Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
JANUARY 2017  
VOLUME 40, NUMBER 5  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................13  
HIGHLIGHTS  
Ross Miller, Chief Economist, 614-644-7768  
ISSUE UPDATES  
GRF tax revenue was below estimate again in December.  
Medicare Part D Clawback  
For the first half of FY 2017, tax revenue was $296.6 million  
below estimate, due to weakness in the two main sources of  
tax revenue (see bullets below). December saw very weak  
Payments .............................22  
K-12 Student Count Data.........22  
OhioMeansJobs Workforce  
Supply Tool ..........................23  
withholding revenue under the income tax; monthly Economic Development  
Compliance Report...............24  
withholding revenue was nearly $28 million below  
December 2015. Withholding rates were the same in both  
months, implying that Ohio payrolls were smaller this year  
than last. This month's "Tracking the Economy" article  
includes a comparison of recent economic forecasts for key  
variables with the forecasts on which the budget for the  
current biennium was based, shedding some light on  
revenue weakness.  
Vocational Rehabilitation  
Employment .........................25  
Youth Deer Hunting Season....25  
Major/New Highway  
Construction Projects ...........27  
Justice Assistance Grant  
Awards .................................27  
TRACKING THE ECONOMY  
The National Economy ............30  
The Ohio Economy..................33  
Through December 2016, GRF sources totaled  
$17.09 billion:  
Revenue from the personal income tax was  
$182.9 million below estimate;  
Sales and use tax receipts were $104.9 million below  
estimate.  
Through December 2016, GRF uses totaled $18.44 billion:  
Legislative Service Commission  
Program expenditures were $412.2 million below  
estimate, due primarily to Medicaid ($404.6 million);  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
Negative variances in several other spending  
categories were partially offset by a $75.3 million  
positive variance in primary and secondary  
education.  
Telephone: 614-466-3615  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of December 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on January 3, 2017)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$106,935  
$109,700  
-$2,765  
-2.5%  
Nonauto Sales and Use  
Total Sales and Use Taxes  
$865,217  
$858,700  
$6,517  
0.8%  
$972,152  
$968,400  
$3,752  
0.4%  
Personal Income  
$780,798  
$471  
$810,300  
$0  
-$29,502  
$471  
-3.6%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
-$5,290  
$168  
$200  
-$5,490  
-$232  
$1,368  
$490  
-2744.9%  
-58.0%  
6.5%  
---  
$400  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
$22,268  
$490  
$20,900  
$0  
$8,059  
$1,317  
$59  
$9,200  
$1,800  
-$600  
$0  
-$1,141  
-$483  
$659  
-12.4%  
-26.8%  
109.8%  
---  
$0  
$0  
$0  
$0  
$0  
---  
$79,494  
$5,189  
$3,831  
$123  
$87,100  
$5,100  
$3,800  
$0  
-$7,606  
$89  
-8.7%  
1.8%  
0.8%  
---  
Alcoholic Beverage  
Liquor Gallonage  
$31  
Estate  
$123  
Total Tax Revenue  
$1,869,129  
$1,906,600  
-$37,471  
-2.0%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$5  
$671  
$0  
$855  
$5  
-$184  
-$157  
-$336  
---  
-21.5%  
-7.8%  
$1,841  
$2,517  
$1,998  
$2,853  
Total Nontax Revenue  
-11.8%  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$16,794  
$16,794  
$0  
$0  
$0  
$0  
$16,794  
$16,794  
---  
---  
---  
TOTAL STATE SOURCES  
Federal Grants  
$1,888,439  
$1,194,908  
$3,083,347  
$1,909,453  
$1,071,499  
$2,980,952  
-$21,013  
$123,408  
$102,395  
-1.1%  
11.5%  
3.4%  
TOTAL GRF SOURCES  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
January 2017  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2017 as of December 31, 2016  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on January 3, 2017)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
TAX REVENUE  
Auto Sales  
$689,237  
$698,600  
-$9,363  
-1.3%  
$675,971  
2.0%  
Nonauto Sales and Use  
$4,642,461  
$4,738,000  
-$95,539  
-2.0%  
$4,558,527  
1.8%  
Total Sales and Use Taxes  
$5,331,698  
$5,436,600  
-$104,902  
-1.9%  
$5,234,498  
1.9%  
Personal Income  
$3,987,894  
-$265  
$4,170,800  
$0  
-$182,906  
-$265  
-4.4%  
---  
$4,202,479  
$13,070  
-$8,360  
$51,619  
$171,617  
$17,164  
$612,755  
$3,362  
-5.1%  
-102.0%  
-81.7%  
-7.9%  
Corporate Franchise  
Financial Institution  
Public Utility  
-$15,191  
$47,555  
$182,706  
$16,929  
$618,715  
$2,860  
-$8,000  
$51,100  
$162,800  
$17,000  
$639,700  
$3,000  
-$7,191  
-$3,545  
$19,906  
-$71  
-89.9%  
-6.9%  
12.2%  
-0.4%  
-3.3%  
-4.7%  
3.2%  
-86.7%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
6.5%  
-1.4%  
-$20,985  
-$140  
1.0%  
-14.9%  
10.4%  
-84.5%  
-1723.5%  
-6.2%  
$161,032  
$53  
$156,100  
$400  
$4,932  
-$347  
$145,911  
$344  
-$678  
$0  
-$678  
$42  
$438,905  
$30,731  
$23,231  
$457  
$442,800  
$28,500  
$22,400  
$0  
-$3,895  
$2,231  
$831  
-0.9%  
7.8%  
3.7%  
---  
$468,091  
$28,976  
$22,407  
$823  
Alcoholic Beverage  
Liquor Gallonage  
6.1%  
3.7%  
Estate  
$457  
-44.5%  
-1.3%  
Total Tax Revenue  
$10,826,630  
$11,123,200  
-$296,570  
-2.7%  
$10,964,797  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$14,199  
$12,014  
$52,887  
$79,100  
$8,500  
$10,830  
$47,588  
$66,918  
$5,699  
$1,184  
$5,300  
$12,182  
67.0%  
10.9%  
11.1%  
18.2%  
$7,932  
$9,837  
79.0%  
22.1%  
38.8%  
41.6%  
$38,099  
$55,868  
Total Nontax Revenue  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$32,102  
$32,102  
$0  
$22,300  
$22,300  
$0  
$9,802  
$9,802  
---  
44.0%  
44.0%  
$0  
$182,688  
$182,688  
---  
-82.4%  
-82.4%  
TOTAL STATE SOURCES  
Federal Grants  
$10,937,832  
$6,147,200  
$17,085,032  
$11,212,418  
$6,483,953  
$17,696,371  
-$274,585  
-$336,753  
-$611,339  
-2.4%  
-5.2%  
-3.5%  
$11,203,354  
$6,322,788  
$17,526,141  
-2.4%  
-2.8%  
-2.5%  
TOTAL GRF SOURCES  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
January 2017  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Jean J. Botomogno, Principal Economist, 614-644-7758  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
As shown by the underperformance of personal income and sales  
taxes, the two largest GRF tax sources, FY 2017 has been characterized by  
an apparent weakness in the Ohio economy compared to prior  
expectations. Through December, FY 2017 GRF sources of $17.09 billion  
were $611.3 million below the estimate released by the Office of Budget  
and Management (OBM) in August 2016. In addition to a shortfall of  
GRF tax  
1
revenue was  
$
37.5 million  
below estimate $296.6 million from tax sources, federal grants were $336.8 million below  
estimate. Total GRF sources have been below estimate throughout  
in December.  
FY 2017 due to a combination of tax revenue shortfalls and smaller than  
expected federal grants, primarily related to the level of spending in the  
2
Medicaid program, which has generally been lower than expected.  
Tables 1 and 2, show GRF sources for December and for FY 2017 through  
December, respectively.  
For the month of December, GRF sources were $102.4 million  
above estimate, with federal grants above estimate by $123.4 million.  
However, GRF tax revenue was below estimate by $37.5 million. Sales  
tax revenue and kilowatt-hour tax revenue were above projection by  
$
3.8 million and $1.4 million respectively, but that was more than offset  
by a $29.5 million shortfall for the personal income tax (PIT). The  
cigarette and other tobacco products tax, the financial institutions tax  
(FIT), and the commercial activity tax (CAT) also fell short of estimates  
by $7.6 million, $5.5 million, and $1.1 million, respectively.  
In the first half  
of FY 2017, GRF  
tax revenue was  
GRF tax revenue generally has been tracking below estimate  
during FY 2017. The first quarter of the fiscal year ended with a  
cumulative shortfall of $71.9 million (1.3%). Tax revenue performance  
deteriorated further in the second quarter, such that the first half of  
FY 2017 ended $296.6 million (2.7%) below estimate. The primary culprit  
was the PIT, from which revenue was $182.9 million below estimate  
through December. The sales and use tax was little better though:  
$296.6 million  
below estimate.  
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 Medicaid spending from the GRF was $404.6 million below estimates in  
the first half of FY 2017.  
Budget Footnotes  
4
January 2017  
Ohio Legislative Service Commission  
revenue from that tax was $104.9 million below estimate during the same  
period.  
