Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
FEBRUARY 2017  
VOLUME 40, NUMBER 6  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................10  
HIGHLIGHTS  
Ross A. Miller, Chief Economist, 614-644-7768  
ISSUE UPDATES  
The Governor unveiled the executive budget for the  
Early Childhood Education ......18  
upcoming biennium on January 30. The total FY 2017 GRF High Achievement School  
Awards .................................19  
Zika Surveillance Funds ..........19  
tax revenue and program expenditure estimates that  
accompanied the proposal were revised downward, by Medicaid Expansion Report.....20  
Ohio Historic Preservation  
about $592 million and $825 million, respectively, from the  
Tax Credit.............................21  
estimates made by the Office of Budget and Management Operation Safe Stay Hotels .....22  
Environmental Education  
Grant Awards .......................22  
(OBM) in August 2016. The downward revisions are  
consistent with revenue and expenditure experiences Capital Funding for Juvenile  
Detention Centers ................23  
through the first seven months of FY 2017. The variance  
analyses in this and future issues of Budget Footnotes will  
TRACKING THE ECONOMY  
continue to be based on the August estimates as OBM did  
not revise its monthly estimates for the remainder of  
The National Economy ............24  
The Ohio Economy..................27  
FY 2017.  
Through January 2017, GRF sources totaled $20.00 billion:  
Revenue from the personal income tax was  
275.3 million below estimate;  
$
Sales and use tax receipts were $120.2 million  
below estimate.  
Through January 2017, GRF uses totaled $20.95 billion:  
Program expenditures were $782.7 million below  
estimate, due primarily to Medicaid  
$699.0 million);  
Legislative Service Commission  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
(
Negative variances in other spending categories  
were partly offset by a $41.9 million positive  
variance in primary and secondary education.  
Telephone: 614-466-3615  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of January 2017  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on February 1, 2017)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$102,491  
$105,300  
-$2,809  
-2.7%  
Nonauto Sales and Use  
Total Sales and Use Taxes  
$888,075  
$900,600  
-$12,525  
-1.4%  
$990,566  
$1,005,900  
-$15,334  
-1.5%  
Personal Income  
$845,851  
$143  
$938,200  
$0  
-$92,349  
$143  
$2,691  
$166  
$179  
-$124  
$4,702  
$0  
-9.8%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
$53,791  
$66  
$51,100  
-$100  
$28,500  
$1,700  
$47,300  
$0  
5.3%  
166.4%  
0.6%  
-7.3%  
9.9%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
$28,679  
$1,576  
$52,002  
$0  
$1,709  
$0  
$100  
$1,609  
$0  
1608.6%  
---  
$0  
$0  
$0  
$0  
---  
$77,464  
$4,295  
$4,862  
$33  
$71,400  
$3,800  
$4,700  
$0  
$6,064  
$495  
$162  
$33  
8.5%  
13.0%  
3.4%  
---  
Alcoholic Beverage  
Liquor Gallonage  
Estate  
Total Tax Revenue  
$2,061,037  
$2,152,600  
-$91,563  
-4.3%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$9,868  
$2,938  
$601  
$8,700  
$2,850  
$4,230  
$15,780  
$1,168  
$88  
13.4%  
3.1%  
-$3,629  
-$2,374  
-85.8%  
-15.0%  
Total Nontax Revenue  
$13,406  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$60,085  
$60,085  
$0  
$9,500  
$9,500  
$0  
$50,585  
$50,585  
---  
532.5%  
532.5%  
TOTAL STATE SOURCES  
Federal Grants  
$2,134,528  
$781,119  
$2,177,880  
$972,174  
-$43,352  
-$191,055  
-$234,407  
-2.0%  
-19.7%  
-7.4%  
TOTAL GRF SOURCES  
$2,915,647  
$3,150,054  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
February 2017  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2017 as of January 31, 2017  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on February 1, 2017)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
TAX REVENUE  
Auto Sales  
$791,728  
$803,900  
-$12,172  
-1.5%  
$772,102  
2.5%  
Nonauto Sales and Use  
$5,530,536  
$5,638,600  
-$108,064  
-1.9%  
$5,422,968  
2.0%  
Total Sales and Use Taxes  
$6,322,264  
$6,442,500  
-$120,236  
-1.9%  
$6,195,069  
2.1%  
Personal Income  
$4,833,745  
-$123  
$5,109,000  
$0  
-$275,255  
-$123  
-5.4%  
---  
$5,126,037  
$30,475  
$35,312  
$51,297  
$198,544  
$18,566  
$657,132  
$3,362  
-5.7%  
-100.4%  
9.3%  
Corporate Franchise  
Financial Institution  
Public Utility  
$38,599  
$47,621  
$211,385  
$18,505  
$670,716  
$2,860  
$43,100  
$51,000  
$191,300  
$18,700  
$687,000  
$3,000  
-$4,501  
-$3,379  
$20,085  
-$195  
-10.4%  
-6.6%  
10.5%  
-1.0%  
-2.4%  
-4.7%  
4.2%  
-86.7%  
---  
-7.2%  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
6.5%  
-0.3%  
-$16,284  
-$140  
2.1%  
-14.9%  
11.3%  
-84.5%  
-1723.5%  
-4.2%  
$162,740  
$53  
$156,200  
$400  
$6,540  
-$347  
$146,166  
$344  
-$678  
$0  
-$678  
$42  
$516,369  
$35,026  
$28,093  
$490  
$514,200  
$32,300  
$27,100  
$0  
$2,169  
$2,726  
$993  
0.4%  
8.4%  
3.7%  
---  
$539,150  
$31,986  
$27,161  
$918  
Alcoholic Beverage  
Liquor Gallonage  
9.5%  
3.4%  
Estate  
$490  
-46.6%  
-1.3%  
Total Tax Revenue  
$12,887,667  
$13,275,800  
-$388,133  
-2.9%  
$13,061,561  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$24,067  
$14,951  
$53,488  
$92,506  
$17,200  
$13,680  
$51,818  
$82,698  
$6,867  
$1,271  
$1,670  
$9,808  
39.9%  
9.3%  
$16,600  
$12,832  
$42,841  
$72,273  
45.0%  
16.5%  
24.9%  
28.0%  
3.2%  
Total Nontax Revenue  
11.9%  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$92,187  
$92,187  
$0  
$31,800  
$31,800  
$0  
$60,387  
$60,387  
---  
189.9%  
189.9%  
$0  
$189,860  
$189,860  
---  
-51.4%  
-51.4%  
TOTAL STATE SOURCES  
Federal Grants  
$13,072,360  
$6,928,319  
$20,000,679  
$13,390,298  
$7,456,128  
$20,846,425  
-$317,937  
-$527,809  
-$845,747  
-2.4%  
-7.1%  
-4.1%  
$13,323,694  
$7,231,395  
$20,555,089  
-1.9%  
-4.2%  
-2.7%  
TOTAL GRF SOURCES  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
February 2017  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Ross A. Miller, Chief Economist, 614-644-7768  
Overview  
GRF tax revenue in January was $91.6 million below the estimate  
published by OBM in August. Revenue from the personal income tax  
PIT) was $92.3 million below estimate, while positive variances from  
other taxes, primarily the cigarette and other tobacco products (OTP) tax  
$6.1 million), the commercial activity tax (or CAT, $4.7 million) and the  
financial institutions tax ($2.7 million) roughly offset a $15.3 million  
negative variance for the sales and use tax.  
GRF tax  
(
revenue was  
$
91.6 million  
(
below estimate  
in January.  
State GRF tax revenue began a trend of weak results around  
January 2016, but it worsened at the end of the calendar year. Due to  
recent revenue experience, OBM revised downward its estimate of  
FY 2017 GRF tax revenue by $592 million when it presented the  
Governor's budget proposal. Downward revisions were made to the  
major tax sources: the sales and use tax ($259 million), the PIT  
1
(
$334 million), and the CAT ($32 million). LSC does not have monthly  
estimates of revenue based on the new estimates, so comparisons to  
estimate in this article are made to the original August 2016 estimates.  
Compared to the August estimates, FY 2017 GRF tax revenue  
through January showed a negative variance of $388.1 million. The PIT  
was below estimate by $275.3 million, and the sales and use tax was  
below estimate by $120.2 million. Revenue from the CAT was  
FY 2017 GRF  
tax revenue  
was  
$
16.3 million below estimate. On the other hand, revenue from the  
kilowatt-hour tax exceeded estimate by $20.1 million, and revenue from  
the foreign insurance tax was above estimate by $6.5 million.  
$
388.1 million  
below  
Total GRF sources through January amounted to $20.00 billion,2  
estimate.  
