Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
MARCH 2017  
VOLUME 40, NUMBER 7  
STATUS OF THE GRF  
STATUS OF THE GRF  
Highlights...................................1  
Revenues ..................................2  
Expenditures............................12  
HIGHLIGHTS  
Ross A. Miller, Chief Economist, 614-644-7768  
ISSUE UPDATES  
February GRF revenue from the income tax was  
76.9 million below the August 2016 estimate by the Office  
of Budget and Management (OBM), but revenue from the  
sales tax was on target. The weakness in income tax  
revenue was attributable in full to higher than expected  
Changing Campus Culture First  
Year Report..........................19  
PASSPORT Rate Increases....20  
Medicaid Payments for  
Ventilator-Dependent  
Individuals............................21  
$
Special License Plates.............21  
refunds to taxpayers; withholding revenue was slightly 2016 State Fair........................22  
Diesel Emission Reduction  
above OBM's August 2016 estimate.  
Grants ..................................23  
Workplace Safety Grants.........23  
The Cleveland Federal Reserve Bank's contribution to a  
Federal Reserve publication reported that economic activity  
TRACKING THE ECONOMY  
continued to grow moderately in recent weeks in its  
The National Economy ............25  
district, and labor markets have shown signs of tightening. The Ohio Economy..................29  
The Cleveland district includes all of Ohio and parts of  
three neighboring states.  
Through February, GRF tax revenue totaled  
$14.43 billion, $411.7 million below OBM's  
August 2016 estimate.  
Through February, GRF program expenditures  
totaled $23.46 billion, $897.9 million below OBM's  
August 2016 estimate. Medicaid accounted for  
$
794.2 million of the total variance.  
The GRF will meet OBM's latest (January 2017)  
target for FY 2017 if GRF tax revenue's negative  
variance for the full fiscal year is no greater than  
Legislative Service Commission  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
Telephone: 614-466-3615  
$
592 million while GRF spending's negative variance  
for the full fiscal year is no smaller than $825 million.  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of February 2017  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on March 1, 2017)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$96,819  
$84,600  
$12,219  
14.4%  
Nonauto Sales and Use  
$652,600  
$665,000  
-$12,400  
-1.9%  
Total Sales and Use Taxes  
$749,419  
$749,600  
-$181  
0.0%  
Personal Income  
$202,552  
$3,352  
$33,853  
$22,774  
$32,034  
$13,640  
$268,746  
$0  
$279,500  
$0  
-$76,948  
$3,352  
-$12,247  
$1,874  
$834  
-27.5%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
$46,100  
$20,900  
$31,200  
$13,700  
$294,200  
$0  
-26.6%  
9.0%  
2.7%  
-0.4%  
-8.7%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
-$60  
-$25,454  
$0  
$139,709  
$102  
$59,300  
$0  
$80,409  
$102  
135.6%  
---  
$0  
$0  
$0  
---  
$70,851  
$3,766  
$3,285  
$0  
$66,200  
$3,600  
$3,300  
$0  
$4,651  
$166  
7.0%  
4.6%  
-0.5%  
---  
Alcoholic Beverage  
Liquor Gallonage  
-$15  
Estate  
$0  
Total Tax Revenue  
$1,544,082  
$1,567,600  
-$23,518  
-1.5%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$6  
$10,704  
$776  
$0  
$7,125  
$1,528  
$8,653  
$6  
$3,579  
-$752  
---  
50.2%  
-49.2%  
32.7%  
Total Nontax Revenue  
$11,486  
$2,833  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
$0  
---  
---  
---  
TOTAL STATE SOURCES  
Federal Grants  
$1,555,568  
$1,046,472  
$2,602,040  
$1,576,253  
$1,091,219  
$2,667,472  
-$20,684  
-$44,747  
-$65,432  
-1.3%  
-4.1%  
-2.5%  
TOTAL GRF SOURCES  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
March 2017  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2017 as of February 28, 2017  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on March 1, 2017)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
TAX REVENUE  
Auto Sales  
$888,548  
$888,500  
$48  
0.0%  
$859,238  
3.4%  
Nonauto Sales and Use  
$6,183,136  
$6,303,600  
-$120,464  
-1.9%  
$6,043,445  
2.3%  
Total Sales and Use Taxes  
$7,071,683  
$7,192,100  
-$120,417  
-1.7%  
$6,902,683  
2.4%  
Personal Income  
$5,036,297  
$3,230  
$5,388,500  
$0  
-$352,203  
$3,230  
-$16,748  
-$1,505  
$20,919  
-$255  
-6.5%  
---  
$5,307,617  
$29,906  
$86,093  
$73,142  
$227,778  
$30,646  
$944,625  
$3,362  
-5.1%  
-89.2%  
-15.8%  
-3.8%  
Corporate Franchise  
Financial Institution  
Public Utility  
$72,452  
$70,395  
$243,419  
$32,145  
$939,463  
$2,860  
$89,200  
$71,900  
$222,500  
$32,400  
$981,200  
$3,000  
-18.8%  
-2.1%  
9.4%  
-0.8%  
-4.3%  
-4.7%  
40.3%  
-61.2%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
6.9%  
4.9%  
-$41,737  
-$140  
-0.5%  
-14.9%  
45.7%  
-56.0%  
-889.6%  
-3.7%  
$302,449  
$155  
$215,500  
$400  
$86,949  
-$245  
$207,538  
$353  
-$678  
$0  
-$678  
$86  
$587,220  
$38,792  
$31,378  
$490  
$580,400  
$35,900  
$30,400  
$0  
$6,820  
$2,892  
$978  
1.2%  
8.1%  
3.2%  
---  
$609,534  
$34,833  
$30,396  
$905  
Alcoholic Beverage  
Liquor Gallonage  
11.4%  
3.2%  
Estate  
$490  
-45.9%  
-0.4%  
Total Tax Revenue  
$14,431,750  
$14,843,400  
-$411,650  
-2.8%  
$14,489,496  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$24,072  
$25,656  
$54,263  
$103,991  
$17,200  
$20,805  
$53,345  
$91,350  
$6,872  
$4,851  
$918  
40.0%  
23.3%  
1.7%  
$16,603  
$20,304  
$44,602  
$81,509  
45.0%  
26.4%  
21.7%  
27.6%  
Total Nontax Revenue  
$12,641  
13.8%  
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  
$190,197  
$190,197  
---  
-51.5%  
-51.5%  
TOTAL STATE SOURCES  
Federal Grants  
$14,627,928  
$7,974,791  
$22,602,719  
$14,966,550  
$8,547,347  
$23,513,897  
-$338,622  
-$572,556  
-$911,179  
-2.3%  
-6.7%  
-3.9%  
$14,761,203  
$8,214,915  
$22,976,118  
-0.9%  
-2.9%  
-1.6%  
TOTAL GRF SOURCES  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
March 2017  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Jean J. Botomogno, Principal Economist, 614-644-7758  
Overview  
On January 30, 2017, OBM revised downward its August 2016  
estimates of FY 2017 GRF tax revenue by $592.2 million. Expected  
receipts from the largest three sources of GRF tax revenues, the personal  
income tax (PIT), the nonauto sales and use tax, and the commercial  
activity tax (CAT), were reduced by $333.9 million, $199.2 million, and  
Through  
$
revenue experiences through the first seven months of the fiscal year.  
