget Footnotes, state agencies  
carried into FY 2017 over $428 million in encumbered GRF funds that  
were originally appropriated for fiscal years prior to FY 2017. An agency  
generally has five months to spend prior year encumbrances for  
operating expenses. Any unspent operating expense encumbrances will  
lapse at the end of the five-month period and will become part of the  
GRF cash balance once OBM cancels the encumbrances. Subject to the  
approval of the Director of Budget and Management, an agency may  
carry funds encumbered for purposes other than operating expenses  
beyond the five-month period. Encumbrances for some grant and aid  
payments may be carried for several months or even years.  
Prior Year GRF Encumbrances by Agency ($ in millions)  
Prior Year  
Encumbrances  
as of  
Outstanding  
Encumbrances  
as of  
Amount  
Expended  
Amount  
Lapsed  
Agency  
July 1, 2016  
December 1, 2016  
Education  
$153.9  
$65.0  
$25.3  
$20.3  
$31.1  
$50.4  
$82.3  
$428.4  
$106.2  
$36.3  
$8.1  
$47.1  
$27.0  
$16.7  
$14.8  
$7.0  
$0.6  
$1.8  
Job and Family Services  
Development Services  
Higher Education  
Rehabilitation and Correction  
Medicaid  
$0.5  
$5.5  
$0.1  
$23.4  
$16.8  
$56.3  
$252.5  
$0.7  
$4.7  
$28.9  
$7.0  
All Other Agencies  
Total  
$19.0  
$136.4  
$39.6  
Detail may not sum to total due to rounding.  
As shown in the table above, as of December 1, 2016,  
252.5 million (58.9%) of the $428.4 million in total prior year  
encumbrances was expended, $136.4 million was still outstanding, and  
the remaining $39.6 million lapsed. The Ohio Department of Education  
As of  
$
December 1,  
2
016,  
(
encumbrances as of December 1, followed by the Ohio Department of Job  
and Family Services (ODJFS) at 19.8%, the Development Services Agency  
ODE) had the largest share (34.6%) of the total outstanding  
outstanding  
prior year GRF  
encumbrances  
totaled  
(DSA) at 12.3%, and the Ohio Department of Higher Education (ODHE)  
at 10.9%. Together, these four agencies had $105.6 million (77.5%) of the  
$
136.4 million in total outstanding prior year encumbrances.  
$
136.4 million.  
Items 200408, Early Childhood Education, 200540, Special  
Education Enhancements, and 200550, Foundation Funding, accounted  
for $12.5 million (26.6%), $11.0 million (23.3%), and $10.4 million (22.0%),  
Budget Footnotes  
20  
December 2016  
Ohio Legislative Service Commission  
respectively, of ODE's total $47.1 million in outstanding prior year  
encumbrances as of December 1. These encumbrances will be used for  
making any necessary subsidy payment adjustments for early childhood  
education service providers, county boards of developmental disabilities,  
and schools.  
ODJFS had $27.0 million in outstanding prior year encumbrances  
as of December 1. Items with significant outstanding encumbrances are  
item 655522, Medicaid Program SupportLocal ($8.5 million, 31.3%), item  
6
00321, Program Support ($4.0 million, 14.6%), and item 600523, Family  
and Children Services ($3.5 million, 13.1%). Funds encumbered in item  
55522 are used to pay the state's share of Medicaid costs for local  
6
administrative services. The encumbrances in item 600321 are for contracts  
with vendors that provide various administrative support services for  
ODJFS. Funds encumbered in item 600523 are used to provide funding to  
county agencies for child protective services.  
DSA had $16.7 million in outstanding prior year encumbrances as  
of December 1. The vast majority of DSA's outstanding prior year  
encumbrances were for various economic development grants. Many of  
these grant programs are operated on a reimbursement basis, under  
which grantees have to carry out the programs and certify that certain  
requirements or objectives have been met before they are reimbursed by  
the state. Depending on the scope of a project, the grantee may not  
actually receive the award until several years after the award was  
originally made.  
ODHE had $14.8 million in outstanding prior year encumbrances  
as of December 1, of which $13.7 million occurred in item 235438, Choose  
Ohio First Scholarship. Item 235438 is used to pay the state's obligations to  
scholarship recipients.  