$845.7 million below estimate. In addition to the poor performance of tax  
revenue, revenue from federal grants has consistently been below  
estimate during FY 2017, with the cumulative negative variance through  
January amounting to $527.8 million. Revenue from federal grants is  
primarily related to the level of spending in the Medicaid program,  
which was $699.0 million below estimate for FY 2017 through January.  
State sources of revenue other than taxes have done better this year, with  
nontax revenue $9.8 million above estimate through January, and  
1 The estimate for the cigarette and OTP tax was left unchanged.  
2 Total GRF sources consist of state-source receipts (tax revenue, nontax  
revenue, and transfers in) and federal grants.  
Budget Footnotes  
4
February 2017  
Ohio Legislative Service Commission  
transfers into the GRF $60.4 million above estimate. January transfers in  
included $60 million that was identified in OAKS as authorized by  
section 512.20 of Am. Sub. H.B. 64 of the 131st General Assembly, the  
current operating budget act; it appears that OBM expected to make these  
transfers in June, so this variance is likely a matter of timing.  
FY 2017  
income tax  
withholding  
grew 1.2% in  
FY 2017 GRF revenue through seven months is also below such  
revenue during the comparable months of FY 2016. Tax revenue has fallen  
by $173.9 million. Revenue from the PIT, which is $292.3 million below  
FY 2016, is almost entirely responsible for the tax revenue decline. Most of FY 2017.  
the decrease in PIT receipts is due to reduced estimated payments, which  
is likely a delayed result from income tax changes enacted in H.B. 64  
rather than a decline in the tax base; revenue from income tax withholding  
3
grew 1.2% from the first seven months of FY 2016 to FY 2017. Revenue  
from the cigarette and OTP tax was $22.8 million below the FY 2016  
figure, though that simply continues a long-term downward trend.  
Revenue from the sales and use tax increased by $127.2 million and CAT  
revenue was $13.6 million higher.  
Sales and Use Tax  
GRF revenue from the sales and use tax was $15.3 million (1.5%)  
below estimate in January, resulting in revenue during the first seven  
months of FY 2017 being $120.2 million (1.9%) below estimate. The  
FY 2017 sales  
variance in January resumed an FY 2017 pattern of below-estimate tax revenue  
revenue from the tax; December was the only month this fiscal year  
showing a positive variance from the tax. Revenue from this tax for the  
first seven months of FY 2017 grew by $127.2 million (2.1%) compared to  
revenue during the corresponding months of FY 2016.  
was  
$
120.2 million  
below  
estimate.  
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 sales of motor vehicles, but auto taxes arising from leases are  
3 Growth in withholding is weak due to both slow growth in aggregate  
payrolls statewide and a reduction in the withholding rate that took effect in  
August 2015. More details about income tax revenue are reported in the personal  
income tax section of this article.  
February 2017  
5
Budget Footnotes  
Ohio Legislative Service Commission  
paid at the lease signing and are mostly recorded under the nonauto tax  
4
instead of the auto tax.  
Nonauto Sales and Use Tax  
Nonauto sales and use tax revenue to the GRF was $888.1 million  
in January, which was $12.5 million (1.4%) below estimate. Collections  
from this segment of the tax have been below estimate six of the seven  
months of FY 2017. Through January, FY 2017 revenue was $5.53 billion,  
Nonauto sales  
tax revenue  
was  
$
108.1 million (1.9%) below estimate. Compared to the corresponding  
$
108.1 million  
months of FY 2016, revenue has grown $107.6 million (2.0%).  
below estimate  
through  
A significant part of the tax base for this tax is attributable to  
premiums paid to Medicaid health insuring corporations (MHICs),  
which have grown 4.6% from FY 2016 to FY 2017. This portion of sales  
tax collections is generally correlated with Medicaid spending, rather  
than broader consumer spending trends. Excluding revenue from  
MHICs, nonauto sales tax revenue has grown 1.7% from FY 2016 to  
FY 2017. Growth in consumer spending is fueled by household incomes,  
which are growing slowly, as implied by data on income tax  
withholding. The Johnson Redbook index of same-store sales, published  
weekly, shows year-over-year growth nationally in sales made at  
discount stores ranging between 1.0% and 2.0% most weeks in January,  
and decreases most weeks for sales at department stores. Traditional  
retail stores are experiencing pressure on sales growth due to  
competition from Internet-based retailers and catalogue sales; many out-  
of-state companies making such sales to Ohioans do not collect the sales  
tax.  
January.  
Auto Sales and Use Tax  
GRF revenue from the auto sales and use tax in January amounted  
to $102.5 million, which was $2.8 million (2.7%) below estimate. Through  
January, FY 2017 revenue amounted to $791.7 million, $12.2 million  
(1.5%) below estimate. Revenue through January from this segment of  
the tax grew by $19.6 million (2.5%) from FY 2016.  
Nationwide sales of autos and light trucks continued briskly in  
January, at a seasonally adjusted annual rate of 17.5 million units.  
January sales are maintaining the record pace set for calendar years 2015  
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 previous 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 a given month.  
Budget Footnotes  
6
February 2017  
Ohio Legislative Service Commission  
and 2016. The pace for auto sales, at 6.3 million units, was slightly below  
the 2016 results for autos (6.9 million units), while the pace for light trucks  
11.2 million units) was slightly better than 2016 (10.6 million units).  
(
January 2017 auto sales tax revenue was $6.4 million (6.6%) higher than  
revenue the previous year. Ohio's market for sales of autos and light  
trucks has been somewhat softer than the nationwide market, though, and  
January's experience continues to exhibit a weaker-than-expected result,  
though auto sales tax revenue remains at a historically high level.  
Personal Income Tax  
January GRF revenue from the PIT was $845.9 million, $92.3 million  
FY 2017  
(
9.8%) below estimate. Monthly withholding revenue was $28.5 million  
income tax  
revenue was  
(3.5%) below estimate, but most of the overall negative variance was  
attributable to refunds. The GRF paid out $149.1 million in refunds in  
January, $72.9 million (95.7%) more than expected. January is one of the  
$
275.3 million  
months that estimated payments are due; estimated payments amounted below estimate  
to $213.1 million, very close to the amount expected.  
through  
Year-to-date PIT revenue was $4.83 billion by the end of January,  
January, due  
275.3 million (5.4%) below estimate, and $292.3 million (5.7%) below the  
mostly to  
$
amount collected during the first seven months of FY 2016. FY 2017  
revenues through January 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.  
withholding.  
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  
-$172.6  
$6.1  
-3.4%  
1.2%  
$59.0  
-$205.4  
-$10.3  
-$21.6  
-$1.8  
1.2%  
-29.2%  
-32.3%  
-17.7%  
-4.3%  
-3.2%  
32.2%  
1.3%  
Quarterly Estimated Payments  
Trust Payments  
-$5.7  
-20.8%  
17.4%  
-15.3%  
-2.9%  
35.2%  
-2.5%  
-5.4%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
$15.0  
-$7.1  
-$164.3  
$116.8  
-$5.8  
-$180.1  
$109.4  
$2.8  
Less Refunds  
Less LGF Distribution  
GRF PIT Revenue  
-$275.3  
-$292.3  
-5.7%  
February 2017  
7
Budget Footnotes  
Ohio Legislative Service Commission  
Revenue from withholding has grown only 1.2% from FY 2016 to  
FY 2017, but that is partly attributable to a 3.1% reduction in the  
withholding rate that went into effect in August 2015 to reflect the  
reduction in PIT rates enacted in H.B. 64. Withholding revenue was  
$
172.6 million (3.4%) below estimate, though, reflecting slower-than-  
expected growth in Ohio's aggregate payrolls so far this fiscal year. Weak  
growth in revenue from withholding has been the primary reason for the  
negative variance through the first seven months of FY 2017, but refunds  
have also played a significant role. Refunds were $116.8 million (35.2%)  
above estimate. With the tax filing season beginning in late January, only  
about one-fifth of FY 2017 refunds were expected during the first seven  
months of the year, while over three-quarters of refunds were expected  
over the next four months. Thus the behavior of refunds relative to  
estimate over the next four months will be a very important factor in  
determining how FY 2017 PIT revenue finishes the year.  