The variance analyses in this issue of Budget Footnotes are based on the  
August estimates as OBM did not revise its monthly estimates for the  
below estimate. remainder of FY 2017. Based on the earlier estimates, GRF sources of  
32.0 million, respectively. The downward revisions were consistent with  
February, GRF  
tax revenue was  
$411.7 million  
1
$
22.60 billion through February were $911.2 million (3.9%) below  
projections, from shortfalls of $411.7 million from tax sources and  
572.6 million in federal grants, the latter primarily related to the level of  
$
spending in the Medicaid program. (See the Expenditures section of this  
publication.) Those negative variances were partially offset by positive  
variances of $60.4 million in transfers in and $12.6 million in nontax  
revenue. Tables 1 and 2 above show GRF sources for February and for  
FY 2017 through February, respectively.  
For the month of February, GRF sources were $65.4 million below  
the August estimate, with negative variances of $44.7 million for federal  
grants and $23.5 million for tax sources. Regarding tax sources, the  
foreign insurance tax posted a timing-related positive variance of  
GRF tax  
revenue was  
$
23.5 million  
$
80.4 million. In addition, the cigarette tax, the corporate franchise  
below estimate tax (CFT), and the public utility tax were ahead of anticipated receipts by  
$
4.7 million, $3.4 million, and $1.9 million, respectively. However, those  
in February.  
positive variances were offset by shortfalls of $76.9 million for the PIT,  
2
$
12.2 million for the financial institutions tax (FIT), and $25.5 million for  
the CAT. Sales tax revenue essentially met the 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 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.  
Budget Footnotes  
4
March 2017  
Ohio Legislative Service Commission  
GRF tax revenue generally has been tracking below estimate during  
FY 2017. As shown in Table 2, all the major tax sources, except the  
cigarette tax, were below projections through February. 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 and continued in FY 2017, despite  
accommodating negative adjustments made by OBM in August 2016  
based on FY 2016's poor results.  
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%  
Through  
February,  
The following chart illustrates the cumulative performance of total  
GRF sources relative to estimates through each month of FY 2017, broken FY 2017 GRF  
down by its largest components. Despite a small positive contribution  
from the "other state revenue" component (light blue bar in the online  
version of the chart), the GRF's cumulative sources were $911.2 million  
below estimate through February, as labeled in the far right column.  
sources were  
$
911.2 million  
below  
estimate.  
March 2017  
5
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 2: GRF Source Fiscal Year Cumulative Performance  
by Component  
Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17  
$
200  
$
0
-
$17.2  
-$200  
-$400  
-$600  
-$800  
-$145.4  
-
$235.0  
-
$262.2  
-
$611.3  
-
$713.7  
-
$845.7  
-$1,000  
-$911.2  
Federal Grants  
Tax Revenue  
Other State Revenue  
Compared to the corresponding period in FY 2016, tax revenue in  
FY 2017 was $57.7 million (0.4%) lower. The majority of the decrease can  
be attributed to the PIT, which collected $271.3 million less thus far in  
FY 2017. Also, revenues from the CFT, cigarette taxes, and the FIT  
decreased by $26.7 million, $22.3 million, and $13.6 million, respectively.  
On the other hand, sales and use tax revenue was $169.0 million higher  
than in FY 2016. Revenue also grew for the foreign insurance tax  
($94.9 million), though most of this, if not all of it, is due to timing, and  
the kilowatt-hour excise tax ($15.6 million).  
Sales and use  
tax receipts  
were  
Sales and Use Tax  
GRF monthly sales and use tax revenue of $749.4 million was  
$
0.2 million below estimate, but $41.8 million (5.9%) above revenue in  
$
120.4 million  
the same month last year. A negative variance from the nonauto portion  
of the tax was nearly offset by a positive variance from the auto sales  
tax. For the fiscal year to date, GRF sales and use tax receipts of  
below  
estimates  
through  
February in  
FY 2017.  
$
7.07 billion were $120.4 million (1.7%) below projections, though they  
were $169.0 million (2.4%) above receipts in FY 2016 through February.  
The 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
March 2017  
Ohio Legislative Service Commission  
from leases are paid at the lease signing and are mostly recorded under  
3
the nonauto tax instead of the auto tax.  
Nonauto Sales and Use Tax  
Nonauto sales and use tax revenue to the GRF was $652.6 million in  
February, which was $12.4 million (1.9%) below estimate, but $32.1 million  
Nonauto sales  
and use tax  
5.2%) above revenue in February 2016. Collections from this segment of the  
revenue was  
(
tax had been below the estimate every month, except in December.  
Comparing revenue, month by month, to revenue from the same month a $120.5 million  
year ago reveals growth, but growth that was steadily declining through  
November has turned up the last three months. For FY 2017 through  
February, nonauto sales and use tax revenue of $6.18 billion was  
below estimate  
through  
February in  
$
120.5 million (1.9%) below expectations, though receipts were $139.7 million  
(
2.3%) above receipts in the corresponding period in FY 2016. The chart FY 2017.  
below illustrates the year-over-year growth of nonauto sales and use tax  
collections and its failure to meet estimates in the last 14 months.  
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  
3 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.  
March 2017  
7
Budget Footnotes  
Ohio Legislative Service Commission  
Auto Sales and Use Tax  
For the month of February, the GRF received $96.8 million from  
the auto sales tax. This amount was $12.2 million (14.4%) above  
expectations, and $9.7 million (11.1%) above receipts in the same month  
in 2016. For the fiscal year, GRF revenue of $888.5 million was on target  
relative to projections, and $29.3 million (3.4%) above revenue in FY 2016  
through February. As the chart below illustrates, the pace of collections  
growth fell off sharply in the spring of 2016, but year-over-year growth  
has generally picked up in FY 2017.  
Auto sales and  
use tax revenue  
was on target  
through  
February in  
FY 2017.  
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%  
Personal Income Tax  
PIT GRF revenue was $202.6 million, $76.9 million (27.5%) below  
the August estimate in February. However, receipts were $21.0 million  
11.5%) above revenue in February 2016. At the end of February 2017,  
FY 2017 PIT  
revenue was  
(
$
352.2 million  
total GRF revenue from the PIT of $5.04 billion was $352.2 million (6.5%)  
below OBM's August estimate, and $271.3 million (5.1%) below PIT  
revenue in the corresponding period in FY 2016. PIT revenue is  
comprised of gross collections, minus refunds and distributions to the  
Local Government Fund (LGF). Gross collections consist of employer  
below estimate  
through  
February.  
4
withholdings, quarterly estimated payments, trust payments, payments  
associated with annual returns, and other miscellaneous payments.  
4 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.  
Budget Footnotes  
8
March 2017  
Ohio Legislative Service Commission  
The performance of the tax is typically driven by employer  
withholdings and refunds. However, the underperformance in February  
was almost all from missed refund projections: refunds were $78.1 million  
(20.6%) above estimates. Quarterly estimated payment and miscellaneous  
Revenue from  
payments were each $1.7 million below estimates, or 26.3% and 14.3%, employer  
respectively. On the other hand, revenue from employer withholdings  
was $3.5 million (0.5%) above estimates. For FY 2017 through February, withholding was  
the PIT revenue shortfall was due to refunds that were $194.9 million $  
169.0 million  
(27.4%) higher than expected. Also, employer withholding revenue was below estimate  
$
169.0 million (3.0%) short of anticipated receipts. In addition to that  
in FY 2017  
negative variance, miscellaneous payments and revenue from trusts were through  
lower than expected by $8.8 million (15.1%) and $5.7 million (20.1%).  