December 2016  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
Department of Higher Education Hosts First Student Summit to  
End Sexual Violence  
Adam Wefler, Budget Analyst, 614-466-0632  
On November 3, 2016, the Ohio Department of Higher Education (ODHE) hosted  
the state's first summit to train students on ways to end sexual violence on Ohio's  
college campuses. The one-day "Generation IX: Our Time. Our Power. Our Voices."  
summit, held in Columbus, featured national activists, safety experts, Title IX  
coordinators, and more than 300 students discussing some of the nation's best practices  
to end sexual assault. Attendees heard two keynote addresses and participated in  
various breakout sessions that covered a variety of topics, including Title IX, advocacy,  
activism, strategies to engage with campus administration and collaborate with  
community-based organizations, sustaining student-led movements, and the impact of  
sexual violence on various groups of students on campus.  
The summit is one component of the state's multipronged "Changing Campus  
Culture" initiative that is designed to strengthen the ability of colleges and universities  
to better prevent and respond to sexual assault on their campuses. The initiative is  
supported by an appropriation of $2.0 million from GRF line item 235492, Campus  
Safety and Training, which has been used by ODHE to develop model best practices for  
preventing and responding to sexual assault on campus, disseminate and analyze a  
campus climate survey, create an online resource portal, provide regional training to  
campuses, and offer grants to individual institutions to help implement the best  
practices developed by ODHE.  
All 52 Educational Service Centers Qualify for "High-Performing"  
Designation for FY 2017 Funding Purposes  
Anthony Kremer, Budget Analyst, 614-466-5654  
In October 2016, the State Board of Education designated all 52 educational  
service centers (ESCs) in the state as "high performing" pursuant to criteria established  
in H.B. 64 and rules adopted by the State Board. To qualify for the designation, an ESC  
must have demonstrated cost savings of at least 5% in FY 2016 for its client school  
districts and community schools across five primary services identified by the ESC. All  
ESCs exceeded the 5% threshold. Overall, 52 ESCs documented total cost savings of  
$
54.1 million in FY 2016.  
Budget Footnotes  
22  
December 2016  
Ohio Legislative Service Commission  
An ESC's high-performing status determines the level of per-pupil state  
operating funding it receives in FY 2017 $27 per pupil for high-performing ESCs, the  
same amount that all ESCs received in FY 2016. An ESC that was not designated as high  
performing would have received state per-pupil funding of $25. ESCs are slated to  
receive total per-pupil state operating funding of $41.6 million in FY 2017 through an  
earmark from GRF line item 200550, Foundation Funding. Per-pupil state operating  
funding comprises about 15% of ESC funding paid by the Ohio Department of  
Education in FY 2017. Most of the remainder is supported by service contracts with  
client districts and schools, payment for which is deducted and transferred from the  
client's state foundation funding. ESCs may also bill school districts directly for other  
fee-for-service contracts.  
$
5.8 million Awarded to Improve Birth and Developmental Outcomes  
Jacquelyn Schroeder, Budget Analyst, 614-466-3279  
On November 16, 2016, the Ohio Department of Health (ODH) announced that  
5.8 million in federal funds was awarded to 27 counties that are at-risk for poor birth  
$
or childhood developmental outcomes. These funds will be used to expand local  
evidence-based home visiting services to pregnant women and parents with young  
children. The individual county awards range from $46,200 to $632,000. For a complete  
list of the awards, please refer to the map on the Prevent Infant Mortality Ohio website:  
www.preventinfantmortality.test.ohio.gov.  
ODH recently released its 2015 Ohio Infant Mortality Report, which may be  
accessed online at: www.odh.ohio.gov. The report found that Ohio's overall infant  
mortality rate for all races has risen from 6.8 (number of infant deaths per 1,000 live  
births) in 2014 to 7.2 in 2015. The black infant mortality rate increased from 14.3 in 2014  
to 15.1 in 2015. Ohio's goal is to obtain a rate of 6.0 or lower for every race or ethnic  
group. In 2015, the white and Hispanic groups were the only two that met or exceeded  
this goal with rates of 5.5 and 6.0, respectively. The three leading causes of infant  
mortality are prematurity/preterm births, sleep-related deaths (i.e., Sudden Infant Death  
Syndrome or asphyxia), and birth defects.  
The state has targeted funding to combat infant mortality in recent years,  
including the current biennium. For instance, the Ohio Department of Medicaid  
awarded $22.5 million in FY 2016 to fund 46 projects in nine counties. These counties  
have communities within their jurisdictions that accounted for almost two-thirds of all  
infant deaths and 90% of black infant deaths during 2015. In the second half of FY 2017,  
ODH also plans to provide $2.6 million to 14 counties with the highest black infant  
mortality rates and another $2.5 million to improve equity in birth outcomes in nine  
counties.  