Cigarette and Other Tobacco Products Tax  
Revenue from the cigarette and OTP tax amounted to  
$
77.5 million in January, $6.1 million (8.5%) above estimate. This was  
partly due to timing; December receipts were $7.6 million below  
estimate. For FY 2017 through January, receipts were $516.4 million,  
Cigarette tax  
revenue is on  
target for  
FY 2017  
$
2.2 million (0.4%) above estimate, and $22.8 million (4.2%) below  
FY 2016. Revenue in FY 2016 was boosted by a "floor tax" on cigarettes  
held in inventory at the beginning of the year when the tax rate rose from  
$
1.25 per pack of cigarettes to $1.60 per pack. Revenue from the cigarette  
through  
tax tends to decline over time, but the rate increase increased FY 2016  
revenue, and the floor tax component made the decline in FY 2017  
somewhat sharper than the long-term rate of decrease. FY 2017 revenue  
attributable to sales of cigarettes was $480.0 million through January,  
while OTP revenue was $36.3 million.  
January.  
Commercial Activity Tax  
GRF revenue from the CAT amounted to $52.0 million in January,  
$
4.7 million (9.9%) above estimate. January is not one of the months that  
quarterly taxpayers remit revenue, so revenue for the month tells us little  
about what to expect for the remainder of the fiscal year. February will  
be the next month during which quarterly taxpayers remit payments.  
Revenue received during the first seven months of FY 2017 totaled  
$
670.7 million, $16.3 million (2.4%) less than estimate. That revenue was  
also $13.6 million (2.1%) above receipts in the corresponding period last  
fiscal year.  
Budget Footnotes  
8
February 2017  
Ohio Legislative Service Commission  
The CAT is the state's third-largest GRF tax revenue source, as well  
as its broadest-based business tax. The tax base is business' gross receipts,  
subject to various adjustments. The manufacturing sector accounted for  
2
4% of total CAT liability during FY 2016, while wholesale and retail trade  
combined accounted for about one-third. Weak growth in this tax base  
reflects weak growth in business' gross receipts across the Ohio economy,  
and especially in these sectors.  
February 2017  
9
Budget Footnotes  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of January 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run February 6, 2017)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$661,905  
$695,231  
-$33,326  
-4.8%  
$181,908  
$4,843  
$185,269  
$8,837  
-$3,361  
-$3,994  
-1.8%  
-45.2%  
-4.6%  
Other Education  
Total Education  
$848,655  
$889,337  
-$40,681  
Medicaid  
$1,162,744  
$162,648  
$1,457,129  
$159,484  
-$294,385  
$3,164  
-20.2%  
2.0%  
Health and Human Services  
Total Welfare and Human Services  
$1,325,392  
$1,616,613  
-$291,221  
-18.0%  
Justice and Public Protection  
General Government  
$184,823  
$37,391  
$210,244  
$38,128  
-$25,422  
-$737  
-12.1%  
-1.9%  
Total Government Operations  
$222,214  
$248,373  
-$26,159  
-10.5%  
Property Tax Reimbursements  
Debt Service  
$995  
$106,193  
$107,188  
$0  
$119,599  
$119,599  
$995  
-$13,406  
-$12,411  
---  
-11.2%  
-10.4%  
Total Other Expenditures  
Total Program Expenditures  
$2,503,449  
$2,873,922  
-$370,473  
-12.9%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$18  
$18  
$0  
$18,918  
$18,918  
$0  
-$18,900  
-$18,900  
---  
-99.9%  
-99.9%  
TOTAL GRF USES  
$2,503,467  
$2,892,839  
-$389,373  
-13.5%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
10  
February 2017  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2017 as of January 31, 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run February 6, 2017)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
Primary and Secondary Education  
Higher Education  
$4,744,916  
$1,327,411  
$51,142  
$4,702,973  
$41,943  
0.9%  
$4,748,335  
$1,294,460  
$48,786  
-0.1%  
2.5%  
4.8%  
0.5%  
$1,340,764  
$53,793  
-$13,353  
-$2,651  
$25,939  
-1.0%  
-4.9%  
0.4%  
Other Education  
Total Education  
$6,123,470  
$6,097,531  
$6,091,582  
Medicaid  
$10,272,922  
$836,447  
$10,971,945  
$885,971  
-$699,023  
-$49,524  
-$748,547  
-6.4%  
-5.6%  
-6.3%  
$10,628,450  
$805,063  
-3.3%  
3.9%  
Health and Human Services  
Total Welfare and Human Services  
$11,109,370  
$11,857,916  
$11,433,512  
-2.8%  
Justice and Public Protection  
General Government  
$1,292,946  
$235,914  
$1,308,329  
$248,341  
-$15,383  
-$12,427  
-$27,810  
-1.2%  
-5.0%  
-1.8%  
$1,241,411  
$223,291  
4.2%  
5.7%  
4.4%  
Total Government Operations  
$1,528,860  
$1,556,670  
$1,464,703  
Property Tax Reimbursements  
Debt Service  
$901,983  
$1,013,333  
$1,915,316  
$919,983  
$1,027,572  
$1,947,555  
-$18,000  
-$14,239  
-$32,240  
-2.0%  
-1.4%  
-1.7%  
$897,181  
$977,669  
0.5%  
3.6%  
2.2%  
Total Other Expenditures  
$1,874,850  
Total Program Expenditures  
$20,677,015  
$21,459,672  
-$782,658  
-3.6%  
$20,864,646  
-0.9%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$29,483  
$238,605  
$268,087  
$29,483  
$269,541  
$299,023  
$0  
-$30,936  
-$30,936  
0.0%  
-11.5%  
-10.3%  
$425,500  
$388,260  
$813,760  
-93.1%  
-38.5%  
-67.1%  
TOTAL GRF USES  
$20,945,102  
$21,758,696  
-$813,594  
-3.7%  
$21,678,406  
-3.4%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
February 2017  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on February 3, 2017)  
Month of January 2017  
Year to Date Through January 2017  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
Percent  
Actual  
Estimate*  
Variance  
Percent  
$1,704,427  
$1,108,243  
$596,184  
$1,998,441  
$1,405,219  
$593,222  
-$294,014  
-$296,976  
$2,962  
-14.7%  
-21.1%  
0.5%  
$12,655,731 $13,510,948  
-$855,217  
-$671,908  
-$183,309  
-6.3%  
-6.4%  
-6.2%  
GRF  
$9,888,408 $10,560,316  
Non-GRF  
$2,767,323  
$2,950,632  
Developmental Disabilities  
$226,184  
$48,140  
$233,653  
$47,299  
-$7,469  
$841  
-3.2%  
1.8%  
-4.5%  
$1,471,081  
$334,085  
$1,549,340  
$337,630  
-$78,260  
-$3,544  
-5.1%  
-1.0%  
-6.2%  
GRF  
Non-GRF  
$178,044  
$186,354  
-$8,311  
$1,136,995  
$1,211,711  
-$74,715  
Job and Family Services  
$16,392  
$5,654  
$9,689  
$3,985  
$5,704  
$6,703  
$1,669  
$5,034  
69.2%  
41.9%  
88.3%  
$126,133  
$44,135  
$81,998  
$172,016  
$68,079  
-$45,883 -26.7%  
-$23,944 -35.2%  
-$21,939 -21.1%  
GRF  
Non-GRF  
$10,738  
$103,936  
Health  
GRF  
$1,669  
$315  
$1,505  
$279  
$164  
$36  
10.9%  
12.8%  
10.4%  
$15,693  
$2,262  
$15,732  
$1,983  
-$38  
$279  
-0.2%  
14.0%  
-2.3%  
Non-GRF  
$1,354  
$1,226  
$128  
$13,432  
$13,749  
-$317  
Aging  
$606  
$337  
$269  
$514  
$282  
$232  
$92  
$55  
$37  
17.9%  
19.6%  
15.8%  
$4,472  
$2,300  
$2,171  
$4,737  
$2,253  
$2,484  
-$266  
-5.6%  
GRF  
$48  
2.1%  
Non-GRF  
-$313 -12.6%  
Mental Health and Addiction  
$223  
$54  
$358  
$65  
-$135  
-$11  
-37.8%  
-16.6%  
-42.5%  
$3,147  
$1,732  
$1,416  
$2,963  
$1,685  
$1,278  
$184  
$47  
6.2%  
2.8%  
GRF  
Non-GRF  
$168  
$293  
-$125  
$138  
10.8%  
Total GRF  
$1,162,744  
$786,757  
$1,457,129  
$787,031  
-$294,385  
-$274  
-20.2%  
0.0%  
$10,272,922 $10,971,945  
$4,003,335 $4,283,791  
$14,276,257 $15,255,736  
-$699,023  
-$280,456  
-6.4%  
-6.5%  
Total Non-GRF  
Total All Funds  
$1,949,501  
$2,244,160  
-$294,660  
-13.1%  
-$979,479  
-6.4%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
12  
February 2017  
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 February 3, 2017)  
January Year to Date Through January 2017  
Variance  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Estimate*  
$938,997  
$126,154  
$228,939  
$96,291  
$115,473  
$74,198  
$29,862  
$43,762  
$41,108  
$18,822  
$28,063  
$16,618  
$393,467  
$92,408  
Percent  
-23.0%  
7.0%  
Actual  
Estimate*  
$6,311,290  
$861,558  
$1,496,722  
$948,560  
$719,146  
$663,298  
$204,590  
$265,740  
$271,672  
$119,205  
$194,799  
$101,826  
$2,542,127  
$555,202  
Variance  
-$476,989  
$21,501  
Percent  
-7.6%  
2.5%  
$722,635  
$134,931  
$221,780  
$89,690  
$96,905  
$74,339  
$29,068  
$35,578  
$48,705  
$14,230  
$38,158  