Though the first half of the fiscal year was highlighted by the  
underperformance of the PIT and the sales and use tax, other tax sources  
3
that contributed significantly to the shortfall were the CAT, the FIT, the  
cigarette tax, and the public utility tax. Partially offsetting those deficits  
were surpluses from the kilowatt-hour tax, the foreign insurance tax, and  
the alcoholic beverage tax.  
The chart below depicts the declining performance of tax revenue  
on a monthly basis (smoothed with a three-month average). Significant  
underperformance began in the last quarter of FY 2016. OBM reduced its  
revenue estimates for FY 2017, as compared with the forecast for the  
current biennial budget, due to the FY 2016 underperformance. But  
though the accommodating adjustments made to OBM's estimates for  
FY 2017 initially limited the deficits, by this fiscal year's second quarter,  
tax revenue was underperforming even those lowered expectations.  
Chart 1: GRF Tax Revenue Performance Relative to Estimate  
(
Three-month Moving Average)  
FY 2017  
6
4
2
0
.0%  
.0%  
.0%  
.0%  
-2.0%  
-4.0%  
-6.0%  
-8.0%  
In the first half  
of FY 2017, GRF  
sources were  
$
611.3 million  
below  
The following chart illustrates the cumulative performance of total  
GRF sources relative to estimates through each month of FY 2017, broken estimate.  
down by its largest components. Despite a small positive contribution  
from the "other state revenue" component (light blue bar in the online  
3 The GRF typically pays out refunds under the FIT during the first half of  
a fiscal year as taxpayers make adjustments to previous tax filings. Receipts of  
the FIT are typically expected at the end of January, March, and May.  
January 2017  
5
Budget Footnotes  
Ohio Legislative Service Commission  
version of the chart), the GRF's cumulative sources were $611.3 million  
below estimate through the first half of FY 2017, as labeled in the far right  
column.  
Chart 2: GRF Source Fiscal Year Cumulative Performance  
by Component  
Jul-16  
Aug-16  
Sep-16  
Oct-16  
-$262.2  
Nov-16  
Dec-16  
$
100  
$
0
-
$17.2  
-$100  
-$200  
-$300  
-$400  
-$500  
-$600  
-$700  
-$800  
-
$145.4  
-
$235.0  
-
$611.3  
-
$713.7  
Federal Grants  
Tax Revenue  
Other State Revenue  
Compared to the first half of FY 2016, tax revenue in FY 2017 was  
138.2 million (1.3%) lower. The majority of the decrease can be  
$
attributed to the PIT, which collected $214.6 million less thus far in  
FY 2017. Though sales and use tax revenue has been significantly below  
estimate in FY 2017, revenue was still $97.2 million higher than in the  
first half of FY 2016.  
Sales and Use Tax  
Sales and use  
tax receipts  
were  
The sales and use tax in December was above estimate for the  
first time in FY 2017. A slight positive variance from the nonauto sales  
tax was partially offset by a smaller negative variance from the auto  
portion of the tax. Overall, GRF monthly sales and use tax revenue of  
$
104.9 million  
$
(
972.2 million was $3.8 million (0.4%) above estimate, and $49.0 million  
5.3%) above revenue in the same month last year. For the fiscal year to  
date, GRF sales and use tax receipts of $5.33 billion were $104.9 million  
1.9%) below projections (with both sources below estimates), but  
97.2 million (1.9%) above receipts in FY 2016 through December. The  
below  
estimates in  
the first half of  
FY 2017.  
(
$
sales and use tax is the largest state sourced revenue stream to the GRF.  
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  
Budget Footnotes  
6
January 2017  
Ohio Legislative Service Commission  
from leases are paid at the lease signing and are mostly recorded under  
4
the nonauto tax instead of the auto tax.  
Nonauto Sales and Use Tax  
Nonauto sales and use tax revenue to the GRF was $865.2 million in  
December, which was $6.5 million (0.8%) above estimate. Collections from  
this segment of the tax had been below estimate in the first five months of  
this fiscal year. Comparing revenue, month by month, to revenue from the  
same month a year ago reveals growth, but growth that was steadily Nonauto sales  
declining until this month. For FY 2017 through December, nonauto sales and use tax  
and use tax revenue of $4.64 billion was $95.5 million (2.0%) below revenue was  
expectations, though receipts were $83.9 million (1.8%) above receipts in the $95.5 million  
first half of FY 2016. The chart below illustrates the year-over-year growth of below estimate  
nonauto sales and use tax collections and its failure to meet estimates in the  
last 12 months. December nonauto sales and use tax revenue experienced a through  
boost from receipts attributed to Medicaid health insuring corporations December in  
(MHICs). Through November in FY 2017, revenue from these corporations FY 2017.  
had declined 0.4% compared to receipts in the corresponding period in  
FY 2016. However, at the end of December, total MHIC receipts ended up  
5.1% above receipts in the first half of FY 2016. 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.  
Chart 3: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
7
6
5
4
3
2
1
0
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Actual  
Estimate  
4 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.  
January 2017  
7
Budget Footnotes  
Ohio Legislative Service Commission  
Auto Sales and Use Tax  
First-half receipts from the auto sales and use tax in FY 2017 of  
First-half auto  
sales and use  
tax revenue  
$689.2 million were $9.4 million (1.3%) below estimate, but $13.3 million  
(2.0%) above revenue in the corresponding period in FY 2016. For the  
month of December, the GRF received $106.9 million from this tax. This  
amount was $2.8 million (2.5%) below expectations, and $1.8 million  
was $9.4 million  
(1.6%) below receipts in the same month in 2015. As the chart below  
below estimate illustrates, the pace of collections growth fell off sharply in the spring of  
2
016, and year-over-year growth in FY 2017 has picked up in recent  
in FY 2017.  
months, but not as much as anticipated.  
Chart 4: 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%  
In December, nationwide light vehicle (auto and light truck) sales  
capped off the year on a strong note, and ended 2016 with total sales of  
7.5 million units, matching the record year of 2015. Most notably in  
1
calendar year (CY) 2016, low gasoline prices and rising construction  
spending boosted light-truck sales relative to cars, resulting in a bumper  
year for that category: light-truck sales were 10.6 million units, 7% above  
sales in 2015, and a record 61% of light vehicle sales. On the other hand,  
sales of cars were 6.9 million units, 9% below unit sales in the previous  
calendar year. For CY 2016, though the total number of light vehicles  
sold nationwide was roughly the same as in 2015, the mix of sales has  
driven the average vehicle price higher this year.  
Budget Footnotes  
8
January 2017  
Ohio Legislative Service Commission  
Personal Income Tax  
PIT GRF revenue was $780.8 million, $29.5 million (3.6%) below  
estimate in December, the fifth straight month the tax has missed  
projections. Receipts were also $68.9 million (8.1%) below revenue in  
December 2015. First-half GRF revenue from the PIT of $3.99 billion was  
FY 2017 PIT  
revenue was  
$
below PIT revenue in the corresponding period in FY 2016.  
182.9 million (4.4%) below OBM's estimate, and $214.6 million (5.1%)  
$
182.9 million  
below estimate  
through  
PIT revenue is comprised of gross collections, minus refunds and  
distributions to the Local Government Fund (LGF). Gross collections  
consist of employer withholdings, quarterly estimated payments, trust  
5
December.  
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.  
Similarly to previous months, this component again missed projections in  
December, this time by $34.3 million (4.4%), and revenue from employer  
withholdings fell by 3.9% compared to that of December 2015. Refunds  
had been another PIT component responsible for poor revenue this year,  
but for the month, refunds were $5.1 million (14.5%) lower than  
anticipated.  
For FY 2017 through December, the PIT revenue shortfall was  
mostly due to a negative variance of $144.1 million (3.4%) in employer  
withholdings. Refunds were $43.9 million (17.1%) higher than expected,  
thereby also contributing to the negative variance. In addition to the  
Revenue from  
employer  
shortfall in employer withholding, collections from miscellaneous withholding was  
payments and trusts were also below anticipated revenue, by  
$
144.1 million  
$
was higher than expected for quarterly estimated payments ($6.5 million)  
and annual returns ($10.0 million).  
12.6 million and $3.8 million, respectively. On the other hand, revenue  
below estimate  
in FY 2017  
through  
Payrolls continue to grow year over year. Policy changes, which led  
to reduced withholding rates, took effect in August 2015 and limited year- December.  
over-year growth of employer withholdings throughout FY 2016. The  
chart below illustrates the growth of monthly employer 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  
5 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.  
January 2017  
9
Budget Footnotes  
Ohio Legislative Service Commission  
FY 2017 estimates. Through December, FY 2017 withholding growth was  
almost flat.  
Chart 5: 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  
-
1.0%  
2.0%  
-
FY 2017 revenues through December 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.  