December 2016  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
Grants Awarded to Prevent Underage Drinking  
and Reduce Prescription Drug Misuse  
Jacquelyn Schroeder, Budget Analyst, 614-466-3279  
On October 20, 2016, the Ohio Department of Mental Health and Addiction  
Services (OMHAS) announced that $720,000 was awarded to nine grant recipients to  
prevent underage drinking and to reduce prescription drug misuse among youth and  
young adults. The grant recipients are located in the following counties: Champaign,  
Coshocton, Hardin, Holmes, Mercer, Seneca, Tuscarawas, Warren, and Wayne. Each  
recipient will receive $80,000 to implement evidence-based programs and strategies that  
help prevent underage drinking among individuals aged 12 to 20 and reduce  
prescription drug misuse among individuals aged 12 to 25. The grants may be renewed  
for up to two more years, depending on the availability of funds and a recipient's  
progress toward meeting certain goals.  
The grant funding was provided through the Strategic Prevention Framework-  
Partnership for Success (SPF-PFS) Initiative, which is a five-year grant program funded  
by the federal Substance Abuse and Mental Health Services Administration and  
administered by OMHAS. The initiative aims to establish an integrated public health  
infrastructure that aligns prevention priorities among different entities at the state and  
local levels. Ohio's SPF-PFS Initiative seeks to ensure that rural and Appalachian  
populations have access to evidence-based prevention services.  
State Board of Pharmacy Awarded Federal Prescription  
Drug Monitoring Program Grant  
Robert Meeker, Budget Analyst, 614-466-3839  
In late September 2016, the State Board of Pharmacy was awarded a two-year  
399,365 grant under the federal Bureau of Justice Assistance's Harold Rogers  
$
Prescription Drug Monitoring Program. The grant will be used to enhance the Ohio  
Automated Rx Reporting System (OARRS), a state-run database created to address  
prescription drug abuse, misuse, and diversion. The Board plans to allocate the grant  
for two primary objectives: (1) expanding database access to include Ohio's drug courts  
and (2) improving drug law enforcement. The latter largely will be accomplished by  
hiring two compliance agents specifically assigned to OARRS. The agents' duties will  
include reviewing complaints, investigating possible violations, assisting with the  
investigation and review of drug overdose deaths, and conducting regular training of  
law enforcement in the use of OARRS.  
Budget Footnotes  
24  
December 2016  
Ohio Legislative Service Commission  
Established in 2006, OARRS collects information on the dispensing and personal  
furnishing of controlled prescription drugs to Ohio patients. In 2015, OARRS collected  
more than 24 million prescription records reported by more than 3,000 Ohio pharmacies  
for 4 million patients.  
DNR Awards Nearly $15.0 million in Outdoor Recreational Facility Grants to  
Communities and Organizations Across the State  
Tom Wert, Budget Analyst, 614-466-0520  
On October 28, 2016, the Department of Natural Resources (DNR) announced the  
recipients of nearly $15.0 million in funding under three grant programs. The majority  
of this amount, $10.5 million, will go to 22 recipients in 12 counties under the Clean  
Ohio Trails Fund Grant Program for community projects to connect regional trail  
systems and provide access to outdoor recreation areas from urban areas. Another  
$
6
3.0 million under the NatureWorks Grant Program is being awarded to 89 recipients in  
9 counties. This money will be used to create and renovate parks and outdoor  
recreation areas, including the acquisition of green space and improvements and  
construction of playgrounds, restroom facilities, shelters, and ballfields. The remaining  
$
1.5 million will go to 13 communities and organizations in 14 counties under the  
Recreational Trails Grant Program for local trails projects. A complete list of grant  
recipients can be found on DNR's website at: http://realestate.ohiodnr.gov/outdoor-  
recreation-facility-grants.  
Funding for Clean Ohio Trails Fund and NatureWorks grants is supported by  
bond proceeds that are deposited into the Clean Ohio Fund (Fund 7061) and the Ohio  
Parks and Natural Resources Fund (Fund 7031), respectively. Recipients of Clean Ohio  
Trails Fund grants must provide a 25% local match for their projects. NatureWorks  
grants also provide up to 75% of eligible project costs. Recreational Trails grants  
provide up to 80% of eligible project costs and are made available through funding  
from the Federal Highway Administration.  