$11,939  
$337,005  
$94,538  
-$216,362  
$8,777  
$5,834,301  
$883,059  
$1,425,392  
$850,778  
$656,879  
$529,203  
$198,898  
$232,531  
$361,061  
$101,796  
$215,159  
$73,001  
-$7,159  
-$6,601  
-$18,567  
$142  
-3.1%  
-$71,329  
-4.8%  
-6.9%  
-$97,783 -10.3%  
-$62,267 -8.7%  
-$134,095 -20.2%  
-$5,692 -2.8%  
-$33,209 -12.5%  
$89,389 32.9%  
-$17,410 -14.6%  
$20,360 10.5%  
-$28,825 -28.3%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
-16.1%  
0.2%  
-$794  
-2.7%  
-$8,184  
$7,597  
-18.7%  
18.5%  
-24.4%  
36.0%  
-28.2%  
-14.3%  
2.3%  
-$4,592  
$10,095  
-$4,679  
-$56,462  
$2,130  
Medicare Part D  
Home Care Waivers  
ACA - Managed Care  
All Other  
$2,356,318  
$557,881  
-$185,809  
$2,679  
-7.3%  
0.5%  
-6.4%  
Total All Funds  
$1,949,501 $2,244,160  
-$294,660  
-13.1%  
$14,276,257 $15,255,736  
-$979,479  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
February 2017  
13  
Budget Footnotes  
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 January and for  
FY 2017 through January, respectively. GRF uses mainly consist of  
program expenditures but also include transfers out. Through January,  
GRF program expenditures totaled $20.68 billion. These expenditures  
were below the estimate released by OBM in August 20165 by  
For the first  
seven months  
of FY 2017, GRF  
program  
$
782.7 million (3.6%), of which $699.0 million occurred in Medicaid. The  
month of January contributed $294.4 million to GRF Medicaid's negative  
year-to-date variance. A large portion of the Medicaid variance was due  
to lower than expected managed care rates. Over 90% of Medicaid  
recipients are enrolled in managed care plans. The section that follows  
this overview provides more details on Medicaid expenditures.  
expenditures  
were below  
OBM's  
August 2016  
estimate by  
The Health and Human Services program category had the second  
largest negative year-to-date variance at $49.5 million (5.6%). This  
variance occurred entirely in months prior to January. The category's  
negative year-to-date variance was in fact narrowed somewhat in  
January as GRF expenditures for Health and Human Services were  
$
782.7 million,  
of which  
699.0 million  
$
$
3.2 million (2.0%) above the estimate for the month. The positive  
occurred in  
Medicaid.  
year-to-date variance of $41.9 million (0.9%) in the Primary and  
Secondary Education program category also occurred entirely in months  
prior to January. This category's expenditures in January were  
$
33.3 million (4.8%) below estimate. As reported in prior issues of Budget  
Footnotes, timing accounted for the majority of the variances in these two  
program categories. More specifically for Primary and Secondary  
Education, school foundation payments often deviate from their monthly  
estimates as various data elements used in the formula calculations,  
including student enrollment and property value, are updated  
throughout the year.  
Other notable program expenditure variances include a negative  
year-to-date variance of $18.0 million (2.0%) in Property Tax  
5
As indicated in the Highlights section of this report, OBM revised  
FY 2017 disbursement estimates downward from $35.89 billion to $35.07 billion  
as part of its executive budget submission on January 30, 2017. However, the  
variance analyses for this and future Expenditures reports will continue to be  
based on those compiled by OBM in August 2016.  
Budget Footnotes  
14  
February 2017  
Ohio Legislative Service Commission  
Reimbursements and another negative year-to-date variance of  
15.4 million (1.2%) in Justice and Public Protection. The variance in the  
$
Property Tax Reimbursements program category was a result of lower  
than expected reimbursement payments based on the August 2016  
property tax settlement. The first semiannual reimbursement payments  
were completed at the end of December. The second semiannual  
payments, which are based on the February 2017 property tax settlement,  
will be made throughout the second half of FY 2017. GRF expenditures  
from the Justice and Public Protection category were $25.4 million below  
estimate in January, which reversed this category's year-to-date variance  
from a positive $10.0 million at the end of December to a negative  
$
15.4 million at the end of January. The Department of Rehabilitation and  
Correction, the largest agency within this program category, accounted for  
$
13.4 million of the category's negative year-to-date variance.  
In addition to program expenditures, GRF transfers out were  
268.1 million through January, $30.9 million (10.3%) below estimate. In  
$
January, OBM anticipated an $18.9 million transfer out to the Managed  
Care Performance Payment Fund (Fund 5KW0), but no such transfer  
occurred. The transfer was authorized by section 327.80 of H.B. 64, which  
requires the Ohio Department of Medicaid (ODM) to provide  
performance payments to Medicaid managed care organizations  
providing care and services to participants of MyCare Ohio. ODM  
withholds a percentage of each premium payment it pays to a managed  
care organization for a program participant. The withheld funds are then  
transferred from the GRF to Fund 5KW0 for performance payments. The  
appropriation for GRF appropriation item 651525, Medicaid/Health Care  
Services, is reduced by the transferred amount.  
Across all  
funds,  
Medicaid  
Medicaid  
expenditures  
were  
Medicaid is primarily funded by the GRF although it also receives  
funding from various non-GRF funds. As a joint federal-state program,  
both GRF and non-GRF Medicaid expenditures contain federal and state  
moneys. In recent years, the federal government reimburses about two-  
thirds of Ohio's all-funds Medicaid expenditures.  
$
979.5 million  
below OBM's  
August 2016  
estimate for  
the year to  
date.  
Table 5 provides GRF and non-GRF Medicaid expenditures by  
agency. As seen from the table, all-funds Medicaid expenditures of  
$
1.95 billion in January were below estimate by $294.7 million (13.1%).  
GRF Medicaid expenditures of $1.16 billion were $294.4 million (20.2%)  
below estimate while non-GRF Medicaid expenditures of $786.8 million  
were just $0.3 million below estimate. Through the first seven months of  
FY 2017, across all funds, Medicaid expenditures totaled $14.28 billion,  
February 2017  
15  
Budget Footnotes  
Ohio Legislative Service Commission  
$
979.5 million (6.4%) below the year-to-date estimate. GRF Medicaid  
expenditures were $10.27 billion, $699.0 million (6.4%) below estimate,  
while non-GRF Medicaid expenditures were $4.00 billion, $280.5 million  
(6.5%) below estimate.  
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, through the first seven months  
of FY 2017, ODM's GRF expenditures totaled $9.89 billion, which was  
$
671.9 million (6.4%) below estimate, and its non-GRF expenditures  
totaled $2.77 billion, which was $183.3 million (6.2%) below estimate.  
Across all funds, ODM's expenditures were $855.2 million (6.3%) 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 $1.47 billion through the  
first seven months of FY 2017, which was $78.3 million (5.1%) below  
estimate. DDD's GRF Medicaid expenditures of $334.1 million were  
For the first  
seven months  
of FY 2017,  
total all-funds  
spending for  
managed care  
$
3.5 million (1.0%) below the year-to-date estimate while its non-GRF  
year-to-date expenditures of $1.14 billion were $74.7 million (6.2%) below  
estimate. Together, ODM and DDD account for about 99% of the  
Medicaid expenditure total.  
(including for  
traditional  
covered  
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 $477.0 million (7.6%). A significant  
portion of that variance ($216.4 million) occurred in January. Much of  
this negative variance can be attributed to lower than forecasted  
managed care rates. Actual rates are set at the beginning of each calendar  
year. Actual rates for calendar years 2016 and 2017 are both below the  
ones used in the estimate. As a result, the negative variance in Managed  
Care will likely continue to grow in the remaining months of FY 2017.  