Partly offsetting those shortfalls, collections from quarterly estimated February.  
payments and annual returns payments were above anticipated revenue  
by $4.3 million (0.9%) and $14.5 million (15.9%), respectively.  
Policy changes, which led to reduced withholding rates, took effect  
in August 2015 and limited year-over-year growth of employer  
withholdings throughout FY 2016. Chart 5 below illustrates how a  
three-month moving average of monthly employer withholdings has  
grown relative to one year earlier. The pace of growth increased during  
early FY 2017 as the effects of policy changes were phased out of the year-  
over-year calculations, but fell in the second fiscal quarter. Early  
indications are that growth turned around since December.  
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 February 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.  
March 2017  
9
Budget Footnotes  
Ohio Legislative Service Commission  
FY 2017 Year-to-Date Personal Income Tax Revenue  
Estimate Variances and Year-over-Year Changes by Component  
Year-to-Date Variance  
from Estimate  
Year-to-Date Changes  
from FY 2016  
Category  
Amount  
$ in millions)  
Percentage  
(%)  
Amount  
($ in millions)  
Percentage  
(%)  
(
Withholding  
-$169.0  
$4.3  
-3.0%  
0.9%  
$73.0  
-$207.7  
-$9.5  
1.3%  
-29.2%  
-29.6%  
-17.3%  
-8.5%  
-2.7%  
12.2%  
0.9%  
Quarterly Estimated Payments  
Trust Payments  
-$5.7  
-20.1%  
15.9%  
-15.1%  
-2.6%  
27.4%  
-2.8%  
-6.5%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
$14.5  
-$8.8  
-$22.1  
-$4.6  
-$164.6  
$194.9  
-$7.3  
-$170.9  
$98.2  
Less Refunds  
Less LGF Distribution  
GRF PIT Revenue  
$2.2  
-$352.2  
-$271.3  
-5.1%  
Cigarette and Other Tobacco Products Tax  
FY 2017  
February GRF revenue from the cigarette and other tobacco  
revenue from  
the cigarette  
tax was  
products tax of $70.9 million was $4.7 million (7.0%) above estimate and  
$
0.5 million (0.7%) above revenue in February 2016. For the fiscal year,  
receipts from the tax were $587.2 million, $6.8 million (1.2%) above  
estimate. Of the total revenue, $546.2 million was from sales of cigarettes  
and $41.0 million was from sales of other tobacco products. Compared to  
the corresponding period of FY 2016, receipts in FY 2017 were  
$6.8 million  
above  
$
22.3 million (3.7%) lower. Generally, cigarette tax receipts are trending  
estimate.  
5
downward long-term; however, legislative changes led to increased  
receipts in the early months of FY 2016. Excluding floor tax receipts,  
FY 2017 receipts were 1.0% below receipts in FY 2016.  
Commercial Activity Tax  
FY 2017  
The third CAT payment for calendar quarter taxpayers in FY 2017  
provided GRF receipts of $268.7 million in February. This revenue was  
revenue from  
the CAT was  
$
25.5 million (8.7%) below estimate, and also $18.7 million (6.5%) below  
revenue in the same month last year. For the fiscal year through  
February, CAT revenues to the GRF totaled $939.5 million, $41.7 million  
$41.7 million  
below  
(4.3%) below estimate, and $5.2 million (0.5%) below GRF revenue in the  
estimate.  
5
H.B. 64 increased the cigarette tax from $1.25 to $1.60 per pack of  
2
cigarettes in inventory at the time the new tax rate went into effect. Excluding the  
0 cigarettes, effective July 1, 2015. This led to the payment of a "floor tax" for  
effect of the floor tax, the year-over-year decline in tax revenue was about 0.6%.  
Budget Footnotes  
10  
March 2017  
Ohio Legislative Service Commission  
corresponding period in FY 2016. FY 2017 CAT revenue credited to the  
School District Tangible Property Tax Replacement Fund (Fund 7047)  
through February was $250.5 million. The Local Government Tangible  
Property Tax Replacement Fund (Fund 7081) received $62.6 million.  
The performance of the CAT has been lackluster for two years. The  
CAT was below estimates in FY 2016, and actual all-funds revenue was  
slightly below FY 2015's total. Weakness in collections has continued this  
fiscal year. According to OAKS, gross collections were about 1.3% below  
those in the corresponding period in FY 2016. The CAT is the third largest  
GRF tax revenue source.  
March 2017  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of February 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run March 7, 2017)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$687,414  
$700,518  
-$13,103  
-1.9%  
$219,959  
$4,052  
$216,325  
$3,817  
$3,634  
$235  
1.7%  
6.2%  
Other Education  
Total Education  
$911,425  
$920,659  
-$9,234  
-1.0%  
Medicaid  
$1,557,918  
$96,057  
$1,653,100  
$100,752  
-$95,181  
-$4,695  
-5.8%  
-4.7%  
-5.7%  
Health and Human Services  
Total Welfare and Human Services  
$1,653,976  
$1,753,852  
-$99,876  
Justice and Public Protection  
General Government  
$141,229  
$24,021  
$141,920  
$28,294  
-$690  
-$4,274  
-$4,964  
-0.5%  
-15.1%  
-2.9%  
Total Government Operations  
$165,250  
$170,214  
Property Tax Reimbursements  
Debt Service  
$267  
$49,538  
$49,805  
$0  
$50,931  
$50,931  
$267  
-$1,393  
-$1,126  
---  
-2.7%  
-2.2%  
Total Other Expenditures  
Total Program Expenditures  
$2,780,455  
$2,895,655  
-$115,200  
-4.0%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$4,557  
$4,557  
$0  
$0  
$0  
$0  
$4,557  
$4,557  
---  
---  
---  
TOTAL GRF USES  
$2,785,012  
$2,895,655  
-$110,643  
-3.8%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
12  
March 2017  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2017 as of February 28, 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run March 7, 2017)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
Primary and Secondary Education  
Higher Education  
$5,432,331  
$1,547,370  
$55,194  
$5,403,491  
$28,840  
0.5%  
$5,471,584  
$1,490,713  
$52,409  
-0.7%  
3.8%  
5.3%  
0.3%  
$1,557,089  
$57,610  
-$9,719  
-$2,416  
$16,705  
-0.6%  
-4.2%  
0.2%  
Other Education  