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  
Percentage  
Amount  
Percentage  
(
$ in millions)  
(%)  
($ in millions)  
(%)  
Withholding  
-$144.1  
$6.5  
-3.4%  
2.3%  
$6.1  
-$133.8  
-$7.5  
0.1%  
-31.9%  
-38.0%  
-20.9%  
-22.3%  
-3.6%  
Quarterly Estimated Payments  
Trust Payments  
-$3.8  
-23.8%  
12.9%  
-31.5%  
-3.1%  
17.1%  
-2.6%  
-4.4%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
$10.0  
-$12.6  
-$144.0  
$43.9  
-$5.0  
-$23.2  
-$7.9  
-$166.4  
$44.9  
Less Refunds  
17.6%  
1.8%  
Less LGF Distribution  
GRF PIT Revenue  
$3.3  
-$182.9  
-$214.6  
-5.1%  
Cigarette and Other Tobacco Products Tax  
For the first time in the fiscal year, year-to-date cigarette and other  
tobacco products tax fell below estimate. December GRF revenue from  
the cigarette and other tobacco products tax of $79.5 million was  
$
7.6 million (8.7%) below estimate and $11.7 million (12.9%) below  
revenue in December 2015. The size of the underperformance suggests it  
Budget Footnotes  
10  
January 2017  
Ohio Legislative Service Commission  
is likely timing-related. For the first half of FY 2017, receipts from the tax  
were $438.9 million, $3.9 million (0.9%) below estimate. Of the total  
revenue, $407.3 million was from sales of cigarettes and $31.6 million was  
from sales of other tobacco products. Compared to the first six months of  
FY 2017  
revenue from  
FY 2016, receipts in FY 2017 were $29.2 million (6.2%) lower. Generally, the cigarette  
cigarette tax receipts are trending downward long-term; however,  
legislative changes led to 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.  
tax was  
6
$
3.9 million  
below  
estimate.  
Commercial Activity Tax  
December GRF revenue of $8.1 million from the CAT was  
$
1.1 million (12.4%) below estimate, and $2.3 million (22.1%) below  
revenue in December 2015. For the fiscal year to date, GRF receipts of  
618.7 million were $21.0 million (3.3%) below estimate, and $6.0 million  
1.0%) above receipts in the corresponding period last year, but only  
$
(
because refunds claims were $22.5 million less this fiscal year.  
FY 2017  
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  
revenue from  
the CAT was  
below estimates in FY 2016, and actual all-funds revenue was slightly $21.0 million  
below FY 2015's total. Weakness in collections has continued this fiscal  
below  
year. According to OAKS, first-half gross collections were about 1.7%  
below those in the corresponding period in FY 2016. The CAT is the third  
estimate.  
largest GRF tax revenue source.  
Other Taxes  
The foreign insurance tax generated $161.0 million during the first  
half of FY 2017, $4.9 million (3.2%) above estimate. This tax is paid by  
insurance companies headquartered in other states, based on premiums  
they receive to provide insurance covering risks located in Ohio. The  
revenue experience so far this year, while positive, reveals little about the  
full fiscal year experience from the tax: payments received so far represent  
advance payments based on previous year tax liabilities before credits.  
Similarly, a very slight negative variance for the domestic insurance tax  
(paid by insurance companies headquartered in Ohio) says little about the  
6
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%.  
January 2017  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
full year experience: virtually all revenue from the tax is received in May  
and June each fiscal year.  
The kilowatt-hour tax generated $182.7 million during the first six  
months of the year. This was $19.9 million (12.2%) above estimate, and  
.5% higher than revenue during the comparable months of FY 2016. The  
tax base generally is kilowatt hours of electricity used, i.e., it generally  
does not depend on the price of electricity. A small part of the positive  
variance, about $2 million to $3 million, is due to the overall poor  
performance of GRF taxes overall this year. Half of the allocation of GRF  
tax revenue to the Public Library Fund is debited against this tax for  
accounting purposes, thus poor revenue performance overall makes this  
tax look good. The remaining positive variance is likely due to the warm  
autumn months, which may have increased household use of air  
conditioning.  
FY 2017  
6
revenue from  
the kilowatt-  
hour tax was  
$19.9 million  
above estimate.  
Budget Footnotes  
12  
January 2017  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of December 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run January 9, 2017)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$619,072  
$605,606  
$13,466  
2.2%  
$185,083  
$7,968  
$185,054  
$4,604  
$29  
$3,365  
0.0%  
73.1%  
2.1%  
Other Education  
Total Education  
$812,123  
$795,263  
$16,859  
Medicaid  
$1,646,073  
$105,419  
$1,565,872  
$120,053  
$80,201  
-$14,635  
$65,567  
5.1%  
-12.2%  
3.9%  
Health and Human Services  
Total Welfare and Human Services  
$1,751,492  
$1,685,925  
Justice and Public Protection  
General Government  
$212,975  
$31,984  
$187,227  
$32,307  
$25,748  
-$323  
13.8%  
-1.0%  
11.6%  
Total Government Operations  
$244,959  
$219,534  
$25,425  
Property Tax Reimbursements  
Debt Service  
$2,101  
$16,747  
$18,848  
$36,417  
$16,924  
$53,341  
-$34,317  
-$177  
-94.2%  
-1.0%  
Total Other Expenditures  
-$34,493  
-64.7%  
Total Program Expenditures  
$2,827,421  
$2,754,063  
$73,358  
2.7%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
---  
---  
---  
TOTAL GRF USES  
$2,827,421  
$2,754,063  
$73,358  
2.7%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
January 2017  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2017 as of December 31, 2016  
(
$ in thousands)  
(
Actual based on OAKS reports run January 9, 2017)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
Primary and Secondary Education  
Higher Education  
$4,083,012  
$1,145,504  
$46,299  
$4,007,742  
$75,270  
1.9%  
$4,086,573  
$1,113,119  
$38,575  
-0.1%  
2.9%  
$1,155,496  
$44,956  
-$9,992  
$1,343  
-0.9%  
3.0%  
1.3%  
Other Education  
20.0%  
0.7%  
Total Education  
$5,274,814  
$5,208,194  
$66,620  
$5,238,267  
Medicaid  
$9,110,179  
$673,799  
$9,514,816  
$726,487  
-$404,638  
-$52,688  
-$457,325  
-4.3%  
-7.3%  
-4.5%  
$9,302,506  
$662,487  
-2.1%  
1.7%  
Health and Human Services  
Total Welfare and Human Services  
$9,783,978  
$10,241,303  
$9,964,993  
-1.8%  
Justice and Public Protection  
General Government  
$1,108,123  
$198,523  
$1,098,084  
$210,213  
$10,039  
-$11,690  
-$1,651  
0.9%  
-5.6%  
-0.1%  
$1,017,087  
$184,762  
9.0%  
7.4%  
8.7%  
Total Government Operations  
$1,306,646  
$1,308,297  
$1,201,849  
Property Tax Reimbursements  
Debt Service  
$900,987  
$907,140  
$919,983  
$907,973  
-$18,996  
-$833  
-2.1%  
-0.1%  
-1.1%  
$898,795  
$880,798  
0.2%  
3.0%  
1.6%  
Total Other Expenditures  
$1,808,128  
$1,827,956  
-$19,829  
$1,779,593  
Total Program Expenditures  
$18,173,566  
$18,585,751  
-$412,185  
-2.2%  
$18,184,702  
-0.1%  
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  
$18,441,635  
$18,865,857  
-$424,221  
-2.2%  
$18,998,436  
-2.9%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
January 2017  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on January 6, 2017)  
Month of December 2016  
Year to Date Through December 2016  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
$95,435  
Percent  
Actual  
Estimate*  
Variance  
Percent  
$2,070,765  
$1,592,769  
$477,996  
$1,975,330  
$1,500,325  
$475,005  
4.8%  
6.2%  
0.6%  
$10,951,304 $11,512,507  
-$561,203  
-$374,931  
-$186,272  
-4.9%  
-4.1%  
-7.9%  
GRF  
$92,444  
$2,991  
$8,780,165  
$2,171,139  
$9,155,097  
$2,357,410  
Non-GRF  
Developmental Disabilities  
$191,099  
$48,040  
$211,275  
$50,373  
-$20,176  
-$2,333  
-9.5%  
-4.6%  
$1,244,897  
$285,945  
$958,952  
$1,315,687  
$290,331  
-$70,790  
-$4,386  
-5.4%  
-1.5%  
-6.5%  
GRF  
Non-GRF  
$143,059  
$160,903  
-$17,844  
-11.1%  
$1,025,357  
-$66,405  
Job and Family Services  
$15,680  
$4,347  
$31,885  
$14,212  
$17,672  
-$16,204  
-$9,865  
-$6,339  
-50.8%  
-69.4%  
-35.9%  
$109,741  
$38,481  
$71,260  
$162,327  
$64,094  
$98,233  
-$52,586 -32.4%  
-$25,613 -40.0%  
-$26,973 -27.5%  
GRF  
Non-GRF  
$11,333  
Health  
GRF  
$2,443  
$423  
$3,566  
$340  
-$1,123  
$83  
-31.5%  
24.4%  
-37.4%  
$14,025  
$1,947  
$14,226  
$1,704  
-$202  
$243  
-1.4%  
14.3%  
-3.5%  
Non-GRF  
$2,021  
$3,226  
-$1,206  
$12,078  
$12,523  
-$445  
Aging  
$665  
$365  
$300  
$720  
$422  
$298  
-$55  
-$57  
$2  
-7.6%  
-13.6%  
0.8%  
$3,866  
$1,963  
$1,902  
$4,224  
$1,971  
$2,252  
-$358  
-8.5%  
GRF  
-$8  
-0.4%  
Non-GRF  
-$350 -15.5%  
Mental Health and Addiction  
$516  
$129  
$387  
$627  
$200  
$427  
-$112  
-$71  
-$41  
-17.8%  
-35.4%  
-9.6%  
$2,925  
$1,677  