The Managed Care negative variance in January was further augmented  
by reimbursement of some duplicate payments mistakenly made earlier  
in the fiscal year. The negative variance in the actual versus forecasted  
managed care rates is also the main driving force behind the negative  
year-to-date variance in the ACA-Managed Care category  
persons and  
the ACA  
expansion  
group) was  
$
662.8 million  
below  
estimate.  
(
$185.8 million, 7.3%).  
After Managed Care and ACA-Managed Care, the category with  
the third largest negative year-to-date variance is Administration  
$134.1 million, 20.2%). Approximately 40% of Medicaid's administrative  
(
spending is driven by service levels. Therefore, variances in spending in  
Administration often reflect variances in spending in the service  
Budget Footnotes  
16  
February 2017  
Ohio Legislative Service Commission  
categories. Variances in Administration are also driven by timing issues as  
billing for various contracts can be difficult to predict.  
The negative year-to-date variance for Hospitals ($97.8 million,  
1
0.3%) persisted in January due to a mix of over and underspending.  
ODM is spending more than anticipated on individuals who are dual-  
enrolled in Medicaid and Medicare. However, this is being more than  
offset by ODM spending less than anticipated on the aged, blind, and  
disabled population. In addition, hospital upper payment limit (UPL)  
payments and hospital-based physician UPL payments are below  
estimates year to date by about $54.8 million and $5.8 million,  
respectively. The UPL program allows the state to direct supplemental  
payments, up to the difference between the Medicare and the Medicaid  
amounts, to providers.  
The Behavioral Health category had a negative variance in January  
of $18.6 million (16.1%) that increased its year-to-date negative variance to  
$
62.3 million (8.7%). As part of the Department's behavioral health  
redesign, ODM budgeted additional spending in this category beginning  
in calendar year 2017. Claims have not come in as quickly as expected, but  
ODM expects this variance will shrink as providers start to bill more  
consistently for services.  
The overwhelmingly negative year-to-date variances in various  
Medicaid payment categories are partially offset by the positive year-to-  
date variance in the Medicare Buy-In category ($89.4 million, 32.9%). This  
category's positive variance initially resulted from a larger than  
anticipated increase in Medicare Part B premiums for calendar year 2016;  
the rates for calendar year 2017 are even more above estimate, meaning  
the positive variance will likely grow at a faster rate in the second half of  
FY 2017 than in the first half. The Medicare Buy-in Program pays  
Medicare premiums, deductibles, and coinsurance for certain low-income  
Ohioans.  
February 2017  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
ODE Works with Early Childhood Education Providers  
to Increase Utilization of Funded Preschool Slots  
Alex Vitale, Budget Analyst, 614-466-6582  
The Ohio Department of Education (ODE) has been working with early  
childhood education providers across the state to increase utilization of available  
preschool slots. H.B. 64 increased the funding for early childhood education by  
$
15 million and the number of funded preschool slots by 3,700 to 18,465 for FY 2017. As  
of late 2016, many of these slots remained unfilled according to enrollment surveys  
conducted by ODE. Some providers had filled fewer than 50% of their originally  
allocated slots due partly to the time needed to adjust to a programmatic change made  
in H.B. 64. Beginning in FY 2017, H.B. 64 limited program eligibility to four-year-old  
children only instead of both three- and four-year-olds. In an effort to increase  
utilization, ODE worked with these providers and reallocated about 1,000 open slots in  
December to providers that, through an ODE canvass, expressed interest in and  
capacity for additional slots. As of January 2017, early childhood education programs  
had filled 81%, or about 14,956, of the total slots funded for FY 2017.6  
Early childhood education grants provide a state funding allocation of $4,000 per  
child to support programs that offer educational services for eligible children from  
families with incomes below 200% of the federal poverty level ($40,320 annually for a  
family of three in 2016). The 3,700 new slots for FY 2017 were targeted to high-need  
school districts in 12 regions throughout the state according to a district's percentage of  
economically disadvantaged kindergartners, performance on Ohio's Kindergarten  
Readiness Assessment, and the percentage of third grade students scoring below  
proficient levels on the reading portion of the state test in English language arts.  
Of the total preschool slots funded in FY 2017, 17,215 (93.2%) are supported by  
GRF line item 200408, Early Childhood Education, in ODE's budget and 1,250 (6.8%) are  
supported by casino operator settlement fund moneys appropriated in Fund 5KT0 line  
item 600696, Early Childhood Education, in the Ohio Department of Job and Family  
Services (ODJFS) budget. FY 2017 marks the first year that casino operator settlement  
fund moneys have been used to fund early childhood education grants.  
6 In FY 2016, 89% of the 14,765 available slots were filled.  
Budget Footnotes  
18  
February 2017  
Ohio Legislative Service Commission  
State Board of Education Recognizes Public Schools and Districts  
for High Academic Achievement and Student Growth  
Anthony Kremer, Budget Analyst, 614-466-5654  
On November 15, 2016, the State Board of Education acknowledged public  
schools and districts that demonstrated high academic achievement and student growth  
on the 2015-2016 local report cards. This is the second year the State Board has  
recognized schools and districts through the All A Award and Momentum Award  
programs. The All A Award is given to districts and schools that received A's on each of  
the district or school's applicable report card measures. For the 2015-2016 school year,  
one district and five schools qualified. In comparison, two districts and 46 schools met  
the recognition criteria in the 2014-2015 school year. Beginning with the report cards for  
the 2017-2018 school year, this award will go to any school or district that earns an A on  
its overall report card grade.7  
Districts and schools that earn straight A's on each applicable value-added  
measure on the report cards qualify for the Momentum Award. For the 2015-2016  
school year, 54 districts and 169 schools met the criteria for this award. Similar numbers  
qualified for the award for the previous school year, when 53 districts and 165 schools  
were recognized. The value-added measure is designed to help educators determine the  
impact schools and teachers have on students' academic growth and progress in  
reading and math from year to year. The measure is calculated on an overall basis and  
for three student subgroups: (1) gifted students, (2) students in the lowest 20% in  
achievement, and (3) students with disabilities. Districts and schools must have a grade  
for at least two of the three value-added subgroups of students to qualify for the award.  
A list of the districts and schools qualifying under both recognition programs is  
available on the ODE's website.8  
Department of Health Receives $380,000 for Zika Surveillance  
Jacquelyn Schroeder, Budget Analyst, 614-466-3279  
On December 22, 2016, the Centers for Disease Control and Prevention (CDC)  
awarded two grants, totaling approximately $380,000, to the Ohio Department of  
Health (ODH) for Zika surveillance activities. The first grant, in the amount of $280,000,  
will be used to develop a process to rapidly detect microcephaly and other birth defects  
potentially related to the Zika virus during pregnancy. Specifically, ODH will use the  
7 Due to "safe harbor" provisions in current law, the report cards for the 2017-2018 school  
year will be the first to include overall letter grades for districts and schools.  
8 http://education.ohio.gov/Topics/School-Improvement/Awards-and-Recognition.  
February 2017  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
funds to contract with the 15 largest birthing hospitals in Ohio. These hospitals will  
alert ODH as soon as a baby is born with one of these birth defects, conduct clinical  
reviews, and consult with ODH staff concerning case specifics. Cases caused by the  
Zika virus will be reported to the CDC. The second grant, which is for approximately  
$
100,000, will be used to fund an epidemiologist who will investigate and report on  
Zika virus cases and ensure that infants with congenital Zika virus infections and birth  
defects are captured in birth surveillance systems, among other duties. The funding will  
also be used to develop continuing education opportunities for health care  
professionals. Continuing education topics will include patient education, the  
professional's role in the screening process, and the resources available within local  
health jurisdictions and the ODH Laboratory.  
These grant dollars were made available by the CDC as part of the Zika  
Response and Preparedness Appropriations Act of 2016, which allocated $350 million  
for Zika virus efforts. Of this amount, a total of $184 million was awarded as grants to  
states, territories, local jurisdictions, and universities. In July 2016, ODH received  
approximately $480,000 to identify and investigate potential Zika cases, coordinate the  
response between government and the health care sector, and purchase preparedness  
supplies such as insect repellents and screens.  
Department of Medicaid Releases Expansion Population Assessment  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
On December 30, 2016, the Ohio Department of Medicaid (ODM) released an  
assessment of the 2014 Ohio Medicaid expansion. The expansion extended coverage to  
9
previously uninsured low-income adults aged 19 to 64. The assessment found this  
population, often referred to as Group VIII, has benefited from expansion through  
increased access to physical and mental health care (64.3% reported improved access),  
reduced emergency room use (33.9% used the emergency room less often), improved  
detection of unaddressed health conditions (27.0% received a chronic condition  
diagnosis), and reduced medical expenses (83.7% worried less about medical bills).  