Total Education  
$7,034,894  
$7,018,190  
$7,014,706  
Medicaid  
$11,830,841  
$932,504  
$12,625,045  
$986,723  
-$794,204  
-$54,218  
-$848,423  
-6.3%  
-5.5%  
-6.2%  
$12,201,838  
$895,462  
-3.0%  
4.1%  
Health and Human Services  
Total Welfare and Human Services  
$12,763,345  
$13,611,768  
$13,097,299  
-2.5%  
Justice and Public Protection  
General Government  
$1,434,175  
$259,935  
$1,450,248  
$276,636  
-$16,073  
-$16,701  
-$32,774  
-1.1%  
-6.0%  
-1.9%  
$1,370,847  
$248,929  
4.6%  
4.4%  
4.6%  
Total Government Operations  
$1,694,110  
$1,726,884  
$1,619,776  
Property Tax Reimbursements  
Debt Service  
$902,250  
$1,062,871  
$1,965,120  
$919,983  
$1,078,503  
$1,998,486  
-$17,734  
-$15,632  
-$33,366  
-1.9%  
-1.4%  
-1.7%  
$896,539  
$1,030,890  
$1,927,428  
0.6%  
3.1%  
2.0%  
Total Other Expenditures  
Total Program Expenditures  
$23,457,470  
$24,355,328  
-$897,858  
-3.7%  
$23,659,210  
-0.9%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$29,483  
$243,162  
$272,644  
$29,483  
$269,541  
$299,023  
$0  
-$26,379  
-$26,379  
0.0%  
-9.8%  
-8.8%  
$425,500  
$401,224  
$826,724  
-93.1%  
-39.4%  
-67.0%  
TOTAL GRF USES  
$23,730,114  
$24,654,351  
-$924,237  
-3.7%  
$24,485,934  
-3.1%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
March 2017  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on March 6, 2017)  
Month of February 2017  
Year to Date Through February 2017  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
$191,525  
Percent  
Actual  
Estimate*  
Variance  
Percent  
$2,421,189  
$1,506,079  
$915,111  
$2,229,665  
$1,600,571  
$629,093  
8.6%  
-5.9%  
45.5%  
$15,076,921 $15,740,613  
-$663,692  
-$766,400  
$102,708  
-4.2%  
-6.3%  
2.9%  
GRF  
-$94,493  
$286,018  
$11,394,487 $12,160,887  
Non-GRF  
$3,682,434  
$3,579,725  
Developmental Disabilities  
$192,214  
$47,548  
$201,285  
$47,267  
-$9,071  
$281  
-4.5%  
0.6%  
-6.1%  
$1,663,295  
$381,634  
$1,750,626  
$384,897  
-$87,331  
-$3,263  
-5.0%  
-0.8%  
-6.2%  
GRF  
Non-GRF  
$144,666  
$154,018  
-$9,352  
$1,281,661  
$1,365,728  
-$84,067  
Job and Family Services  
$17,774  
$3,654  
$9,402  
$4,660  
$4,742  
$8,372  
89.1%  
$143,907  
$47,789  
$96,118  
$181,417  
$72,739  
-$37,510 -20.7%  
-$24,950 -34.3%  
-$12,560 -11.6%  
GRF  
-$1,006  
-21.6%  
Non-GRF  
$14,120  
$9,378 197.8%  
$108,678  
Health  
GRF  
$3,640  
$285  
$1,385  
$254  
$2,255 162.9%  
$19,334  
$2,547  
$17,117  
$2,237  
$2,217  
$310  
13.0%  
13.8%  
12.8%  
$31  
12.3%  
Non-GRF  
$3,356  
$1,131  
$2,224 196.6%  
$16,787  
$14,880  
$1,908  
Aging  
$482  
$333  
$149  
$514  
$282  
$232  
-$32  
$52  
-6.2%  
18.4%  
-36.0%  
$4,953  
$2,634  
$2,320  
$5,251  
$2,534  
$2,717  
-$297  
-5.7%  
GRF  
$99  
3.9%  
Non-GRF  
-$83  
-$397 -14.6%  
Mental Health and Addiction  
$615  
$19  
$254  
$65  
$361 142.5%  
-$47 -71.3%  
$408 216.6%  
$3,762  
$1,750  
$2,012  
$3,217  
$1,750  
$1,466  
$546  
$0  
17.0%  
0.0%  
GRF  
Non-GRF  
$596  
$188  
$546  
37.2%  
Total GRF  
$1,557,918  
$1,077,997  
$1,653,100  
$789,404  
-$95,181  
-5.8%  
36.6%  
$11,830,841 $12,625,045  
$5,081,332 $5,073,194  
$16,912,172 $17,698,240  
-$794,204  
$8,137  
-6.3%  
0.2%  
Total Non-GRF  
$288,593  
$193,411  
Total All Funds  
$2,635,915  
$2,442,504  
7.9%  
-$786,067  
-4.4%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
March 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 March 6, 2017)  
February Year to Date Through February 2017  
Variance  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Estimate*  
$941,072  
$125,793  
$196,571  
$384,953  
$93,736  
$66,369  
$30,735  
$34,245  
$41,207  
$16,955  
$29,275  
$13,341  
$395,597  
$72,655  
Percent  
-9.5%  
5.4%  
Actual  
Estimate*  
$7,252,362  
$987,350  
$1,693,293  
$1,333,514  
$812,882  
$729,668  
$235,325  
$299,984  
$312,878  
$136,160  
$224,074  
$115,167  
$2,937,724  
$627,857  
Variance  
-$565,967  
$28,249  
Percent  
-7.8%  
2.9%  
$852,094  
$132,540  
$188,369  
$684,562  
$98,062  
$70,497  
$31,428  
$29,069  
$47,964  
$13,670  
$39,829  
$9,566  
-$88,978  
$6,748  
$6,686,395  
$1,015,599  
$1,613,761  
$1,535,339  
$754,941  
$599,700  
$230,326  
$261,600  
$409,025  
$115,466  
$254,988  
$82,567  
-$8,202  
$299,609  
$4,325  
-4.2%  
77.8%  
4.6%  
-$79,532  
$201,826  
-$57,942  
-4.7%  
15.1%  
-7.1%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
$4,128  
6.2%  
-$129,968 -17.8%  
-$4,999 -2.1%  
-$38,384 -12.8%  
$96,147 30.7%  
-$20,694 -15.2%  
$30,914 13.8%  
-$32,600 -28.3%  
$693  
2.3%  
-$5,175  
$6,757  
-15.1%  
16.4%  
-19.4%  
36.1%  
-28.3%  
-9.6%  
11.1%  
7.9%  
-$3,285  
$10,554  
-$3,775  
-$38,057  
$8,071  
Medicare Part D  
Home Care Waivers  
ACA - Managed Care  
All Other  
$357,540  
$80,726  
$2,713,858  
$638,607  
-$223,866  
$10,750  
-7.6%  
1.7%  
-4.4%  
Total All Funds  
$2,635,915 $2,442,504  
$193,411  
$16,912,172 $17,698,240  
-$786,067  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
March 2017  
15  
Budget Footnotes  
Ohio Legislative Service Commission  
EXPENDITURES  
Russ Keller, Senior Economist, 614-644-1751  
Nicholas J. Blaine, Budget Analyst, 614-387-5418  
Overview  
Through February, FY 2017 GRF program expenditures totaled  
23.46 billion. These expenditures were $897.9 million (3.7%) below the  
$
At the end of  
February, year-  
to-date GRF  
uses were  
estimate released by OBM in August 2016. This negative year-to-date  
variance is larger than an $825 million downward revision made by OBM  
in January 2017 for FY 2017. As part of its executive budget proposal  
submission, OBM lowered its estimates for GRF revenues and  
disbursements for FY 2017 as a whole. However, OBM did not revise its  
monthly disbursement estimates for the remainder of FY 2017. Therefore,  
the variance analyses for this and future Expenditures reports will  
continue to be based on OBM's August 2016 estimates.  