Development Services Agency Awards $11.6 million to Local  
Governments for Community Improvements  
Tom Middleton, Budget Analyst, 614-728-4813  
On November 1, 2016, the Development Services Agency (DSA) announced the  
award of 37 grants totaling $11.6 million for local governments to make public  
improvements. This funding comes from the set-aside portion of the federal  
Community Development Block Grant (CDBG) Program. Under this set-aside, local  
governments apply to DSA for funding for projects that serve primarily low- and  
December 2016  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
moderate-income populations in their communities. The eligible projects fall into one of  
the three categories: (1) Critical Infrastructure, (2) Neighborhood Revitalization, and  
(3) Downtown Revitalization. The table below summarizes the 2016 CDBG set-aside  
grants and total community improvement project costs by program category. Overall,  
the CDBG set-aside grants account for almost 53% of the total project costs.  
CDBG Set-aside Grants, 2016  
Number of  
Grants  
CDBG Grant  
Amount  
Total Project  
Cost  
CDBG Grant Share  
of Total Cost  
Category  
Critical Infrastructure  
Neighborhood Revitalization  
Downtown Revitalization  
TOTAL  
21  
9
$5,033,900  
$4,500,000  
$2,100,000  
$11,633,900  
$9,289,230  
$7,918,283  
$4,803,048  
$22,010,561  
54.2%  
56.8%  
43.7%  
52.9%  
7
37  
Attorney General Awards $79.5 million in Crime Victim Services Grants  
Jessica Murphy, LSC Fellow, 614-466-9108  
On October 7, 2016, the Office of the Attorney General announced the award of  
1
0
$
4
79.5 million in 563 crime victim services grants. The grants support the delivery of  
22 crime victim services programs by more than 340 providers statewide. Of the total  
awarded, $76.1 million is to be funded by the federal Crime Victims Assistance Fund  
(Fund 3830) and $3.4 million is to be funded by the state Victims of Crime/Reparations  
Fund (Fund 4020). Twenty-four entities were awarded a total of $4.3 million in federal  
crime victim services grants to operate 27 new programs across the state. The remainder  
($71.8 million) of the federal grants and all of the state grants were awarded to support  
existing programs. Crime victim services programs are operated by public agencies,  
including local prosecutors, and private nonprofit organizations.  
Fund 3830's revenues are from a population-based grant administered by the  
U.S. Department of Justice. There is no state match requirement for the grant. The Ohio  
Attorney General's Victim Services Section administers this federal grant at the state  
level. Fund 4020's revenues are generated primarily from court costs imposed on  
offenders and driver's license reinstatement fees.  
1
0
A complete grant award list can be found at: www.ohioattorneygeneral.gov/  
Media/News-Releases.  
Budget Footnotes  
26  
December 2016  
Ohio Legislative Service Commission  
Controlling Board Releases $3.5 million for Juvenile Community  
Corrections Facility Renovations  
Maggie Wolniewicz, Senior Budget Analyst, 614-995-9992  
On November 14, 2016, the Controlling Board approved the Department of  
Youth Services' request for the release of $3.5 million in capital funds for general  
renovations and maintenance repair projects at the state's 12 county-operated juvenile  
community corrections facilities (CCFs). Specific projects include door and lock  
replacements, safety and security system improvements, HVAC and boiler  
replacements, lighting upgrades, roof replacements, and various other facility  
improvements. The table below lists each CCF by county, as well as the corresponding  
project cost.  
CCFs provide treatment services in a secure facility setting to less serious felony  
level offenders between the ages of 12 and 18 who would otherwise be committed into  
the care and custody of the Department. All construction, renovation, and operating  
costs of the CCFs are paid for by the Department. In FY 2016, these facilities served  
4
47 youth statewide.  