Notably, the uninsured rate among adults aged 19 to 64 dropped from 32.4% in 2012 to  
1
8
4.1% in 2015, dropping almost entirely due to Medicaid expansion. Approximately  
9% of those enrolled in Group VIII had either no insurance prior to enrolling or had  
lost their employer-based health insurance.  
This report was completed to comply with a provision of H.B. 64 that required  
ODM to report on the impact of Medicaid expansion by the end of calendar year (CY)  
2
016. Expansion allowed adults up to 138% of the federal poverty level (FPL) to enroll  
9
The full assessment is available on the Department of Medicaid's website:  
http://medicaid.ohio.gov/Portals/0/Resources/Reports/Annual/Group-VIII-Assessment.pdf.  
Budget Footnotes  
20  
February 2017  
Ohio Legislative Service Commission  
in Medicaid. During FY 2016, Group VIII caseloads averaged 676,000 per month, of  
which 590,000 were served by managed care. The Department spent a total of  
$
4.76 billion, including $3.83 billion on managed care plans, for this population. These  
costs were paid 100% with federal funds. For CY 2017, the state will share in the cost of  
Group VIII with federal support dropping to 95%.  
Development Awards $22.8 Million in Ohio Historic Preservation Tax Credits  
Tom Middleton, Senior Budget Analyst, 614-728-4813  
On December 20, 2016, the Development Services Agency (DSA) approved  
22.8 million worth of Ohio Historic Preservation Tax Credits (OHPTC) for the  
$
rehabilitation of 33 historic buildings under 18 awards. The table below displays the  
OHPTC awards by region under this announcement, Round 17 of OHPTC awards.  
Ohio Historic Preservation Tax Credit Awards by Region, Round 17  
Number of  
Awards  
Total Value of  
Awards ($ millions)  
Total Project Costs  
($ millions)  
Award as % of  
Total Project Costs  
Region  
Northeast  
West  
4
2
$7.2  
$5.2  
$4.1  
$3.9  
$2.5  
$22.8  
$75.7  
$47.2  
$29.1  
$44.7  
$28.9  
$225.6  
9.5%  
11.0%  
14.0%  
8.8%  
Northwest  
Southwest  
Central  
3
6
3
8.5%  
TOTAL  
18  
10.1%  
Note: Detail may not sum to total due to rounding.  
The goal of the OHPTC Program is to spur investment within historic areas,  
restore buildings that will attract new businesses, and generate new jobs. To be eligible,  
generally a building must be listed on the National Register of Historic Places or  
designated as a local landmark by a Certified Local Government. Each year, $60 million  
is allocated to the program; however, an additional amount in tax credits may be  
awarded if projects that were previously approved under the program have been  
withdrawn, or if there is a surplus of tax credits from prior fiscal years. The program is  
administered through a partnership between DSA and the Ohio History Connection.  
DSA awards two rounds of funding each year. Round 18 project applications were due  
February 1, and the awards will be announced at the end of June.  
February 2017  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
Ohio Department of Commerce Launches Compliance  
Incentive Program for Hotels  
Shannon Pleiman, Budget Analyst, 614-466-1154  
In January 2017, the Ohio Department of Commerce's (COM) Division of State  
Fire Marshal began issuing hotels "Operation Safe Stay" logos to appear in their  
windows and advertising campaign. The Operation Safe Stay Program was created  
under H.B. 486 of the 130th General Assembly. The program is intended to provide an  
incentive for the hotel industry to recognize hotels in Ohio that are consistently in  
compliance with the Ohio Fire Code and sanitary standards under the Ohio Revised  
Code. By mid-January, 43 out of the nearly 1,700 licensed hotels have qualified as a Safe  
Stay Hotel.  
In order to qualify as a Safe Stay Hotel, a hotel must maintain a valid annual  
operating license, renew on time, and comply with sanitation and safety standards  
under both the Revised Code and the Ohio Fire Code for 24 consecutive months.  
Furthermore, the hotel cannot be the subject of nuisance findings or findings or  
convictions for lewdness, assignation, prostitution, or felony drug activity for  
6
0 consecutive months.  
The license fee for a new hotel ranges from $2,000 to $4,000. For existing hotels,  
the license fee is $110 up to 110 rooms plus $1.00 per room thereafter. License fees are  
deposited into the State Fire Marshal Fund (Fund 5460). In FY 2016, approximately  
$
640,000 was deposited into Fund 5460 from these licenses.  
Ohio EPA Awards Just Over $200,000 in Environmental Education  
and Awareness Project Grants  
Robert Meeker, Budget Analyst, 614-466-3839  
In December 2016, the Ohio Environmental Protection Agency (Ohio EPA)  
announced the award of six environmental education and awareness project grants  
totaling a little over $200,000 through its Office of Environmental Education's General  
Grant Program (see table below). Under this program, eligible applicants may receive  
grants of up to $50,000 for projects that target a specific audience, such as preschool  
through university students and teachers. Priority is given to projects that focus on  
either: (1) innovative storm water management, (2) air emissions reductions, (3) habitat  
restoration, or (4) nutrient pollution reduction in rivers and streams. Grant recipients  
are required to provide a 10% cash or in-kind match. The grant awards are paid from  
the Environmental Education Fund (Fund 6A10), which receives one-half of the civil  
penalties collected by the Ohio EPA for violations of Ohio's air and water pollution  
control laws.  
Budget Footnotes  
22  
February 2017  
Ohio Legislative Service Commission  
December 2016 Ohio EPA Environmental Education Grant Program Awards  
Grant  
Award  
Grant Recipient  
County Service Area  
Project Description  
Cuyahoga, Lorain, Lucas,  
Summit  
Expand curricular integration of Environmental  
Dashboard technology in four school districts  
Oberlin College  
$49,689  
$46,332  
Create curriculum for high school and adult  
education students in green building and  
environmental technologies  
Columbus Green  
Building Forum  
Licking  
Ashtabula, Cuyahoga,  
Geauga, Lake Lorain,  
Medina, Portage, Summit  
Hold alternative fuel and advance technology  
workshops for vehicle operations personnel  
Earth Day Coalition  
$42,779  
Lake Erie Nature and  
Science Center  
Cuyahoga  
Statewide  
Mahoning  
Expand Climate Education field trip program  
Implement storm water education program  
$25,000  
$23,721  
$16,053  
$203,574  
Ohio University  
Boardman Glenwood  
Junior High School  
Reduce school cafeteria waste and implement  
related community compost education  
TOTAL  
Controlling Board Releases $4.6 million for County Juvenile  
Detention Center Renovations  
Maggie Wolniewicz, Senior Budget Analyst, 614-995-9992  
On December 19, 2016, the Controlling Board approved the Department of Youth  
Services' request for the release of $4.6 million in capital funds for renovation and  
maintenance projects at 12 of the state's 38 county-operated juvenile detention centers.  
Of this total, $3.6 million will be used to fund a $6 million project to replace the existing  
Allen County Juvenile Detention Center, a 45-year-old, 16-bed facility, with a new  
4
5-bed facility. The remaining $1.0 million in state capital funds will be used to help  
fund various maintenance projects, including surveillance cameras, door controls,  
HVAC equipment and controls, kitchen equipment, generators, roofing, and sprinkler  
system replacements in juvenile detention centers of the following 11 counties: Fairfield,  
Logan, Lorain, Marion, Ross, Sandusky, Trumbull, Union, Warren, Williams, and  
Wood. Juvenile detention centers are secure facilities intended to provide short-term  
care and custody of alleged and adjudicated juvenile offenders.  
February 2017  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Thomas Kilbane, Economist, 614-714-3218  
The material that follows is from the Economic Conditions and  
Outlook section of the Ohio Legislative Service Commission's February 1  
testimony before the House Finance Committee on the pending biennial  
budget of the 132nd General Assembly. It reflects information available  
as of that date.  
State of the Economy  
The economic expansion continued in 2016 for both the U.S. and  
Ohio, though some sectors have slowed. Nationwide, employment grew  
for 75 straight months through December, and by the end of 2016, wage  
growth was stronger than at any point since the 2007-2009 recession. This  
has supported healthy consumer spending, including a record number of  
light vehicle sales in 2016. Inflation, though still low, is increasing and  
employment growth was deemed strong enough by the Federal Reserve  
for a further increase in its target interest rate in December, with more  
expected in 2017. In contrast, business investment remains soft and  
exports are struggling under the weight of a strong U.S. dollar, which  
rose significantly again late in 2016. Nationwide industrial production  
declined in 2016.  