$
924.2 million  
below the  
estimates  
released by  
OBM in August.  
The Medicaid  
variance made  
up 85.9% of  
that total  
Year-to-date program expenditures were below their August  
estimates for all but one category; Primary and Secondary Education had  
a relatively small positive variance of $28.8 million (0.5%) due partly to  
timing. GRF Medicaid expenditures were $794.2 million below the year-  
to-date estimate, of which $95.2 million occurred in February. More  
details on Medicaid expenditures are discussed below.  
Tables 3 and 4 show GRF uses for the month of February and for  
FY 2017 through February, respectively. GRF uses mainly consist of  
program expenditures but also include transfers out. Including both  
program expenditures and transfers out, GRF uses were $23.73 billion at  
the end of February, which is $924.2 million (3.7%) below OBM's  
August 2016 estimate.  
variance in  
uses.  
Medicaid  
Medicaid is primarily funded by the GRF although it also receives  
funding from various non-GRF funds. As a joint federal-state program,  
both GRF and non-GRF Medicaid expenditures contain federal and state  
moneys. In recent years, the federal government reimburses about two-  
thirds of Ohio's all-funds Medicaid expenditures.  
Table 5 shows GRF and non-GRF Medicaid expenditures from the  
Ohio Department of Medicaid (ODM) and the five "sister" agencies –  
Developmental Disabilities, Job and Family Services, Health, Aging, and  
Mental Health and Addiction Services. As seen from the table, across all  
funds, Medicaid expenditures of $2.64 billion in February were above  
estimate by $193.4 million (7.9%). GRF Medicaid expenditures of  
$
1.56 billion were $95.2 million (5.8%) below estimate while non-GRF  
Budget Footnotes  
16  
March 2017  
Ohio Legislative Service Commission  
Medicaid expenditures of $1.08 billion were $288.6 million (36.6%) above  
estimate. February's positive non-GRF variance is due to a timing issue  
with Hospital Care Assurance Program (HCAP) payments that is  
described below. This positive variance will be offset by an anticipated  
negative variance next month. Through the first eight months of FY 2017,  
across all funds, Medicaid expenditures totaled $16.91 billion,  
$
expenditures were $11.83 billion, $794.2 million (6.3%) below estimate,  
while non-GRF Medicaid expenditures were $5.08 billion, $8.1 million  
A timing issue  
caused a large  
positive  
variance in  
786.1 million (4.4%) below the year-to-date estimate. GRF Medicaid  
non-GRF  
spending in the  
hospitals  
(0.2%) above estimate.  
Table 6 details all-funds Medicaid expenditures by payment  
category in  
February. This  
variance will be  
reversed in  
March.  
category. As seen from the table, Managed Care had the largest negative  
variance for the year to date at $566.0 million (7.8%), growing from the  
previous month. 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 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 ($223.9 million,  
7
.6%).  
After Managed Care and ACA-Managed Care, the category with  
the third largest negative year-to-date variance is Administration  
$130.0 million, 17.8%), shrinking slightly from January. Approximately  
0% of Medicaid's administrative spending is driven by service levels.  
(
4
Therefore, variances in spending in Administration often reflect variances  
in spending in the service categories. Variances in Administration are also  
driven by timing issues as billing for various contracts can be difficult to  
predict.  
The Behavioral Health category had a positive variance in February  
of $4.3 million (4.6%) that reduced its year-to-date negative variance to  
$
57.9 million (7.1%). The negative year-to-date variance in this category  
will likely continue to shrink somewhat through the end of the fiscal year,  
as ODM expects higher spending than originally estimated in the final  
months of FY 2017 due to the behavioral health redesign.  
Hospitals, which has had a negative year-to-date variance for the  
first seven months of the fiscal year now has a positive variance  
($201.8 million, 15.1%) due to significant overspending of $299.6 million in  
February. This occurred because ODM made both its originally scheduled  
February ($314.0 million) and March ($314.0 million) HCAP payments in  
March 2017  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
February. Under HCAP, Ohio makes subsidy payments to hospitals that  
provide uncompensated care to low-income and uninsured individuals  
at or below 100% of the federal poverty level. Due to the early payment,  
the Hospitals category will have a larger than usual negative variance in  
March, canceling out most or all of the positive variance this month and  
putting the category back into having a negative year-to-date variance.  
While ODM's spending for Hospitals is more than anticipated on  
individuals who are dual-enrolled in Medicaid and Medicare, 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.  
After Hospitals, the second largest positive year-to-date variance  
is in the Medicare Buy-In category ($96.1 million, 30.7%). This category's  
positive variance resulted from larger than anticipated increases in  
Medicare Part B premiums for both calendar years 2016 and 2017. Due to  
a higher rate increase in calendar year 2017, 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.  
The first  
payments to  
providers  
under the  
Comprehensive  
Primary Care  
Program were  
made in  
Also worth noting, the All Other category had a positive variance  
of $8.1 million in February due to the first payments for the  
Comprehensive Primary Care (CPC) Program being sent to providers.  
Participating CPC practices are eligible to receive a per member  
per month incentive payment by engaging in activities that are known to  
improve patients' health. Payments average $4 per member per month  
and are made quarterly; the next payment is scheduled for April.  
February.  
Budget Footnotes  
18  
March 2017  
Ohio Legislative Service Commission  
ISSUE UPDATES  
Department of Higher Education Releases First-Year Data on  
Changing Campus Culture Initiative  
Adam Wefler, Budget Analyst, 614-466-0632  
On January 20, the Ohio Department of Higher Education (ODHE) released the  
first-year implementation report on the Changing Campus Culture initiative, which  
was initially launched in October 2015. During its first year, the initiative saw a  
dramatic increase in participation among Ohio's public and private institutions of  
higher education. By October 2016, all 88 Ohio campuses had implemented evidence-  
based training programs for preventing sexual violence, compared with 33% in October  
2
015. Climate survey data was collected by 92% of campuses, up from 27% a year ago.  
The percentage of campuses that have begun sexual violence awareness campaigns  
increased from 49% to 77%. Many campuses have also increased support services for  
survivors of sexual violence. In October 2015, 41% of Ohio's colleges and universities  
had survivor-centered support service programs. Now, 95% of campuses have trained  
community members available, and 85% have confidential advisors on hand to assist  
survivors.  
The Changing Campus Culture Initiative, which is designed to combat sexual  
violence on Ohio's college campuses, received $2 million in GRF funding in FY 2016  
under H.B. 64. A diverse advisory board was tasked with collecting data and generating  
recommendations. In October 2015, the advisory board issued a report that calls for  
campuses to implement five recommended strategies to prevent and respond to sexual  
violence. The goal is to have all five recommendations implemented in every campus.  
These five recommendations are:  
Use data to guide action;  
Empower staff, faculty, campus law enforcement, and students to prevent  
and respond to sexual violence through evidence-based training;  
Communicate a culture of shared respect and responsibility;  
Develop a comprehensive response protocol; and  
Adopt a survivor-centered response.  