Community Corrections Facility Projects by County  
(Total: $3,469,811)  
Project  
Cost  
Project  
Cost  
County  
Athens  
Facility  
County  
Marion  
Facility  
Hocking Valley Community $314,856  
Residential Center  
North Central Ohio  
$50,000  
Rehabilitation Center  
Belmont  
Butler  
Erie  
Oakview Juvenile  
Residential Center  
$146,625  
$180,000  
$393,400  
Miami  
West Central Juvenile  
Rehabilitation Center  
$340,000  
Butler County Juvenile  
Rehabilitation Center  
Montgomery Montgomery County Center $385,000  
for Adolescent Services  
Northern Ohio Juvenile  
Community Corrections  
Facility  
Perry  
Perry Multi-County Juvenile $340,000  
Facility  
Greene  
Lucas  
Miami Valley Juvenile  
Rehabilitation Center  
$515,000  
$741,430  
Stark  
Multi-County Juvenile  
Attention System  
$50,000  
$13,500  
Lucas County Youth  
Treatment Center  
Wood  
Juvenile Residential Center  
of Northwest Ohio  
December 2016  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
Ohio's nonfarm payroll employment decreased in October for the  
third straight month, while the state unemployment rate was 4.9%, the  
same as the U.S. as a whole (in October). Employment in the state is still  
growing year over year, but at the slowest pace in over three years. A  
new report from the Bureau of Economic Analysis (BEA) estimated that  
economic production in Ohio rose in the second quarter, but decreased  
on balance during the first half of 2016 by 0.5% (seasonally adjusted  
annual rate). According to the Federal Reserve's survey in October and  
early November of businesses in the region, total economic activity rose  
slightly during the period, but auto assembly plant production was  
down more than 5% year over year, and retail sales were down in  
general.  
The national  
unemployment  
rate fell to 4.6%  
in November,  
lowest since  
2007.  
Somewhat in contrast, newly reported nationwide economic  
indicators were mostly positive. The national unemployment rate fell to  
4
.6% in November, lowest since 2007. Nationwide sales of existing homes  
in October posted the strongest seasonally adjusted rate in nearly a  
decade. Nationwide sales of motor vehicles remained strong through  
November. Due in part to the strength of those figures, at the conclusion  
of its meeting on December 13-14, the Federal Reserve is widely expected  
to raise its target for short-term interest rates for only the second time  
since the end of the Great Recession.  
The National Economy  
Employment and Unemployment  
The national unemployment rate fell to 4.6% in November, its  
lowest rate since 2007 (see chart below). Employment gains and  
1
1
decreases in the labor force in back-to-back months led to the drop from  
5
measured as the percent of the labor force that is unemployed.  
.0% in September and 4.9% in October. The unemployment rate is  
11 The labor force is the number of civilians age 16 and over who are  
either currently employed or unemployed but looked for work in the last four  
weeks.  
Budget Footnotes  
28  
December 2016  
Ohio Legislative Service Commission  
Chart 5: Unemployment Rate and Monthly Employment Change  
1
1
1
0
9
8
7
6
5
4
3
600  
400  
200  
0
(200)  
(400)  
(600)  
(800)  
(1,000)  
2
007 2008 2009 2010 2011 2012 2013 2014 2015 2016  
Nonfarm Payroll Employment Change (right scale) Unemployment Rate  
Nationwide  
employment  
has increased  
The U.S. added 178,000 jobs12 in November, continuing a streak of  
4 straight months with employment gains. The pace of job growth in  
7
2
016 has averaged 180,000 per month with only May (low) and June and in 74 straight  
July (high) as significant outliers.  
months.  
The largest November gains among industries came in professional  
and business services (+63,000), and education and health services  
(+44,000), while information services (-10,000), and manufacturing (-4,000)  
lost jobs. The biggest change from prior employment trends came in the  
retail trade, which lost 8,000 jobs in November, but had gained 223,000  
since November one year ago.  
Average hourly earnings among private, nonfarm employees  
dipped in November after ten straight months of increases. Overall,  
earnings for these workers still grew 2.5% in the last 12 months.  
Production  
U.S. economic output expanded more in the third quarter of 2016  
than previously thought. The BEA estimated that inflation-adjusted gross  
domestic product (real GDP) grew at a 3.2% annual rate1 during the  
quarter, faster than any other quarter in two years. (The BEA had  
previously reported 2.9% growth using preliminary data.) The jump can  
be attributed in part to higher exports of goods, which increased at a  
3
1
4.2% rate from the second quarter. Exports of soybeans saw a  
12 Nonfarm payroll, seasonally adjusted.  
13 Seasonally adjusted.  
December 2016  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
particularly large jump, a development which was not expected to  
continue at that pace in the future. Despite the jump in quarterly  
production, 12-month economic growth remained below 2% for the  
fourth straight quarter.  