$1,247  
$2,605  
$1,620  
$985  
$320  
$57  
12.3%  
3.5%  
GRF  
Non-GRF  
$262  
26.6%  
Total GRF  
$1,646,073  
$635,095  
$1,565,872  
$657,532  
$80,201  
-$22,436  
5.1%  
$9,110,179  
$3,216,578  
$9,514,816  
$3,496,759  
-$404,638  
-$280,181  
-4.3%  
-8.0%  
Total Non-GRF  
-3.4%  
Total All Funds  
$2,281,168  
$2,223,403  
$57,765  
2.6%  
$12,326,757 $13,011,576  
-$684,819  
-5.3%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
January 2017  
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 January 6, 2017)  
December Year to Date Through December 2016  
Variance  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Estimate*  
$883,299  
$121,456  
$199,454  
$235,040  
$93,631  
$97,038  
$28,232  
$34,435  
$38,660  
$15,133  
$28,057  
$13,248  
$363,382  
$72,337  
Percent  
8.6%  
Actual  
Estimate*  
$5,372,293  
$735,404  
$1,267,783  
$852,270  
$603,674  
$589,101  
$174,728  
$221,977  
$230,564  
$100,383  
$166,737  
$85,208  
Variance Percent  
$959,555  
$126,467  
$186,511  
$243,247  
$89,658  
$63,648  
$24,766  
$29,885  
$92,567  
$11,107  
$31,267  
$9,303  
$76,256  
$5,011  
$5,111,667  
$748,128  
$1,203,613  
$761,087  
$559,974  
$454,864  
$169,830  
$196,953  
$312,356  
$87,566  
-$260,627  
$12,724  
-4.9%  
1.7%  
-5.1%  
4.1%  
-$12,943  
$8,207  
-6.5%  
3.5%  
-$64,170  
-$91,182 -10.7%  
-$43,700 -7.2%  
-$134,237 -22.8%  
-$4,898 -2.8%  
-$25,025 -11.3%  
$81,792 35.5%  
-$12,818 -12.8%  
$10,265 6.2%  
-$24,146 -28.3%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
-$3,973  
-$33,390  
-$3,466  
-$4,550  
-4.2%  
-34.4%  
-12.3%  
-13.2%  
$53,907 139.4%  
-$4,026  
$3,210  
-26.6%  
11.4%  
-29.8%  
-9.1%  
14.4%  
2.6%  
Medicare Part D  
Home Care Waivers  
ACA Expansion  
All Other  
$177,001  
$61,062  
-$3,945  
-$32,926  
$10,394  
$57,765  
$330,456  
$82,732  
$2,019,314  
$463,343  
$2,148,660  
$462,794  
-$129,346  
$548  
-6.0%  
0.1%  
-5.3%  
Total All Funds  
$2,281,168 $2,223,403  
$12,326,757 $13,011,576  
-$684,819  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
16  
January 2017  
Ohio Legislative Service Commission  
EXPENDITURES  
Russ Keller, Senior Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
Through December, FY 2017 GRF uses as a whole totaled  
$
in August 2016. GRF uses mainly consist of program expenditures but  
also include transfers out. Year-to-date GRF program expenditures were $424.2 million  
18.44 billion, $424.2 million (2.2%) below the estimate released by OBM GRF uses were  
$
18.17 billion, $412.2 million (2.2%) below estimate, while transfers out  
below estimate  
for the first half  
of FY 2017.  
were $268.1 million, $12.0 million (4.3%) below estimate. Tables 3 and 4  
show GRF uses for the month of December and for FY 2017 through  
December, respectively. GRF program expenditures for the month of  
December were $2.83 billion, $73.4 million (2.7%) above the estimate.  
There were no transfers out in December.  
Medicaid accounted for more than 95% of the total negative year-  
to-date variance in GRF uses. For the first half of FY 2017, GRF Medicaid  
expenditures were $404.6 million (4.3%) below estimate. Medicaid  
spending for December exceeded OBM's monthly estimate by  
$
80.2 million, which helped to narrow this year-to-date variance. Details  
on Medicaid expenditures are provided below.  
Health and Human Services had the second largest negative year-  
to-date variance after Medicaid at $52.7 million, of which $14.6 million  
occurred in the month of December. On the other hand, expenditures  
from the Primary and Secondary Education category were $13.5 million  
above estimate in December, which increased the category's positive year-  
to-date variance to $75.3 million. These variances are also discussed  
below.  
Elsewhere, property tax reimbursement payments were below  
estimate in December, by $34.3 million. This negative monthly variance  
reversed the category's year-to-date variance from a positive $15.3 million  
at the end of November to a negative $19.0 million at the end of  
December. The reimbursement payments based on the August 2016  
property tax settlement were largely completed by the end of November,  
so December's variance was expected.  
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  
January 2017  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
moneys. Overall, the federal and state shares of Medicaid expenditures  
are about 64% and 36%, respectively.  
Table 5 provides GRF and non-GRF Medicaid expenditures by  
agency. As seen from the table, across all funds Medicaid expenditures of  
$
2.28 billion in December were above estimate by $57.8 million (2.6%).  
GRF Medicaid expenditures of $1.65 billion were $80.2 million (5.1%)  
above estimate while non-GRF Medicaid expenditures of $635.1 million  
were $22.4 million (3.4%) below estimate. Through the first half of  
FY 2017, across all funds, Medicaid expenditures totaled $12.33 billion,  
$
684.8 million (5.3%) below the year-to-date estimate. GRF Medicaid  
expenditures were $9.11 billion, $404.6 million (4.3%) below estimate,  
while non-GRF Medicaid expenditures were $3.22 billion, $280.2 million  
(8.0%) below estimate.  
The Ohio Department of Medicaid (ODM) is primarily responsible  
for administering Medicaid, with the assistance of five other state  
agencies Developmental Disabilities, Job and Family Services, Health,  
Aging, and Mental Health and Addiction Services. As seen from Table 5,  
ODM, the largest agency within this program category, also had the  
largest year-to-date variance. Through the first half of FY 2017, ODM's  
GRF expenditures totaled $8.78 billion, which was $374.9 million (4.1%)  
below estimate, and its non-GRF expenditures totaled $2.17 billion,  
which was $186.3 million (7.9%) below estimate. Across all funds, ODM's  
expenditures were $561.2 million (4.9%) below the year-to-date estimate.  
All-funds Medicaid expenditures from the Department of  
Developmental Disabilities (DDD), the second largest agency within this  
program category, totaled $1.24 billion through the first half of FY 2017,  
which was $70.8 million (5.4%) below estimate. DDD's GRF Medicaid  
expenditures of $285.9 million were $4.4 million (1.5%) below the year-  
to-date estimate while its non-GRF year-to-date expenditures of  
For the first  
half of FY 2017,  
Medicaid  
expenditures  
were below  
estimate by  
$
684.8 million,  
including  
404.6 million  
$
from the GRF.  
$
959.0 million were $66.4 million (6.5%) 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, Managed Care had the largest negative  
variance for the year to date at $260.6 million (4.9%), shrinking notably  
from the end of the previous month due to a positive variance of  
$
76.3 million in December. The positive variance in December was  
caused by an expenditure of $138.8 million for health insurer fees. These  
fees had been estimated to total only $83.3 million and were originally  
planned for November. Continued lower-than-expected spending in  
other Managed Care areas offset much of this overage. As reported in  
previous issues of Budget Footnotes, the negative year-to-date variance in  
Budget Footnotes  
18  
January 2017  
Ohio Legislative Service Commission  
Managed Care has persisted through the first half of FY 2017 as actual  
managed care rates that ran through CY 2016 were lower than expected.  
The lower than forecasted managed care rates have also been the main  
driving force behind the negative variance in the ACA Expansion category  
(
$129.3 million, 6.0%). New rates took affect for CY 2017 on January 1.  
The negative year-to-date variance in Administration  
$134.2 million, 22.8%) continues to grow with a negative variance of  
33.4 million in December. Approximately $8.0 million of the December  
(
$
variance was due to ODM caseload driven contracts that have not been  
billing as frequently as anticipated. Notably, billing for ODM's 1915(i)  
home and community-based services plan contract has been late. Most of  
the remaining December variance in this category was from lower than  
expected spending by the Department of Job and Family Services  
(
(
$16.2 million) and the Department of Developmental Disabilities  
$7.0 million).  
The negative year-to-date variance for Hospitals ($91.2 million,  
1
0.7%) persisted through the first half of the year, but shrank slightly from  
November. During December, $134.3 million in hospital upper payment  
limit (UPL) payments and $37.2 million in physician UPL payments went  
out, $9.3 million more than planned. However, the payments remain  
under estimate year to date by $60.7 million. Hospital UPL allows the  
state to direct supplemental payments, up to the difference between the  
Medicare and the Medicaid amounts, to providers. Similarly, physician  
UPL provides direct supplemental payments to hospital-based physicians.  