March 2017  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
Department of Aging Increases Rates for PASSPORT Providers  
Justin Pinsker, Budget Analyst, 614-466-5709  
On January 1, 2017, the Ohio Department of Aging (ODA), in conjunction with  
the Ohio Department of Medicaid (ODM), increased the rate for certain PASSPORT  
services (see table below). The amounts were increased to increase access for waiver  
services for Medicaid consumers, align rules with the Ohio Home Care Waiver, and to  
replace the previous regional rate system with a statewide rate system. The largest rate  
increases went to agency nursing services provided by a licensed practical nurse (LPN),  
increasing $2.75 from $37.90 to $40.65, and agency nursing services provided by a  
registered nurse (RN), increasing $2.00 from $45.40 to $47.40. The base rate is the rate  
for the first 35-60 minutes of a service delivered, and the unit rate is for either less than  
3
5 minutes of service provision or for each additional 15 minutes of services provided in  
excess of the base amount. ODA estimates the rate increases will total approximately  
$
11.5 million in FY 2017, $16.7 million in FY 2018, and $17.6 million in FY 2019.  
PASSPORT Service Rates, Effective January 1, 2017  
Base Rate  
Unit Rate  
Provider Type  
Old  
N/A  
New  
N/A  
N/A  
Old  
$4.34  
$2.86  
$8.32  
$6.96  
$6.82  
$5.57  
New  
$4.49  
$2.95  
$8.72  
$7.03  
$7.37  
$5.88  
Personal Care-Agency Provider  
Home Care Attendant  
N/A  
RN Nursing Services Agency  
RN Nursing Services Nonagency  
LPN Nursing Services Agency  
LPN Nursing Services Nonagency  
$45.40  
$38.60  
$37.90  
$31.65  
$47.40  
$38.95  
$40.65  
$33.20  
PASSPORT is a home and community-based Medicaid waiver program that  
enables older individuals to stay at home by providing them with in-home, long-term  
care services. ODA administers the program and ODM pays for reimbursement of  
service providers. To be eligible for the program, a person must be over age 60 and meet  
Medicaid eligibility for nursing facility care. In addition, the person must be frail enough  
to require a nursing facility level of care and have a physician's consent that he or she is  
able to safely remain at home. PASSPORT services include home care attendant services,  
emergency response systems, enhanced community living, home medical equipment,  
nursing services, and independent living assistance.  
Budget Footnotes  
20  
March 2017  
Ohio Legislative Service Commission  
Medicaid Increases Reimbursement Rates for Ventilator-Dependent  
Nursing Facility Residents  
Ivy Chen, Principal Economist, 614-644-7764  
Effective February 1, 2017, ODM implemented an enhanced reimbursement rate  
through an alternative payment system for ventilator-dependent nursing home patients  
to increase access to care for those individuals. The enhanced payment rate is  
approximately $640 per Medicaid day for nursing facilities that provide services to  
ventilator-dependent individuals and that meet the criteria and conditions to  
participate in the Department's alternative purchasing model for the provision of  
services to ventilator-dependent individuals. This enhancement payment rate is  
established based on 60% of the average per day Medicaid payment in FY 2016 for long-  
term care hospitals whose primary patients are those who depend on ventilators. The  
implementation of this enhanced payment rate is expected to increase reimbursements  
for nursing facilities by approximately $6.5 million in FY 2017 and by about $40 million  
in each of FY 2018 and FY 2019.  
Bureau of Motor Vehicles Issues Over 436,000 Special License Plates in 2016  
Maggie Wolniewicz, Senior Budget Analyst, 614-995-9992  
In calendar year 2016, the Bureau of Motor Vehicles (BMV) issued a total of  
36,224 special license plates. The number of different plates available totaled over 240,  
4
each of which generally falls into one of four categories: organizational, collegiate,  
military, or disability. The table below lists the top five organizational, collegiate, and  
military plates issued in 2016, the number of each, and the total number issued for each  
category.  
Of the available 240 different special license plates, the 30 collegiate, and 95 of the  
organizational plates, require a contribution that varies by type of plate from $5 to $35.  
These contributions generally are earmarked for programs related to health, sports,  
children, pets, colleges, and the environment. These special license plates as a group  
generated over $3 million in contributed revenue. The BMV also offers 89 military  
plates, as well as a disability plate, but those do not generate revenue as they are issued  
at no cost to the registrant.  
Special license plates generally are subject to minimum registration  
requirements, which if not met, may result in termination of the plate. According to the  
BMV, no license plates were terminated for failure to meet that requirement in 2016.  
March 2017  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
Top Five Special License Plates Issued by Category, Calendar Year 2016  
Organizational  
License Plate  
Collegiate License  
Plate  
Total  
Total  
21,218  
3,118  
2,088  
1,939  
1,635  
38,312  
Military License Plate  
Total  
Historical (Motor  
Vehicles)  
The Ohio State  
U.S. Armed Forces  
Veteran (Army)  
1
8,509  
16,670  
10,505  
10,393  
10,004  
70,244  
29,769  
18,958  
18,200  
14,719  
12,794  
166,993  
University (Block O)  
University of  
Cincinnati  
Wildlife (Cardinal)  
Vietnam Veteran  
U.S. Armed Forces  
Veteran (Marine)  
Lake Erie Lighthouse  
Ohio Pets (Pet Friendly)  
One Nation Under God  
Ohio University  
Miami University  
U.S. Armed Forces  
Veteran (Navy)  
(
Block M)  
U.S. Armed Forces  
Veteran (Air Force)  
University of Dayton  
Organizational  
Collegiate License  
Plate Total  
Military License  
Plate Total  
1
License Plate Total  
2
016 Ohio State Fair Generated a Profit of Nearly $711,000  
Shannon Pleiman, Budget Analyst, 614-466-1154  
The Ohio Expositions Commission reported a profit of almost $711,000 from the  
016 State Fair, which was held from July 27 through August 7. Overall revenue from  
2
the event was approximately $9.0 million, of which $6.6 million (73.3%) was derived  
from admission fees, ticket sales for entertainment and attractions, and exhibit space  
rental fees. The remaining $2.4 million (26.7%) came from event sponsorship, parking  
and camping fees, and other sources such as concessions and livestock auction  
revenues. Total expenses for the 2016 State Fair were $8.3 million, with payroll and  
entertainment and personal service contracts accounting for approximately $5.2 million  
(62.7%) of that amount. The remaining $3.1 million (37.3%) was spent on advertising,  
fairground maintenance, supplies, utilities, and other items. Over 921,000 individuals  
attended the 2016 State Fair, 61,000 fewer people compared to the record-setting  
attendance in 2015.  
The Exposition Commission has an FY 2017 budget of $14.5 million, of which  
$
1
13.9 million is funded by anticipated revenues from the State Fair and approximately  
75 other events held on the state fairground throughout the year. A GRF appropriation  
of $375,000 is used to support the Junior Fair held in conjunction with the State Fair.  
Under certain conditions, the Commission may tap the State Fair Reserve Fund  
(Fund 6400) if receipts from the annual event fall short of expenses. The last time the  
Commission exercised this authority was in 2002. As of February 24, 2017, Fund 6400  
had a cash balance of $125,337.  