Industrial production remained flat in October as the result of a  
decrease in output of utilities offsetting an increase in mining and a small  
increase in manufacturing. The increase in mining was the largest  
monthly increase since March 2014, while the decrease in utilities  
production was the result of warmer than usual temperatures reducing  
the demand for heating. In the bigger picture, manufacturing production  
remains lower than its level 12 months ago, according to the Federal  
Reserve's measure.  
Consumer Spending  
Real (price-adjusted) consumer spending increased slightly in  
October and over the last 12 months, grew 2.8%, a similar pace to growth  
in 2015. In particular, spending continues to increase the most for  
durable goods. Spending growth in 2016 has been buoyed by growth in  
real disposable personal income, which increased 2.7% over the past  
1
2 months.  
Nationwide sales of motor vehicles remained strong through  
November. Annual sales of light vehicles were a record high in 2015;  
with one month to go in 2016, total sales are not far off the record pace.  
Driven in part by low gas prices, light trucks and SUVs continue to be  
more popular than ever, keeping average sales prices high. In November,  
Kelley Blue Book estimated the average transaction price for light  
vehicles was $34,948.  
Real Estate  
The residential real estate market was very strong across the  
country in October. Sales of existing homes (the bulk of the market)  
posted its strongest seasonally adjusted rate in nearly a decade, housing  
construction starts jumped to its highest tally since 2007, and sales of new  
homes remained solidly above the total one year ago. Sales of existing  
homes increased in all four regions of the country in each of September  
and October. Still, it remains to be seen if the strong pace will last as costs  
continue to rise. The nationwide median existing home sales price was  
Unit sales of  
existing homes  
in October  
were highest in  
nearly a  
14  
decade.  
6
.0% higher in October than one year ago, far exceeding the pace of  
income growth. Mortgage rates, which have been low all year, are  
14 The National Association of Realtors splits the country into Northeast,  
Midwest, South, and West regions for existing home sales reporting purposes.  
Budget Footnotes  
30  
December 2016  
Ohio Legislative Service Commission  
beginning to rise as well. The average rate for a 30-year fixed rate  
mortgage climbed above 4.0% in the last week of November for the first  
time all year, according to Freddie Mac's Primary Mortgage Market  
Survey.  
Inflation and Monetary Policy  
Broad measures of consumer prices all indicated increases in  
October, as has been the case for most of the year. In September and  
October, consumer price increases were driven by gasoline prices, a  
notoriously volatile segment. Measures of "core" prices, which exclude  
volatile prices of food and energy products, have been rising steadily all  
year. Over the last 12 months ended in October, the price index for  
personal consumption expenditures (PCE) excluding food and energy  
increased 1.7%. Among consumer price index components, the largest  
increases in major categories during the last 12 months were for medical  
care and utility gas service. The largest price decreases during that time  
were for used cars and trucks.  
The Federal Open Market Committee (FOMC)15 is scheduled to  
meet on December 13 and 14, shortly after production of this newsletter.  
At the conclusion of the meeting, the FOMC is widely expected to raise its  
target for short-term interest rates for only the second time since the end  
of the Great Recession. In testimony to Congress on November 17,  
Chair Janet Yellen said: "the Committee judged [at its meeting earlier in  
November] that . . . an increase could well become appropriate relatively  
soon . . . ." Financial markets have taken that, and other indicators, to  
mean a rate rise in December is on the way.  
The Ohio Economy  
Employment and Unemployment  
In October,  
Ohio lost 2,800 jobs16 in October, continuing an autumn malaise in  
the state's labor market. Ohio has lost more jobs than it gained in each of  
the last three months. Overall during 2016, job gains continue to be  
positive in Ohio, but the pace of growth has slowed. Average monthly job  
gains during the first ten months of 2016 was 2,100, while the average was  
Ohio lost jobs  
for the third  
straight month.  
6
,700 during all of 2015.  
15 The FOMC is the body within the Federal Reserve that meets eight  
times a year to determine the appropriate stance of monetary policy.  
16 Nonfarm payroll employment, seasonally adjusted.  
December 2016  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
The chart below illustrates the pace of year-over-year job growth  
in Ohio and the U.S. since the beginning of 2011. While in the midst of an  
usually long period of sustained job growth, the pace of growth has  
slowed for both regions since the beginning of 2015. In October, Ohio's  
year-over-year job growth dropped to its lowest level since March  
of 2013.  