The positive year-to-date variance in the Medicare Buy-In category  
($81.8 million, 35.5%) more than doubled due to a positive variance of  
$
53.9 million (139.4%) in December. The category's positive variance  
initially resulted from a larger than anticipated increase in Medicare  
Part B premiums for CY 2016. However, the large variance in December  
was mostly due to two payments being posted that month. The payment  
is due on the first of the month with a ten-day grace period. Whereas  
payments have been posting in the month due, ODM has begun making  
the payments a few days earlier, which causes them to post in the prior  
month. This new payment schedule may result in 13 payments being  
made during FY 2017. The Medicare Buy-in Program pays Medicare  
premiums, deductibles, and coinsurance for certain low-income Ohioans.  
January 2017  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
Health and Human Services  
Through December, expenditures from the Health and Human  
Services program category totaled $673.8 million. These expenditures  
were below estimate by $52.7 million (7.3%), of which $14.6 million  
occurred in the month of December. The Ohio Department of Job and  
Family Services (ODJFS) was the principal source for this variance as its  
year-to-date spending was $34.0 million below estimate. The Ohio  
Department of Health (ODH) and Ohio Department of Mental Health  
and Addiction Services (OMHAS) accounted for $9.4 million and  
$
3.5 million, respectively, of the category's total negative year-to-date  
variance.  
ODJFS expenditures were below estimate in 16 of 20 line items,  
Expenditures in led by item 600535, Early Care and Education ($7.4 million). Prior to  
December, this item had positive variances each month totaling  
the Health and  
$
1.3 million, but a negative variance of $8.7 million in December reversed  
Human  
that trend. This item is used in conjunction with other GRF and federal  
appropriation items for publicly funded child care. Also having  
significant negative year-to-date variances were item 600321, Program  
Support ($5.6 million), item 600416, Information Technology Projects  
Services  
category were  
below estimate  
by $52.7 million  
year to date.  
(
(
$5.4 million), and item 600410, TANF/State Maintenance of Effort  
$3.9 million). According to OBM, items 600321 and 600416 were below  
estimate due to timing issues, whereas disbursements from item 600410  
were below estimate due to lower than estimated program costs and a  
decrease in Ohio Works First caseloads.  
Year-to-date negative variances for ODH were widespread as  
9 of 21 line items were below the OBM estimate. The most prominent  
1
occurrences were for item 440418, Immunizations ($1.8 million), item  
4
4
40416, Mothers and Children Safety Net Services ($1.7 million), item  
40459, Help Me Grow ($1.6 million), and item 440473, Tobacco  
Prevention, Cessation, and Enforcement ($1.3 million).  
The principal source for lower than anticipated spending within  
the OMHAS budget was item 336423, Addiction Services Partnership  
with Corrections ($10.4 million), which was followed by item 336504,  
Community Innovations ($2.9 million), and item 336421, Continuum of  
Care Services ($2.2 million). The agency's negative variance was partially  
offset by a positive variance in item 336412, Hospital Services  
($8.5 million).  
Budget Footnotes  
20  
January 2017  
Ohio Legislative Service Commission  
Primary and Secondary Education  
GRF expenditures for Primary and Secondary Education were  
619.1 million in December, $13.5 million (2.2%) above estimate. For the  
first six months of FY 2017, program expenditures were $4.08 billion,  
The positive  
variance in  
Primary and  
$
$
75.3 million (1.9%) above the OBM estimate. The Ohio Department of  
Education (ODE) is the only agency in this program category. Both the Secondary  
monthly and year-to-date variances are largely attributable to item 200550,  
Education  
Foundation Funding, and to a lesser degree, item 200502, Pupil  
Transportation. Item 200550 was above estimate by $5.0 million in  
December and $72.4 million year to date. Item 200502 was above estimate  
continued to  
increase  
by $7.1 million in December and $10.8 million year to date. Both line items reaching  
disburse money based on a formula, and the expenditures often vary from  
estimate as data inputs (e.g., school district enrollment and property  
valuations) are received throughout the year. The positive year-to-date  
variances in items 200550 and 200502 were offset somewhat by the overall  
negative variance from ODE's other line items.  
$
75.3 million  
by the end of  
December.  
January 2017  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
CMS Releases Medicare Part D Clawback Payment Amounts  
for January through September 2017  
Ivy Chen, Principal Economist, 614-644-7764  
On October 28, 2016, the Centers for Medicare & Medicaid Services (CMS)  
released the January-September 2017 monthly Medicare Part D clawback payments per  
beneficiary for each state. Ohio's payment is to be $149.75. This is $8.72 higher than the  
$
141.03 assumed in H.B. 64. Based on a projected 208,483 beneficiaries each month  
subject to the clawback, Ohio's total clawback payments will be $10.9 million higher for  
the last two quarters of FY 2017 than what was anticipated ($8.72 per beneficiary per  
month x 208,483 beneficiaries x 6 months).  
The federal Medicare Prescription Drug Improvement and Modernization Act of  
2
003 (MMA) requires states to share the cost of Medicare prescription drug coverage  
(Medicare Part D) for individuals eligible for both Medicare and Medicaid (dual  
eligibles). Prior to MMA, state Medicaid programs covered these costs. The states' share  
of the costs that must be paid to the federal government is known as the "clawback."  
Clawback payments are made monthly to the federal Medicare Program. A state's  
monthly clawback amount is equal to the product of a three-part formula: (1) a state's  
monthly count of dual eligibles, (2) CMS's estimate of the state's share of its per capita  
expenditure (PCE) for Medicaid covered drugs, and (3) the phase-down percentage.  
Each state's PCE is estimated by first increasing the state's 2003 PCE amount by the  
estimated annual national growth in per capita prescription drug spending, and then  
multiplying that result by the state's federal reimbursement rate for the year. The  
phase-down percentage decreased from 90% in 2006 to 75% in 2015 and thereafter.  
ODE Began Using Current Year Student Count Data for State Foundation  
Payments to School Districts in November  
Jason Glover, Budget Analyst, 614-466-8742  
In the latter part of November 2016, the Ohio Department of Education (ODE)  
began using current year K-12 student count data in the calculation of FY 2017 state  
foundation payments to school districts. This marks the earliest point in the fiscal year  
that current year data has been used for funding purposes since the state transitioned to a  
Budget Footnotes  
22  
January 2017  
Ohio Legislative Service Commission  
student count based on annualized full-time equivalent (FTE) enrollment in FY 2015.7 In  
FY 2015 and FY 2016, current year data was not used for funding purposes until the latter  
parts of March and February, respectively. Until current year student count data is ready  
for use, ODE uses data from the prior year to calculate state foundation payments.  
In general, ODE attributed the earlier use of current year data to process  
improvements that have come about as the new student count reporting system has  
matured. For example, the student count process is now mostly automated. In the two  
previous years, as implementation issues were being resolved, manual data processing  
was required to a much greater degree. In addition, ODE implemented a system of  
nightly error reports that allow a district to receive immediate feedback if there are  
problems with the student count data it submits. Finally, ODE indicated that school  
districts have gained familiarity with the new reporting process and format, leading to  
quicker data reporting turnaround times.  
Statewide, there are approximately 1.7 million FTE students in the state funding  
system. In FY 2017, public districts and schools are slated to receive a total of  
$
8.07 billion in state foundation aid. State foundation payments are primarily funded  
through GRF revenues. A smaller portion is supported by lottery profits.  
State Debuts Online Workforce Supply Tool for In-Demand Jobs  
Edward M. Millane, Senior Budget Analyst, 614-995-9991  
In December, a new online tool to help businesses gauge the number of newly  
8
trained workers in in-demand fields debuted on the OhioMeansJobs website. The  
Workforce Supply Tool (WST) provides businesses with historical data on and a  
two-year projection for the number of graduates by education level for certain  
in-demand occupations in Ohio, as well as background data on the occupation,  
including actual earnings and the number of unemployment claims. WST users can  
select occupation information on a statewide basis or from any one of the six JobsOhio  
regions. WST currently includes information on 25 in-demand occupations, but,  
according to the Ohio Department of Higher Education (ODHE), will expand to include  
approximately 200 occupations early in 2017.  
7 Under the current methodology, students are counted based on the portion of the year  
they are enrolled in public education and residing in the district. For example, a full-time  
student who moves from one district to another one-quarter of the way through the school year  
will be counted as 0.25 FTE in the first district and 0.75 FTE in the second district. Prior to  
FY 2015, districts counted their students over a single week in October and then calculated the  
daily average.  
8 To access the tool, go to OhioMeansJobs.com, click on the "Get Started" links under  
either the "Individuals" or "Employers" sections and then click on the "Supply Tool" link or  
access the tool directly at https://workforcesupply.chrr.ohio-state.edu/.  
January 2017  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
WST is supported by a $180,000 State Workforce Education Alignment Project  
(
SWEAP) grant from the National Skills Coalition. In August 2015, the Controlling Board  
established appropriation for ODHE for that same amount under Fund 5FR0 line item  
35697, Workforce and Education Alignment Project, to fund the project. The project is a  
2
joint effort of ODHE, the Ohio Department of Job and Family Services, the Ohio  
Department of Education, and the Governor's Office of Workforce Transformation.  