Budget Footnotes  
22  
March 2017  
Ohio Legislative Service Commission  
Ohio EPA Awards $12.8 million in Diesel Emission Reduction Project Grants  
Robert Meeker, Budget Analyst, 614-466-3839  
On January 31, 2017, the Ohio Environmental Protection Agency (Ohio EPA)  
announced the award of Diesel Emission Reduction Grants (DERG) totaling  
6
$
12.8 million for 30 public and private sector diesel fleet projects (see table below). The  
grant awards will be used for projects that refurbish or replace aging diesel engines  
with newer, cleaner diesel technology or alternative fuel technology. Awards range  
from $53,667 to $987,000 with an average award of $427,000.  
DERG Awards Announced in January 2017  
Number of Vehicles  
or Engines Replaced  
Total Amount  
Awarded  
% of Amount  
Awarded  
Diesel Fleet Project Type  
Projects  
Public Sector School Buses  
Public Sector Transit Buses  
Private Sector*  
12  
7
118  
11  
$4,511,163  
$4,001,056  
$4,303,830  
$12,816,049  
35.2%  
31.2%  
33.6%  
100.0%  
11  
30  
106  
235  
TOTAL  
*
Private sector entities are required to apply through a public sector partner such as a metropolitan planning organization, local  
government, or state agency.  
DERG is administered jointly by the Ohio EPA and the Ohio Department of  
Transportation and is supported with federal Congestion Mitigation and Air Quality  
Program (CMAQ) funds allocated to Ohio by the Federal Highway Administration.  
Grants awarded as part of the DERG program cover up to 80% of an eligible project's  
total cost. Recipients are required to provide a minimum 20% in matching funds, which  
cannot be sourced from other federal funds or from in-kind services. To be eligible, the  
recipient's equipment must be operated in Ohio CMAQ-eligible areas for at least 65% of  
the time. These areas include 38 counties (or parts of counties), largely in central,  
southwest, and northeast Ohio. The projects awarded during this grant cycle cover  
2
5 counties.  
BWC Awards $944,000 in Workplace Safety Grants  
Terry Steele, Senior Budget Analyst, 614-387-3319  
On January 25, 2017, the Bureau of Workers' Compensation (BWC) awarded over  
944,000 in workplace safety grants to 41 employers in 28 counties. These grants were  
$
awarded under the Safety Intervention Grant Program and will be used to purchase  
6 The Ohio EPA estimates the 30 projects will reduce air pollutants (fine particulates and  
nitrogen oxides) by more than 137 tons annually.  
March 2017  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
equipment designed to substantially reduce or eliminate workplace injuries and  
illnesses. Of the 41 grant recipients, 22 are private employers and their award total is  
approximately $412,000. The remaining 19 recipients are public employers and their  
award total is approximately $532,000. Eight employers were each awarded the  
maximum grant of $40,000 that is allowed under the program. A full list of the grant  
award recipients, including the specific employers and award amounts, can be found at:  
https://www.bwc.ohio.gov/home/current/releases/2017/012517.asp.  
BWC's Safety Intervention Grant Program offers private and public employers  
funding for training, wellness programs, and equipment intended to reduce workplace  
injuries and illnesses. Grants are made available to employers with a three to one  
matching amount up to a maximum of $40,000. The funding for this program comes  
from assessments charged to employers that are calculated as a percentage of paid  
premiums. Those amounts are 1.0% of paid premiums for private employers and 0.75%  
of paid premiums for public employers. In total, BWC offers approximately  
$
15.0 million in Safety Intervention Grants in each fiscal year.  
Budget Footnotes  
24  
March 2017  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Philip A. Cummins, Senior Economist, 614-387-1687  
Ruhaiza Ridzwan, Senior Economist, 614-387-0476  
Overview  
The national economy appears to be continuing to expand, as  
indicated by increases reported for January in employment, factory and  
mining production, and home sales. Consumer spending, housing starts,  
and total construction spending slowed in January, however. Sales of  
light motor vehicles remained at a high level in January and February but  
were down from the pace in the fourth quarter of last year. Inflation-  
adjusted gross domestic product (real GDP) rose at a 1.9% annual rate in  
last year's fourth quarter, and rose only 1.6% for all of last year.  
The national  
economy  
appears to be  
continuing to  
expand.  
In Ohio, total employment fell in January after trending upward  
last year. The rate of growth in employment in 2016 was slower than in  
the previous six years. Home sales in the state continue to expand.  
The nation's central bank, the Federal Reserve, has kept its short-  
term interest rate target, for the federal funds rate, unchanged since it  
1
3
raised the target range to ⁄  
2
% to ⁄  
4
% at the December meeting of its  
monetary policy-setting committee. This group, the Federal Open Market  
Committee (FOMC), next meets March 14-15. Federal Reserve Chair  
Yellen said in a speech on March 3 that "(t)he economy has essentially met  
the employment portion of our mandate and inflation is moving closer to  
our 2 percent objective." Market participants appear to expect another  
7
firming of policy at the March meeting.  
The National Economy  
Employment and Unemployment  
Total nonfarm payroll employment in the U.S. increased 227,000  
from December to January, up from monthly gains averaging 187,000 in  
2
016. The unemployment rate rose to 4.8% in January from 4.7% in  
7 One measure of market expectations is federal funds futures prices.  
Based on trading in contracts for 30-day federal funds futures, the CME Group  
estimated on March 7 that the probability of a quarter-point increase in the range  
at that meeting was more than 84%. This estimate of market expectations was  
downloaded from the following website: http://www.cmegroup.com/trading/  
interest-rates/countdown-to-fomc.html.  
March 2017  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
December and 4.6% in November, the lowest since 2007. 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
007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017  
Nonfarm Payroll Employment Unemployment Rate (right scale)  
The next report on nationwide employment and unemployment in  
February is scheduled for release March 10 by the U.S. Bureau of Labor  
Statistics.  
Production, Shipments, and Inventories  
Real GDP rose at a 1.9% annual rate in last year's fourth quarter,  
the same growth rate as estimated initially but based on more complete  
information. The figures continue to show an upturn in growth in the  
second half of last year after slower growth earlier. Consumer spending  
expanded at a 3% annual rate in the 2016 second half and residential  
fixed investment rose briskly in the fourth quarter after two quarters of  
declines. Business fixed investment, however, remained sluggish. Real  
exports, on balance, rose only slightly last year, the second consecutive  
year of minimal growth. For the full year 2016, real GDP rose 1.6%, down  
from 2.6% growth the year before and a 2.4% increase in 2014.  
In January,  
output of  
factories rose  
0
.2% and that  
of mining rose  
.8%.  
2
Total industrial production fell 0.3% in January as utility output  
fell 5.7%. In contrast, output of factories rose 0.2% and that of mining  
rose 2.8%. The industrial production index is a weighted average of  
estimated output of manufacturing (about 80%), mining (9%), and  
utilities (11%). The plunge in utility output was attributed by the source  
agency, the Federal Reserve, to exceptionally warm weather that cut  
demand for heating. The increase in mining reflected increases in the  
major industry groups in this sector including oil and gas extraction,  
Budget Footnotes  
26  
March 2017  
Ohio Legislative Service Commission  
coal, and others. The index for all industrial production remains about 2%  
below its peak in late 2014.  