Chart 6: 12-Month Nonfarm Employment Change  
3
2
2
1
1
0
0
.0%  
.5%  
.0%  
.5%  
.0%  
.5%  
.0%  
2
011  
2012  
2013  
Ohio  
2014  
2015  
2016  
United States  
Job growth in Ohio over the last five years has largely been  
concentrated in private service-providing sectors, but in recent months  
job growth in those areas has slowed. Over the last three months, private  
service-providing sectors in Ohio have lost a net of 10,600 jobs, and job  
growth year over year in those areas has slowed to 1.0%. Among  
industries, administrative support and waste services lost the most net  
jobs in October (-5,100), as well as the last 12 months (-13,100).  
Ohio's year-  
over-year job  
growth  
dropped to  
the lowest  
level since  
March 2013.  
The unemployment rate in Ohio ticked up in October to 4.9%,  
even as another large monthly decrease in the labor force was reported.  
That rate matched the U.S. rate in October, as well as Ohio's  
unemployment rate in January 2016. In October, 280,000 Ohioans were  
estimated to be unemployed.  
Budget Footnotes  
32  
December 2016  
Ohio Legislative Service Commission  
State Production  
Production in Ohio grew by 1.9% in the second quarter of 2016  
(seasonally adjusted annual rate), which ranked in the top half of states.  
However, the BEA also estimated that production in Ohio decreased by  
Ohio's state  
2
increased 1.4%. The major downward revision results in Ohio's year-over-  
year production growth rate remaining between 0.5% and 0.9% in each of  
.9% in the first quarter, which had previously been estimated to have  
GDP declined  
2
.9% in the first  
the last four quarters (see chart below). The decrease in production during quarter of  
the first quarter was unexpected, but not unusual; it was the eighth  
quarter since the end of the recession in which Ohio's production  
decreased by at least 1.0% (annual rate). However, Ohio has lacked a  
quarter with a big production increase of late. Not since the third quarter  
of 2014 has Ohio had a quarter with production growth over 4.0%.  
2
016.  
Chart 7: Ohio Real GDP Growth  
1
0.0%  
8
6
4
2
0
.0%  
.0%  
.0%  
.0%  
.0%  
-2.0%  
-4.0%  
-6.0%  
Single Quarter (Seasonally Adjusted Annual Rate)  
12-Month Growth  
Among industries, Ohio's real estate rental and leasing, and  
transportation and warehousing contributed the most to positive GDP  
growth during the second quarter (taking into account both size of  
industry and growth rates). The two largest negative contributions by  
industry came from mining, which has been declining for some time now,  
and the retail trade, which was more unexpected.  
Regional Economy  
Economic activity in the region increased slightly during the  
period from early October to mid-November, according to the Federal  
December 2016  
33  
Budget Footnotes  
Ohio Legislative Service Commission  
Reserve Bank of Cleveland's most recent report.17 The report also  
mentioned the following:  
Manufacturing production was reported as generally stable,  
though year-to-date auto assembly plant production through  
September was down more than 5% from the same period in 2015.  
Sales of new motor vehicles continue to decline, but sales of used  
vehicles are up from one year ago.  
The number of  
drilling rigs in  
the Marcellus  
and Utica  
Retail sales were down due in part to warm weather depressing  
winter related sales and continued increasing competition from  
Internet retailers.  
The number of drilling rigs operating in the Marcellus and Utica  
shales continues to increase slowly as wellhead prices rise.  
shales  
continues to  
increase slowly.  
Commercial construction activity moved higher, while real estate  
agents cited low existing-home inventory as the primary factor  
driving up prices in the residential market.  
A number of businesses reported that the results of the presidential  
election increased uncertainty in the future.  
Housing  
Year-over-year volume growth of Ohio home sales slowed in  
October relative to prior months, but average sale price spiked. This  
scenario matches the Beige Book description of high residential prices in  
the region driven by low inventory. Overall, 2016 remains a very strong  
year for residential real estate in the state. Statewide unit sales volume  
was up 4.4% through October from the period one year ago, and average  
sales price during the period was $164,067, a 4.8% increase year over  
year.  
1
7
Prior to meetings of the FOMC, the Federal Reserve publishes the  
Beige Book, which reports on regional economic activity in each of the central  
bank's 12 districts. The Federal Reserve Bank of Cleveland's district includes all  
of Ohio and parts of Kentucky, Pennsylvania, and West Virginia. Information in  
the latest report was collected on or before November 18, 2016.  
Budget Footnotes  
34  
December 2016