Attorney General Releases Economic Development Compliance Report  
Jessica Murphy, Budget Analyst, 614-466-9108  
On November 22, 2016, the Ohio Attorney General's Office released its  
9
2
016 Economic Development Compliance Report, a required annual review of recipient  
compliance with the terms and conditions of state awards for economic development  
administered by the Ohio Development Services Agency (DSA). The report examined  
3
29 awards with a performance period ending in calendar year 2015. Of those  
recipients, 279 were determined to be substantially compliant, having met at least 90%  
of the performance metrics set forth in their award agreement. The remaining  
5
0 recipients were determined to be noncompliant. The performance metrics used to  
determine compliance included the degree to which a recipient met, as applicable, their  
commitments for creating or retaining jobs, training workers, or maintaining a certain  
hourly wage. The overall compliance rate was 84.8%.  
The report provides a breakdown of compliance rates for four main award  
categories: workforce training grants (100.0%), project grants (86.3%), tax credits  
(80.0%), and project loans (82.8%). The report also provides information on remedial  
actions taken by DSA, which includes seeking grant reimbursements totaling $643,570  
from eight recipients, reducing the tax credit rate or term for 15 recipients, and  
increasing the loan interest rate for five recipients.  
The table below shows the overall and award category compliance rates reported  
in the 2011-2015 reviews. Except for 2012, the rates have trended upward with the  
workforce training grant category consistently showing the highest compliance rate.  
Economic Development Award Recipient Compliance Rates, 2011-2015  
Award Category  
Workforce Training Grant  
Project Grant  
2011  
89.9%  
48.6%  
59.5%  
42.0%  
63.5%  
2012  
100.0%  
49.5%  
53.8%  
55.8%  
54.9%  
2013  
100.0%  
74.4%  
62.4%  
57.1%  
70.6%  
2014  
100.0%  
76.3%  
73.4%  
81.3%  
78.9%  
2015  
100.0%  
86.3%  
80.0%  
82.8%  
84.8%  
Tax Credit  
Project Loan  
OVERALL  
9 The full report is available at: http://www.ohioattorneygeneral.gov/Files/Publications-  
Files/Publications-for-Business/2016-Economic-Development-Accountability-Report.  
Budget Footnotes  
24  
January 2017  
Ohio Legislative Service Commission  
OOD Vocational Rehabilitation Program Results in  
Over 6,300 Employment Outcomes in FFY 2016  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
In October 2016, the Opportunities for Ohioans with Disabilities (OOD) agency  
announced that over 6,300 individuals secured employment (and therefore have been  
rehabilitated) through its Vocational Rehabilitation (VR) services in federal fiscal year  
(
increase from FFY 2015. OOD saw the average cost per rehabilitation fall from $8,800 in  
FFY 2015 to $7,500 in FFY 2016 and the average time to rehabilitation drop from  
FFY) 2016. VR services were provided that year to nearly 30,000 individuals, a 3.9%  
2
$
2.8 months to 19.4 months. On average, a rehabilitated worker earned approximately  
11 per hour and worked about 27 hours per week in FFY 2016. The table below reflects  
a trend for OOD of rehabilitating more workers over shorter periods of time, in part  
reducing the cost per rehabilitation.  
Vocational Rehabilitation Results, FFY 2013FFY 2016  
Rehabilitated  
Workers  
Months to  
Rehabilitation  
Cost Per Employment  
Outcome  
Average  
Hourly Wage  
Average Hours  
Per Week  
FFY  
2
013  
014  
015  
016  
3,714  
4,580  
5,413  
6,365  
27.3  
25.3  
22.8  
19.4  
$10,152  
$9,773  
$8,772  
$7,480  
$10.27  
$10.07  
$10.34  
$11.03  
27.4  
27.0  
27.0  
27.1  
2
2
2
The state's VR program provides individuals with disabilities services and  
supports to help them obtain and maintain employment. Disabilities may include  
physical, intellectual, mental health, or sensory. VR services are available in all  
8
8 counties and are customized for each individual through assessments and  
one-on-one meetings with professional VR counselors. VR services are paid for by a mix  
of state and federal funds, with $3.69 in federal match for every $1 in state spending.  
In FY 2016, Ohio spent $27.5 million in state funds and $101.6 million in federal funds  
for this purpose.  
Young Hunters Tag Nearly 6,000 Deer During Ohio's Youth Deer Season  
Tom Wert, Budget Analyst, 614-466-0520  
Young hunters harvested a total of 5,930 deer during Ohio's two-day youth deer  
hunting season on November 19 and 20. The number of deer harvested was down  
7.9% compared to 2015's youth deer season, when 7,223 deer were tagged.  
1
Coshocton County had the most successful youth hunters with 222 deer being  
harvested. This was followed by Guernsey County (197), Tuscarawas County (178),  
Muskingum County (162), and Meigs County (152). Hamilton County had 18 deer  
January 2017  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
harvested during the youth hunt, highest among the state's more urban counties. The  
map below shows the number of deer harvested in each of Ohio's 88 counties during  
the youth deer season.  
2016 Youth Deer Season Harvest by County  
Ohio's youth deer hunting season is open to anyone 17 years old and younger  
who possesses a valid youth hunting license and valid youth deer permit and who is  
accompanied by a nonhunting adult. Typically held the weekend prior to the  
Thanksgiving holiday, the youth deer hunting season gives young hunters an  
opportunity in the field prior to the statewide deer gun season beginning the Monday  
after Thanksgiving. Youth hunting licenses and deer permits cost $10 and $12,  
respectively. These fees are deposited to the credit of the Wildlife Fund (Fund 7015) and  
used by the Department of Natural Resources to support the Division of Wildlife. As of  
December 20, 2016, a total of 48,561 youth licenses and 51,591 youth deer permits had  
been issued for the 2016-2017 hunting license year.  
Budget Footnotes  
26  
January 2017  
Ohio Legislative Service Commission  
Ohio Department of Transportation Announces Major/New Highway  
Construction Projects Up for Approval in 2017  
Tom Middleton, Budget Analyst, 614-728-4813  
On December 15, 2016, the Ohio Department of Transportation (ODOT)  
announced that just over $466 million in highway project funding is proposed and up  
1
0
for approval for calendar year (CY) 2017. This funding represents the Major/New  
Construction Program component of ODOT's overall construction budget and must be  
approved by the Department's Transportation Review Advisory Council (TRAC). The  
Major/New Construction Program consists of highway projects that add capacity to the  
state's network of roads and cost over $12 million.  
The types of construction projects overseen by TRAC typically require several  
years of planning and construction before they are completed. Thus, for this current  
review period, TRAC is proposing commitments beyond the $466 million for CY 2017.  
Approximately $841 million is proposed for Major/New projects over the  
CY 2018-CY 2026 period. The Major/New projects under the draft list announced in  
mid-December are subject to public comment before the final list is approved in  
January.  
All state funding of Major/New Construction projects are financed out of the  
Highway Operating Fund (Fund 7002). The fund is comprised of three main sources of  
revenue: (1) federal highway trust fund distributions, (2) ODOT's portion of revenue  
from the 28-cent per gallon Ohio motor fuel tax, and (3) proceeds from bonds issued by  
the state and backed by future federal highway and Ohio motor fuel tax revenues, as  
well as some toll revenue collected on the Ohio Turnpike.  
Criminal Justice Services Awards $4.0 million in Federal Edward Byrne  
Memorial Justice Assistance Grants  
Maggie Wolniewicz, Senior Budget Analyst, 614-995-9992  
On November 14, 2016, the Department of Public Safety's Office of Criminal  
Justice Services announced the award of $4.0 million in federal grants from the  
Edward Byrne Memorial Justice Assistance Grant (JAG) Program to 128 projects in  
5
6 counties.11 Under the JAG program, units of local government, state agencies,  
state-supported universities, statewide and local nonprofit or faith-based associations,  
and law enforcement agencies may apply for new or renewal funding to support a  
broad range of crime prevention and control activities in five program areas.  
10 The draft project list can be found on ODOT's website: www.dot.state.oh.us/trac.  
11A  
complete list of funded programs by county can be found at  
http://publicsafety.ohio.gov/links/FY2016_JAG_Recommended_for_Funding.pdf.  
January 2017  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
Funding for the projects ranged from $3,291 for a crime prevention program in  
Logan County to three awards of $100,000 each for an offender reentry program in  
Portage County, a multi-jurisdictional drug task force in Richland County, and a heroin  
partnership project in Ross County. The following table lists, for each program area, the  
number of projects funded and the total amount of funding awarded. All JAG program  
awards are for 12 months of funding, beginning January 1, 2017. The required match  
(cash or in-kind) is either 25%, 50%, or 75% depending on the number of years a project  
has been funded, but may be waived under certain circumstances.  
Federal JAG Awards by Program Area  
Number of  
Program Area  
Projects  
Total Funding  
Multi-Jurisdictional Task Forces and Law Enforcement  
Adult and Juvenile Corrections, Community Corrections, and Reentry  
Courts, Defense, Prosecution, and Victim Services  
Crime Prevention  
59  
19  
23  
24  
3
$1,753,150  
$786,528  
$689,207  
$624,285  
$189,531  
$4,042,702  
Cross-agency and Cross-system Collaboration, Training, and Research  
TOTAL  
128  
Note: Numbers may not add to total due to rounding.  