Slowdown in  
manufacturing  
hampered  
Ohio's  
economic  
growth in 2016.  
Many of these issues are highlighted in Ohio's economy which  
features plenty of manufacturing and production for export. Ohio's  
employment growth slowed significantly in 2016. On the other hand,  
home sales and real estate investment have been strong in the state and  
Columbus is one of the fastest growing metropolitan areas in the  
Midwest. Other statewide sectors have helped to pick up some of the  
slack too, such as growth in health care. Overall, further growth is  
predicted nationwide and also in Ohio, though at a bit of a slower pace.  
National  
The national  
economy  
The national economy continued to grow in 2016 as measured by  
total output, though at a slowed pace from 2015. Inflation-adjusted gross  
domestic product (real GDP) grew by 1.6% in 2016, down from 2.6%  
growth in 2015. Growth picked up in the second half of 2016 after a weak  
first half. Output during 2015 and early 2016 was weighed down in part  
by the oil and gas industry. Industrial production, which includes  
mining, fell in six of the last eight quarters, including a 0.6% decline in  
the fourth quarter of 2016. Manufacturing, the largest component of  
continued to  
grow in 2016,  
though at a  
slowed pace.  
Budget Footnotes  
24  
February 2017  
Ohio Legislative Service Commission  
industrial production, was nearly flat in 2016, increasing just 0.1% in the  
calendar year. Chart 1 illustrates quarterly changes in real GDP and  
industrial production from 2008 through last year.  
Chart 1: United States Output Measures  
1
0
5
0
5
-
-10  
-15  
-20  
-25  
2
008  
2009  
2010  
2011  
2012  
2013  
2014  
2015  
2016  
Real Gross Domestic Product  
Total Industrial Production  
The current U.S. economic expansion has been marked by its  
length and its weakness. December 2016 marked 90 months since the last  
The current  
recession ended in June 2009,10 which makes it the fourth longest economic  
expansion since 1854. However, it has also been the weakest expansion in  
terms of economic growth in the post-World War II era. Quarterly growth  
of real GDP averaged a 2.1% annual rate from the 2009 second quarter  
through the 2016 fourth quarter, while previous post-World War II  
expansions averaged a 4.6% annual growth rate.  
expansion is the  
weakest in the  
post-WWII era.  
Employment has been among the most consistent sources of  
growth during the current expansion. The economy added another  
2
.2 million jobs11 in 2016, though growth did slow a bit from 2015.  
December 2016 marked 75 straight months in which the national economy  
added more jobs than it lost. Wage growth, which has been sluggish  
throughout the recovery, showed signs of picking up by the end of 2016  
as well. By December, average hourly earnings for private, nonfarm  
workers had grown at a faster pace year-over-year than at any point since  
the recession.  
10 Business cycle trough and peak dates used in calculating the numbers  
on which these statements are based are from the National Bureau of Economic  
Research.  
11 Nonfarm payroll employment.  
February 2017  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
On the back of employment and wage gains, consumer spending  
was strong in 2016, driving economic growth despite weakness in other  
sectors. Consumer durable goods spending grew at a high pace. U.S.  
sales of cars and light trucks were 17.5 million units in 2016, setting the  
all-time record for the second straight year. The market share of light  
trucks and SUVs increased sharply over the last two years, driven in part  
by low gasoline prices. By the end of 2016 though, auto production had  
been cut at some domestic plants, based on expectations that demand  
may have peaked.  
Consumer price increases reached the Federal Reserve's 2% target  
over a 12-month span in December for the first time in over two years,  
though the measure which excludes food and energy products exceeded  
that level throughout the year (Chart 2). Overall price inflation was  
minimal in 2015 and slow to pick up for much of 2016 after a steep drop  
in energy prices at the end of 2014. Gasoline prices remain low relative to  
levels during the last ten years, but are no longer declining.  
Chart 2: Consumer Price Index  
Seasonally Adjusted  
6
5
4
3
2
1
0
-
-
-
1
2
3
2
008  
2009  
2010  
2011  
2012  
2013 2016  
2014  
2015  
All Items  
Excluding Food and Energy  
In contrast to consumers, business activity generally softened in  
016. Overall business fixed investment fell after slowing in 2015. Industrial  
capacity utilization declined in 2016 despite some recovery in mining.  
Manufacturing capacity utilization had its biggest decline year-over-year  
since the recession ended. Exporters have been hurt by a strong U.S. dollar.  
Nationwide residential fixed investment growth slowed in 2016  
after double-digit growth in 2015, although much of the decline was  
related to apartment construction in the Northeast region of the country.  
Many regions still experienced healthy investment growth. Housing  
starts in the Midwest region grew by 17.4% in 2016. Nationwide sales  
2
Nationwide  
business fixed  
investment  
declined in  
2016.  
Budget Footnotes  
26  
February 2017  
Ohio Legislative Service Commission  
volume of single-family existing homes (the bulk of the residential real  
1
2
estate market) in 2016 was the highest in a decade. Healthy demand in  
the market, but low supply relative to historical standards, led to rising  
prices in most regions. Nationwide home prices were up about 6% in 2016  
relative to 2015.13  
More increases  
in the Federal  
Reserve's target  
interest rate  
The Federal Reserve began raising short-term interest rates in  
December 2015, and in December 2016 determined economic conditions  
were strong enough for a second quarter-point increase in the target  
range. With inflation near (or already at by some measures) the Federal  
Reserve's 2% target, and employment continuing to increase on a monthly  
basis nationwide, more increases are expected in 2017. Prior to December  
are expected in  
2017.  
2
015, U.S. monetary policy had held short-term interest rates near zero for  
seven years (Chart 3).  
Chart 3: Effective Federal Funds Rate  
4
4
3
3
2
2
1
1
0
0
.5%  
.0%  
.5%  
.0%  
.5%  
.0%  
.5%  
.0%  
.5%  
.0%  
-0.5%  
2
008  
2009  
2010  
2011  
2012  
2013  
2014  
2015  
2016  
Ohio  
The 2007-2009 recession was more severe in Ohio than nationwide,  
but so was the initial recovery as measured by gross product. By 2015 and  
the first half of 2016 (the most recent state GDP estimate available), Ohio's  
growth rate of total output trailed the nation's (Chart 4). During that time  
period, the national economy experienced declines in industrial  
production, an outsized portion of which takes place in Ohio. Overall  
1
2
Data on existing home sales are from the National Association of  
Realtors.  
13 Home prices according to the Federal Housing Finance Agency.  
February 2017  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
four-quarter output growth in Ohio trailed the nation in each of the five  
most recently reported quarters.  
Chart 4: Real Gross Domestic Product  
Seasonally Adjusted  
6
4
2
0
2
4
6
8
-
-
-
-
2
008  
2009  
2010  
2011  
2012  
2013  
2014  
2015  
Ohio  
2016  
United States  
Ohio added  
Ohio nonfarm payroll employment has grown each year since  
reaching a low point in 2010, but the pace of growth slowed considerably  
in 2016. Ohio added 41,800 jobs in 2016, the lowest total in a calendar  
year since 2009. The healthcare and social assistance sector added the  
most jobs in Ohio in 2016, while durable goods manufacturing lost the  
most. Nationwide nonfarm payroll growth slowed in 2016 as well,  
though not as much as in Ohio (Chart 5).  
fewer jobs in  
2
016 than in  
any other  
calendar year  
since 2009.  
Chart 5: Total Nonfarm Payroll Employment  
Millions, Seasonally Adjusted  
1
1
1
1
1
1
1
1
45.6  
43.0  
40.4  
37.8  
35.2  
32.6  
30.0  
27.4  
5.6  
5.5  
5.4  
5.3  
5.2  
5.1  
5.0  
4.9  
2
008  
2009  
2010  
2011  
2012  
2013  
2014 2015 2016  
United States  
Ohio (right scale)  
Ohio's statewide unemployment rate in December was 4.9%,  
finishing the year higher than it began for the first time since 2009. It was  
Budget Footnotes  
28  
February 2017  
Ohio Legislative Service Commission  
also the first time since 2013 that Ohio ended the year with a higher  
unemployment rate than the nation, which finished the year at 4.7%  
Chart 6). Labor markets still appear to have more slack than these  
unemployment rates suggest. Since the end of the 2007-2009 recession, the  
rate of participation in the labor force has declined steeply, both in Ohio  
and the U.S. as a whole. Some of the decline is demographic in nature as  
the baby-boomer generation retires, but the labor force participation rate population  
(
5
9.1% of Ohio's  
1
4
civilian  
has declined even among those younger than 65. In December, Ohio's  
labor force participation rate fell to its lowest level since the 1970s. This  
reduction in labor force has caused the reported rate of unemployment1  
to correspond to lower levels of actual employment for the population  
than in past eras. For instance, when Ohio's unemployment rate was 4.9%  
in October of 2001, 63.8% of its working-age population was employed,  
whereas in December 2016, Ohio's unemployment rate was the same, but  
the employment to working-age population percentage was only 59.1%.  
aged 16 and up  
was employed  
in December  
5
2016.  