Factory production continued to rise in February, as indicated by a  
survey of purchasing managers with the Institute for Supply  
Management. Survey responses noting increases also outnumbered  
reports of decreases for new orders, order backlogs (unfilled orders),  
inventories, and employment, along with widespread reports of higher  
prices paid. A comparable survey of purchasing managers with  
nonmanufacturing organizations also showed continued expansion of  
economic activity.  
Factory  
production  
continued to  
rise in  
February, as  
indicated by a  
survey of  
Consumer Spending and Incomes  
Personal income rose 0.4% in January, measured in dollars of  
current purchasing power and seasonally adjusted. Incomes were boosted  
by higher wages and salaries and by increased transfer payments. The  
price index for consumer spending also rose 0.4% for the month. Real  
personal consumption expenditures fell 0.3% in January, as spending fell  
for both services, particularly utility services, and for durable goods,  
notably new vehicles and household durables. The fall in consumption of  
utility services plausibly reflects the effect of the unseasonably mild  
winter weather.  
purchasing  
managers.  
In February, sales of light motor vehicles remained strong. On a  
seasonally adjusted basis, the sales rate was around the record pace for all  
of last year. Compared with the elevated rate in last year's fourth quarter,  
though, light vehicle sales in January and February were lower, indicating  
weakness in this component of first quarter consumer spending,  
compared with the fourth quarter.  
Construction and Real Estate  
Housing starts fell 3% in January, seasonally adjusted, but were  
1
0% above the year-earlier rate. Seasonal adjustment of these data is  
particularly uncertain in the winter months. For all of last year, housing  
starts rose 6%, with particular strength in starts on construction of single-  
family homes and slackening starts on apartments, especially in the  
Northeast region of the country.  
Nationwide sales of new homes rose 4% from December to  
January, after increasing 12% in all of 2016 compared with the previous  
year. Sales of used homes rose 3% in January after rising 4% from 2015 to  
March 2017  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
2
016.8 Used home sales in January were reported to be at the strongest  
rate, seasonally adjusted, in nearly a decade.  
U.S. home prices continued to rise through year end 2016,  
according to estimates from the Federal Housing Finance Agency.  
Average home prices in 2016 were 6% higher than a year earlier,  
extending an uptrend underway since 2011.  
Total construction put in place nationwide declined 1% in January  
from December, seasonally adjusted. These figures are in current dollars,  
not adjusted for inflation. In all of 2016, construction activity rose 5%,  
including a 5% increase in private residential construction, an 8%  
increase in private nonresidential construction, partially offset by a 1%  
decline in public construction. Private office construction rose 30% last  
year, private lodging construction (hotels, motels, and similar buildings)  
rose 27%, and construction of private commercial structures rose 11%.  
Inflation  
The personal consumption expenditures price index rose 0.4% in  
January, as noted above, and was 1.9% higher than a year earlier, the  
highest inflation rate as measured by this index since 2012. The most  
recent published FOMC meeting minutes say that the group judges  
inflation at 2% per year, measured by this index, to be most consistent  
with the agency's mandate.  
The personal  
consumption  
expenditures  
price index in  
January was  
The consumer price index (CPI) rose 0.6% in January, the largest  
monthly increase since February 2013, as gasoline prices jumped 7.8%.  
Compared with a year earlier, the CPI for all items was 2.5% higher, the  
highest in nearly five years, with prices of various energy goods and  
services up 10% to 20% or more. Excluding both energy and food, the  
CPI was 2.3% higher than in January 2016, equaling or exceeding year-  
over-year changes in this inflation measure since 2008.  
1
.9% higher  
than a year  
earlier.  
The producer price index for final demand, a measure of factory  
and wholesale prices, rose 0.6% in January to 1.6% higher than in  
January 2016. Final demand goods prices were 3.1% higher than a year  
earlier, the largest increase since 2012, with energy goods prices up  
sharply.  
8
Used or existing home sales are from the National Association of  
Realtors and are closings on purchase/sales contracts.  
Budget Footnotes  
28  
March 2017  
Ohio Legislative Service Commission  
The Ohio Economy  
Employment and Unemployment  
Total nonfarm payroll employment in Ohio declined 2,100 from  
December to January, to 31,100 (0.6%) higher than a year earlier.  
Unemployment as a share of the labor force in January was unchanged at  
Total nonfarm  
payroll  
5
.0%. Trends in Ohio employment and unemployment are shown in  
Chart 7.  
employment in  
Ohio in January  
was 31,100  
(0.6%) higher  
than a year  
earlier.  
Chart 7: Ohio Employment and Unemployment Rates  
5
5
5
5
5
5
5
4
.6  
11%  
10%  
9%  
8%  
7%  
6%  
5%  
4%  
.5  
.4  
.3  
.2  
.1  
.0  
.9  
2
007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017  
Nonfarm Payroll Employment  
Unemployment Rate (right scale)  
Both employment and unemployment were revised for earlier  
months and years, with employment generally revised downward and  
unemployment upward. Revisions were small. On average, total nonfarm  
payroll employment in 2016 was revised downward by 0.1%. The  
statewide average unemployment rate in 2016 was revised upward  
slightly, less than 0.1 percentage point, and the low point of recent years  
for this rate, in August and September 2015, was revised upward from  
4
.6% to 4.7%.  
The uptrend in employment is continuing but is slower than earlier  
in the expansion. In the year to December 2016, the number of nonfarm  
payroll jobs increased 0.9%, the smallest rise since the 2007-2009 recession.  
In 2010-2015, yearly increases averaged 1.4%.  
March 2017  
29  
Budget Footnotes  
Ohio Legislative Service Commission  
Ohio Home Sales  
The number of existing homes sold in Ohio increased by 1.6% in  
January compared to the preceding January, according to the Ohio  
Association of Realtors. The average price of homes sold through realtors  
statewide was 7.5% higher than a year earlier. For all of 2016, the group  
reported 151,594 housing units sold in Ohio, 7.5% more than in 2015, at  
an average price of $163,503, up 5.1% from the previous year.  
The number of  
existing homes  
sold in Ohio for  
all of 2016 was  
7
.5% more  
Regional Economic Conditions  
than in 2015.  
Economic activity in the Federal Reserve District that includes  
Ohio grew at a moderate pace in late 2016-early 2017, according to a  
9
report from the Federal Reserve Bank of Cleveland. Retailers cite  
increased consumer confidence, low interest rates, and incentive  
programs of product manufacturers as factors in rising sales. Production  
at factories in the region strengthened slightly, but continues to be  
restrained by the high value of the dollar relative to foreign currencies,  
and by weakness in the oil and gas sector. Commercial construction  
activity remains at a high level. Labor markets continue to tighten,  
particularly for skilled trades, engineering, data analytics, and similar  
positions, resulting in rising wages and benefits, and lengthening of the  
time needed to fill job openings.  
9 Based on the latest Beige Book, a Federal Reserve System publication  
that summarizes information gathered on or before February 17, 2017, from  
outside contacts. The Federal Reserve Bank of Cleveland's district includes all of  
Ohio and nearby parts of Kentucky, Pennsylvania, and West Virginia.  
Budget Footnotes  
30  
March 2017