Budget Footnotes  
28  
January 2017  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Philip A. Cummins, Senior Economist, 614-387-1687  
Ruhaiza Ridzwan, Senior Economist, 614-387-0476  
Overview  
U.S. economic growth continued through late 2016. Indicators for  
Ohio's economy also show continued expansion, though growth has  
slowed. U.S. inflation-adjusted gross domestic product (real GDP), the  
Total nonfarm  
total output of the economy, rose at a 3.5% annual rate in the third payroll  
quarter, strongest in two years. The current business cycle expansion,  
employment in  
following the 2007-2009 recession, is one of the longest on record but has  
been exceptionally slow, with real GDP growth averaging only 2.1% per  
year. In 2015 and 2016, growth was predominantly in the service sector,  
the U.S. rose  
156,000 in  
1
2
as industrial output fell reflecting in part weakness in mining including December.  
oil and gas. The mining sector began to turn around last year. Also, a  
strong dollar in foreign exchange markets has been an impediment for  
U.S. manufacturing exports. Total employment nationwide continued to  
grow through December, though less rapidly than in 2013-2015, and the  
unemployment rate remained low. The nation's central bank in December  
raised its short-term interest rate target by one-quarter percentage point,  
its second monetary tightening after seven years of holding interest rates  
at ultra-low levels.  
An economic forecast summary is appended at the end of this  
article. It compares the outlook in December 2016, for a few broad  
measures of activity, with expectations in May 2015 ahead of the  
Conference Committee on the current biennium's operating budget. The  
1
3
projections, from forecasting firm IHS Economics, show slower growth  
in Ohio incomes than previously anticipated, and zero growth in the  
state's industrial output during both years of the biennium.  
12 Real GDP growth in all earlier post-World War II expansions was more  
rapid than in the current expansion, and the median growth rate, 4.3% per year,  
was more than twice as rapid. Business cycle turning points underlying this  
analysis are as defined by the National Bureau of Economic Research, posted at  
http://www.nber.org/cycles/cyclesmain.html.  
13 Formerly Global Insight.  
January 2017  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
The National Economy  
Employment and Unemployment  
Total nonfarm payroll employment in the U.S. rose 156,000 in  
December and the unemployment rate edged up to 4.7%. Trends in  
employment and unemployment are shown in Chart 6.  
Chart 6: U.S. Employment and Unemployment  
1
1
1
1
1
1
1
1
48  
45  
42  
39  
36  
33  
30  
27  
11  
10  
9
8
7
6
5
4
2
006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016  
Nonfarm Payroll Employment Unemployment Rate (right scale)  
Employment growth in December was mostly in the service  
sector, particularly in health care, social assistance, and restaurants and  
bars. In all of 2016, employment growth averaged 180,000 per month,  
down from 224,000 per month on average during the previous three  
years. Factory employment rose 17,000 in December but remained 63,000  
below the peak in January 2016, highest in nearly seven years.  
The nationwide  
unemployment  
rate in  
Nationwide unemployment in December, persons without jobs  
who had actively looked for work in the previous four weeks, totaled  
about 7.5 million. Unemployment as a share of the labor force in  
December was 4.7%, up from 4.6% in November, the lowest U.S.  
unemployment rate since 2007.  
December was  
4
.7%.  
A survey of hiring plans for the 2017 first quarter showed 19% of  
U.S. employers plan to increase staff, and 6% expect to reduce  
1
4
employment. These hiring projections are broadly in line with those one  
and two years earlier, and stronger than earlier in the economic recovery.  
1
4
ManpowerGroup Employment Outlook Survey, Q1:2017, published  
December 13, 2016.  
Budget Footnotes  
30  
January 2017  
Ohio Legislative Service Commission  
Production, Shipments, and Inventories  
Real GDP grew at a 3.5% annual rate in the 2016 third quarter,  
strongest since a 5.0% rate of growth in the 2014 third quarter. Growth  
averaged only a 1.1% rate in last year's first half, and was 2.6% in 2015.  
The upturn in third quarter growth resulted in part from a swing to  
Real GDP grew  
at a 3.5%  
modest inventory building from liquidation in the second quarter, along annual rate in  
with an exceptional jump reported for soybean exports. Consumer  
spending grew at a 3.0% annual rate, with particular strength in durable  
goods. Residential fixed investment fell for the second straight quarter,  
after a strong 2015. Business fixed investment grew slowly, but with  
the 2016 third  
quarter,  
strongest in  
strength in construction of office buildings and factories.  
two years.  
Total industrial production fell 0.4% in November mainly  
reflecting reduced utility output, as unseasonably warm weather cut  
demand for heating. The index for total industrial production was 0.6%  
lower in November than a year earlier, and nearly 3% below the all-time  
peak two years ago mainly due to sharply lower output in the mining  
sector including oil and gas. Mining output bottomed out in April 2016  
and recovered more than 4% since then. Manufacturing output through  
November fluctuated in a narrow range below its recent peak two years  
ago, 6% short of the highest level on record reached in 2007.  
Manufacturers that reported growth of production and new orders  
in December were more widespread than the month before, in a survey of  
purchasing managers by the Institute for Supply Management (ISM),  
along with more frequent reports of higher prices paid for inputs. A  
comparable ISM report for nonmanufacturing sectors of the economy also  
showed expansion.  
Consumer Spending and Incomes  
Real consumer spending rose only 0.1% in November after a  
similar increase in October, but appears to have strengthened in  
December. Durable goods sales slowed in November, after large increases  
in October and September, on lower light truck sales. Income gains  
continued in 2016 through November but were smaller than in 2015,  
particularly after adjustment for the modest uptick in inflation.  
Sales of light vehicles were particularly strong during December,  
boosted by heavy promotional activity according to a posting on the  
1
5
WardsAuto website. Sales of light motor vehicles rose in all of 2016 to  
7.5 million units, highest on record for the second consecutive year. Sales  
1
of light trucks rose 7% in 2016. Car sales fell 9%.  
15 http://wardsauto.com.  
January 2017  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
Construction and Real Estate  
Housing starts and issuance of building permits for new  
residential units slowed in November, seasonally adjusted. Year-to-date  
housing starts for 11 months were 5% higher than a year earlier,  
consisting of a 10% increase in starts on new homes and a 4% decline in  
starts on apartments. Apartment construction rose in the previous six  
years. At a rate this year of fewer than 1.2 million units annually, starts  
on new housing units have doubled since the recession low in 2009 but  
remain short of building rates typical in years past.  
Housing starts  
for 11 months  
were 5% higher  
than a year  
Total construction activity, in dollars of current purchasing power,  
was 4% higher in January-November than a year earlier, as private  
residential construction rose 5%, private nonresidential construction rose  
earlier.  
8
%, and public construction fell 1%. Office buildings accounted for  
nearly half of the rise in private nonresidential construction.  
Home sales rose in 2016. New home unit sales rose in November,  
particularly in the Midwest, and year-to-date unit sales were 13% higher  
than a year earlier. In 2015, new home sales rose 15%. Unit sales of homes  
reported by the National Association of Realtors (NAR), generally  
previously occupied homes, were 4% higher in January through  
November of 2016 than a year earlier. This follows an increase in sales of  
6
% in all of 2015. Listings of homes with realtors were described by NAR  
as low relative to demand.  
House prices in the U.S. averaged 6% higher in October than a  
1
6
year earlier. The average house price in the nation rose in 2016 for the  
fifth consecutive year, after four years of declining prices.  
Mortgage interest rates have climbed sharply since the election,  
with the rate on 30-year fixed-rate mortgages averaging 4.20% in the  
January 5 week, higher by two-thirds of a percentage point in the past  
1
7
nine weeks. More costly mortgage financing can be expected to erode  
the ability of marginal borrowers to qualify for home purchases.  
Inflation  
The consumer price index (CPI) for all items rose 0.2% in  
November to 1.7% above its level a year earlier, the largest year-over-  
year increase in the all-items index in two years. More rapid increases in  
this inflation measure reflect in part an upturn in energy prices this year.  
Food prices, in contrast, have fallen over the past year, specifically food  
16 Federal Housing Finance Agency index.  
17 Freddie Mac weekly survey.  
Budget Footnotes  
32  
January 2017  
Ohio Legislative Service Commission  
consumed at home. The CPI excluding food and energy rose 2.1% in the  
year to November, the same rate of rise as in 2015.  
Inflation has also picked up at the wholesale and manufacturing  
levels. The producer price index (PPI) for final demand rose 1.3% in the The CPI in  
year to November, also largest in two years, and also due partly to higher  
November was  
.7% above its  
energy prices this year. Food prices at wholesale have generally declined  
since 2014. The PPI for final demand excluding food and energy rose 1.6%  
in the year to November, up from only 0.2% in 2015.  
1
level a year  
earlier, the  
largest year-  
over-year  
Financial Markets  
Longer-term U.S. interest rates rose in the second half of 2016 and  
broad stock market measures climbed to new highs. Ten-year Treasury  
note yields rose more than a percentage point from lows in July, and rose increase in two  
particularly sharply around the time of and following the November  
years.  
election. Markets appear to expect more expansionary fiscal policy to  
result from the election outcome, including some combination of tax cuts,  
spending increases, or both. Such a fiscal boost could add to economic  
activity as well as raise inflation.  