Chart 6: Unemployment Rate  
Seasonally Adjusted  
1
1
1
2
1
0
9
8
7
6
5
4
2
008  
2009  
2010  
2011  
2012  
2013  
2014  
2015  
Ohio  
2016  
United States  
Personal income has generally been growing in Ohio and  
nationwide since 2009, though Ohio's pace of growth has trailed the  
nation's (Chart 7). Figures in the chart reflect dollars of current purchasing  
power. Ohio's personal income grew 3.3% in the most recently reported  
14 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.  
15 The unemployment rate is the number of people not employed but who  
have looked for work within the last four weeks as a percent of the labor force.  
February 2017  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
four quarters (ending in the third quarter of 2016), while personal income  
in the U.S. rose 3.5%.  
Chart 7: Personal Income  
Billions of Dollars, Seasonally Adjusted Annualized Quarters  
1
1
1
1
1
1
1
1
6,500  
5,750  
5,000  
4,250  
3,500  
2,750  
2,000  
1,250  
550  
525  
500  
475  
450  
425  
400  
375  
2
008  
2009  
2010  
2011  
2012  
2013  
2014  
2015  
2016  
United States  
Ohio (right scale)  
The number of  
Ohio homes  
sold and the  
average price  
The Ohio statewide housing market had a very strong 2016.  
Housing construction growth increased substantially while the  
nationwide rate slowed, as indicated by building permits data for new  
privately owned units (Chart 8). Ohio home sales were an all-time high  
1
6
both rose to all- in 2016 by both unit sales and average price. Both measures eclipsed  
previous records set in 2005. The average home sales price in Ohio was  
time highs in  
$
163,503 in 2016, with all regions experiencing higher prices than in 2015.  
2016.  
Chart 8: New Privately Owned Housing Units  
Authorized by Building Permits  
4
3
2
1
0%  
0%  
0%  
0%  
0
%
-10%  
-20%  
-30%  
-40%  
2
008  
2009  
2010  
2011  
2012  
2013  
2014  
Ohio  
2015  
2016  
United States  
16 Ohio home sales data are from the Ohio Association of Realtors.  
Budget Footnotes  
30  
February 2017  
Ohio Legislative Service Commission  
Economic Forecasts  
The following are forecasts of key economic indicators that serve to  
illustrate the economic environment in which LSC state revenue forecasts for  
the next biennium were made. The forecasts are point estimates, which do  
not indicate the sizable, and varying, uncertainty involved in each forecast.  
Some of the indicator forecasts were used as direct inputs of various LSC  
econometric models used to make state revenue forecasts. Therefore, LSC's  
forecasts for state revenues also reflect the inherent uncertainties of economic  
indicator forecasts. Economic indicator projections are taken from  
IHS Economics' baseline forecasts released in December 2016, with the  
exception of Ohio personal income. Ohio personal income projections are  
based on an alternative forecast from IHS Economics which takes Ohio's  
recent personal income tax withholding performance into further account.  
The first line in each table contains quarter-by-quarter projected  
changes of the indicator at an annual rate. The second line contains  
year-over-year projections of the indicator averaged for the fiscal year.  
The unemployment rate tables are IHS Economics' unemployment rate  
projections for the quarters indicated (first line) and the average of the  
quarters in each fiscal year (second line).  
U.S. Gross Domestic Product  
U.S. real GDP is projected to increase about 2.5% annually on  
average in the next biennium, as shown below.  
U.S. Real GDP Growth  
2
Q2  
017  
Q3  
-----------------------------------percent change at annual rate------------------------------------  
2.4 2.4 2.2 2.2 3.3 2.6 2.6 2.4 2.4 2.0 2.0 1.9  
2.0 2.4 2.6  
2018  
Q2 Q3  
2019  
Q2 Q3  
Forecast  
Q1  
Q4  
Q1  
Q4  
Q1  
Q4  
-
Quarterly  
Fiscal Year  
Ohio Gross Domestic Product  
Economic growth in Ohio is expected to continue through 2019 but  
at a slower pace than the nation. Ohio real GDP is projected to increase  
about 1.8% annually on average in the next biennium.  
Ohio Real GDP Growth  
2
Q2  
017  
Q3  
-----------------------------------percent change at annual rate------------------------------------  
1.8 1.8 1.5 1.6 2.7 1.7 1.8 1.8 1.8 1.5 1.6 1.6  
1.5 1.7 1.9  
2018  
Q2 Q3  
2019  
Q2 Q3  
Forecast  
Q1  
Q4  
Q1  
Q4  
Q1  
Q4  
-
Quarterly  
Fiscal Year  
February 2017  
31  
Budget Footnotes  
Ohio Legislative Service Commission  
U.S. Inflation  
IHS Economics' December baseline forecast projects the consumer  
price index rate of increase to peak in the third quarter of calendar year  
2
017, and average about 2.4% annually in the next biennium.  
U.S. Consumer Price Index Inflation  
2
Q2  
017  
Q3  
-----------------------------------percent change at annual rate------------------------------------  
2.0 2.4 2.9 2.1 2.0 2.6 2.4 2.3 2.5 2.5 2.6 2.6  
2.0 2.5 2.4  
2018  
Q2 Q3  
2019  
Q2 Q3  
Forecast  
Q1  
Q4  
Q1  
Q4  
Q1  
Q4  
-
Quarterly  
Fiscal Year  
U.S. Personal Income  
Nationwide personal income is projected to grow about 5.2%  
annually in the next biennium. These growth rates are based on the  
dollar amounts of income, not adjusted for inflation.  
U.S. Personal Income Growth  
2
017  
Q3  
-----------------------------------percent change at annual rate------------------------------------  
4.5 5.0 4.8 4.9 5.7 5.4 5.1 5.2 5.9 4.8 4.8 4.7  
4.3 5.0 5.3  
2018  
2019  
Forecast  
Q1  
Q2  
Q4  
Q1  
Q2 Q3  
Q4  
Q1  
Q2 Q3  
Q4  
-
Quarterly  
Fiscal Year  
Ohio Personal Income  
Income to persons who reside in Ohio also is forecast to grow in  
the next biennium, at 4.2% annually on average, a reduced pace of  
growth compared to the U.S. These projections reflect an alternative,  
slightly more pessimistic forecast from IHS Economics relative to their  
December baseline forecast.  
Ohio Personal Income Growth  
2
Q2  
017  
Q3  
-----------------------------------percent change at annual rate------------------------------------  
3.6 4.2 3.8 3.9 4.9 4.4 4.1 4.3 5.2 4.0 4.0 3.9  
3.1 4.1 4.4  
2018  
Q2 Q3  
2019  
Q2 Q3  
Forecast  
Q1  
Q4  
Q1  
Q4  
Q1  
Q4  
-
Quarterly  
Fiscal Year  
Budget Footnotes  
32  
February 2017  
Ohio Legislative Service Commission  
U.S. Unemployment Rate  
IHS Economics' December baseline forecast projects the nationwide  
unemployment rate will decline slowly through the next biennium.  
U.S. Unemployment Rate  
2
Q2  
017  
Q3  
--------------------------------------percent of the labor force----------------------------------------  
2018  
Q2 Q3  
2019  
Q2 Q3  
Forecast  
Q1  
Q4  
4.5  
Q1  
4.4  
Q4  
4.2  
Q1  
4.1  
Q4  
4.1  
-
Quarterly  
Fiscal Year  
4.7  
4.6  
4.7  
4.6  
4.3  
4.4  
4.2  
4.1  
4.1  
4.1  
Ohio Unemployment Rate  
Ohio's unemployment rate is also projected to decline throughout  
the next biennium, as shown below.  
Ohio Unemployment Rate  
2
Q2  
017  
Q3  
--------------------------------------percent of the labor force----------------------------------------  
2018  
Q2 Q3  
2019  
Q2 Q3  
Forecast  
Q1  
Q4  
4.6  
Q1  
4.6  
Q4  
4.3  
Q1  
4.3  
Q4  
4.2  
-
Quarterly  
Fiscal Year  
4.7  
4.7  
4.7  
4.6  
4.5  
4.6  
4.4  
4.2  
4.3  
4.2  
February 2017  
33  
Budget Footnotes