As widely expected, the Federal Reserve's Open Market Committee  
(FOMC) raised its target for short-term interest rates by one-quarter  
percentage point at its meeting in December. The central bank set the  
target range for federal funds, overnight loans between banks, at 0.5% to  
0
.75%. It previously raised its target in December 2015, from a range of  
zero to 0.25% where it had been held since December 2008. The FOMC  
reported that committee members expect to increase the short-term  
interest rate target during 2017 by 0.75 percentage point, up from a 0.50  
percentage point rise anticipated at the September FOMC meeting, as  
indicated by the committee members' median forecasts.  
The Ohio Economy  
Employment and Unemployment  
Total nonfarm payroll employment in Ohio, seasonally adjusted,  
rose by 9,100 (0.2%) in November from the revised total in October,  
following a decrease of 2,100 jobs from September to October. In  
November, the state's nonfarm payroll employment was 49,800, or 0.9%  
higher than in November 2015. So far in 2016, employment gain averaged  
2
,800 per month compared to 6,700 per month in 2015. The state's  
unemployment rate was 4.9% in November, same as in October, but was  
slightly higher than in November 2015. Chart 7 below shows Ohio's  
trends in employment and the unemployment rate over the last ten years.  
January 2017  
33  
Budget Footnotes  
Ohio Legislative Service Commission  
The state's unemployment rate in November was 0.3 percentage  
point higher than the U.S. unemployment rate of 4.6%. In November,  
unemployment rates in 18 states were significantly lower than in October  
while unemployment rates in 32 states and the District of Columbia  
Total nonfarm  
payroll  
18  
remained stable. The number of unemployed workers in Ohio was  
employment in 278,000 in November, 2,000 fewer than in October, but 9,000 more than in  
November 2015.  
Ohio rose 9,100  
in November to  
49,800 higher  
Chart 7: Ohio Employment and Unemployment Rates  
than in  
5.6  
12%  
1
1
9
1%  
0%  
%
November 2015.  
5
5
5
5
5
5
.5  
.4  
.3  
.2  
.1  
.0  
8%  
7%  
6%  
5%  
4%  
Nonfarm Payroll Employment  
Unemployment Rate (right scale)  
Ohio Personal Income  
In the third quarter of 2016, Ohio's personal income, seasonally  
adjusted, grew 1.2% from the previous quarter, following 1.2% growth in  
1
9
the second quarter and a 0.4% decline in the first quarter. Ohio's growth  
from the second to the third quarter was led by increased earnings in the  
health care and social assistance industry and in state and local  
government. Nationwide, state personal income growth averaged 1.1%  
in the third quarter of 2016, down from 1.2% in the second quarter.  
Ohio's personal income growth ranked 15th among states in the nation  
18 Rates deemed stable by the Bureau of Labor Statistics include both  
those that were unchanged and statistically insignificant changes of -0.2 to  
+
0.2 percentage point.  
19 Corresponding annual rates of change are +4.8% in the third quarter,  
5.0% in the second quarter, and -1.7% in the first quarter.  
+
Budget Footnotes  
34  
January 2017  
Ohio Legislative Service Commission  
(
from highest growth to lowest). In the first three quarters of 2016, Ohio's  
personal income grew 2.0%, less than nationwide growth for the period of  
.6%.  
2
Ohio Home Sales  
In November, the number of existing homes sold in the state  
increased by 16.5% compared to November 2015, according to the Ohio  
Association of Realtors. Existing home unit sales rose by 5.3% in the first  
The number of  
unemployed  
1
1 months of this year compared with the corresponding months of 2015. workers in Ohio  
The statewide sales price of homes sold in the first 11 months of 2016  
averaged $163,899, 5.2% higher than the corresponding months a year  
earlier.  
was 278,000 in  
November,  
2,000 fewer  
Ohio Population  
than in  
Ohio's population was 11,614,373 as of July 1, 2016, an increase of  
.1% from July 1, 2015, according to U.S. Census Bureau estimates. Ohio's  
population remained the seventh largest among the 50 states and the  
October, but  
0
9,000 more  
District of Columbia with 3.6% of the nation's total population. The fastest than in  
growing state was Utah, followed by Nevada, Idaho, and Florida. Eight  
November 2015.  
states, including West Virginia, Pennsylvania, and Connecticut, lost  
population with Illinois losing the largest number of people.  
Economic Forecasts  
The tables below compare the December baseline economic  
forecasts from IHS Economics with that organization's forecasts released  
in May 2015. The earlier predictions were used by LSC in projecting  
FY 2016-FY 2017 state revenues for the Conference Committee hearings  
on the operating budget in June 2015. The updated forecasts generally  
show slower growth of Ohio's economy than did the earlier predictions.  
Economic forecasting is inevitably an uncertain process, and consequently  
forecasts for state tax revenues are also uncertain.  
Years shown in the tables are calendar years. Quarterly changes,  
the first and third lines in each table, are from the preceding quarter, and  
are stated at annual rates. Changes shown in the second and fourth lines  
compare average values for the four quarters ending in the second  
calendar quarter, coinciding with Ohio's fiscal year, with average values  
for the four quarters one year earlier. The fifth and sixth lines in each table  
show the change in expectations for each quarter and year between the  
May 2015 and December 2016 forecasts.  
January 2017  
35  
Budget Footnotes  
Ohio Legislative Service Commission  
Ohio Personal Income  
IHS Economics predicts that personal income in the state will  
continue to grow through the end of 2017 but not as rapidly as projected  
earlier. In the current fiscal year, personal income is expected to increase  
3
.4%, revised down from 4.3% growth anticipated in May 2015.  
Ohio Personal Income Growth  
2
Q2  
015  
Q3  
-----------------------------------percent change at annual rate------------------------------------  
4.4 3.7 2.9 3.1 4.7 3.9 4.0 4.4 5.7 4.7 4.7 4.5  
4.2 3.6 4.3  
-0.9 5.7 3.8 5.2 -1.7 4.2 3.8 4.2 3.8 4.5 4.3 4.3  
4.1 3.2 3.4  
-5.3 2.0 0.9 2.1 -6.4 0.3 -0.2 -0.2 -1.9 -0.2 -0.4 -0.2  
-0.1 -0.4 -0.9  
2016  
Q2 Q3  
2017  
Q2 Q3  
Forecast  
Q1  
Q4  
Q1  
Q4  
Q1  
Q4  
-
Conference  
Committee  
December  
2
016  
Change  
pct. pts.)  
(
Ohio Wages and Salaries  
Wages and salaries in Ohio, a key driver of predictions for  
withholding tax revenue, are also expected to increase more slowly in the  
current economic forecast than predicted earlier. In the current fiscal  
year, wages and salaries in the state are expected to grow 3.5%, revised  
from 4.2% in the IHS Economics baseline forecast released in May 2015.  
Ohio Wage & Salary Growth  
2
Q2  
015  
Q3  
-----------------------------------percent change at annual rate------------------------------------  
4.5 4.6 4.4 4.0 4.1 4.2 4.3 4.2 4.6 4.2 4.4 4.3  
4.7 4.3 4.2  
-1.1 6.6 3.6 9.8 -4.1 4.8 4.6 2.8 4.3 4.8 4.6 4.5  
4.5 3.9 3.5  
-5.6 2.0 -0.8 5.8 -8.2 0.6 0.3 -1.4 -0.3 0.6 0.2 0.2  
-0.2 -0.4 -0.7  
2016  
Q2 Q3  
2017  
Q2 Q3  
Forecast  
Q1  
Q4  
Q1  
Q4  
Q1  
Q4  
-
Conference  
Committee  
December  
2
016  
Change  
pct. pts.)  
(
Ohio Industrial Production  
Industrial production, the total of manufacturing, mining, and  
utility output, is estimated monthly for the nation by the Federal  
Reserve, the nation's central bank. At the state level, an approximation to  
industrial production is constructed by IHS Economics using the national  
index values and employment in each industry at the state and national  
levels. As is evident in the following table, industrial production in Ohio  
Budget Footnotes  
36  
January 2017  
Ohio Legislative Service Commission  
is thought to have been unchanged in FY 2016 and is projected to be flat  
again in the current fiscal year. Both projections are sharp downward  
revisions from the predictions in May 2015, ahead of the Conference  
Committee on the budget for the current biennium. LSC uses forecasts of  
industrial production primarily in forecasting revenue from the CAT.  
Ohio Industrial Production Growth  
2
Q2  
015  
Q3  
-----------------------------------percent change at annual rate------------------------------------  
1.5 -1.4 3.6 3.5 3.9 3.8 4.7 4.6 4.0 2.9 2.8 2.9  
3.8 2.4 4.1  
-0.8 -2.0 2.0 0.4 -1.9 -2.8 3.6 -2.3 1.7 1.8 3.1 2.6  
3.4 0.0 0.0  
-2.3 -0.6 -1.6 -3.1 -5.8 -6.6 -1.1 -6.9 -2.3 -1.1 0.3 -0.3  
2016  
Q2 Q3  
2017  
Q2 Q3  
Forecast  
Q1  
Q4  
Q1  
Q4  
Q1  
Q4  
-
Conference  
Committee  
December  
2
016  
Change  
pct. pts.)  
(
-0.4  
-2.4  
-4.1  
January 2017  
37  
Budget Footnotes