Budget Footnotes  
A NEWSLETTER OF THE OHIO LEGISLATIVE SERVICE COMMISSION  
MAY 2017  
VOLUME 40, NUMBER 9  
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  
April GRF tax revenue was $159 million below the  
August 2016 estimate by the Office of Budget and  
Management (OBM), as the April income tax filing season  
Volunteer Fire Assistance Grant  
Program ...............................18  
BWC Premium Rebate ............18  
I-Corps@Ohio..........................19  
was disappointing and sales tax revenue was nearly Person-Centered Staff  
Engagement Project.............20  
Ohio History Fund Grants........20  
$
48 million below the estimate. Payments accompanying  
income tax returns were $28 million below estimate, and Small Business Collateral  
Enhancement Program ........21  
Public Wastewater and Water  
System Project Loans ..........22  
refunds were $82 million above estimate.  
Ten months into FY 2017 it is likely that GRF tax  
revenue, currently nearly $774 million below the August  
estimate, will end the year below the January OBM  
TRACKING THE ECONOMY  
The National Economy ............24  
estimate. The Executive budget proposal reduced GRF tax The Ohio Economy..................28  
revenue projections for FY 2017 by $592 million compared  
to the August estimate, and Ohio ended April $182 million  
below that. The spending side of the state budget is also  
well below estimate, but the possibility that FY 2017  
GRF revenue exceeds expenditures looks unlikely.  
Through April 2017, GRF sources totaled $27.79 billion:  
Revenue from the personal income tax was  
$554.4 million below the August OBM estimate,  
while sales tax receipts were $208.4 million below  
estimate.  
Through April 2017, GRF uses totaled $29.55 billion:  
Legislative Service Commission  
7
7 South High Street, 9th Floor  
Columbus, Ohio 43215  
GRF program expenditures were $1.17 billion  
below OBM's August 2016 estimate. Medicaid  
accounted for $872.6 million of the total variance.  
Telephone: 614-466-3615  
AVAILABLE ON OUR WEBSITE: WWW.LSC.OHIO.GOV  
CLICK ON 'PUBLICATIONS/BUDGET FOOTNOTES'  
Ohio Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of April 2017  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on May 1, 2017)  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
TAX REVENUE  
Auto Sales  
$121,625  
$124,700  
-$3,075  
-2.5%  
Nonauto Sales and Use  
$791,719  
$836,200  
-$44,481  
-5.3%  
Total Sales and Use Taxes  
$913,343  
$960,900  
-$47,557  
-4.9%  
Personal Income  
$781,906  
-$24  
$888,600  
$0  
-$106,694  
-$24  
-12.0%  
---  
Corporate Franchise  
Financial Institution  
Public Utility  
$26,873  
$264  
$33,200  
$0  
-$6,327  
$264  
-19.1%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
$30,290  
$3,314  
$45,554  
$0  
$32,400  
$3,900  
$39,500  
$0  
-$2,110  
-$586  
$6,054  
$0  
-6.5%  
-15.0%  
15.3%  
---  
-$2,235  
$1,012  
$0  
-$1,000  
$0  
-$1,235  
$1,012  
$0  
-123.5%  
---  
$0  
---  
$72,779  
$4,509  
$3,887  
$86  
$75,300  
$4,300  
$3,600  
$0  
-$2,521  
$209  
-3.3%  
4.9%  
8.0%  
---  
Alcoholic Beverage  
Liquor Gallonage  
$287  
Estate  
$86  
Total Tax Revenue  
$1,881,558  
$2,040,700  
-$159,142  
-7.8%  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$13,274  
$2,224  
$418  
$8,700  
$2,565  
$705  
$4,574  
-$341  
-$287  
$3,946  
52.6%  
-13.3%  
-40.8%  
33.0%  
Total Nontax Revenue  
$15,916  
$11,970  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$4,018  
$4,018  
$0  
$9,800  
$9,800  
$0  
-$5,782  
-$5,782  
---  
-59.0%  
-59.0%  
TOTAL STATE SOURCES  
Federal Grants  
$1,901,492  
$780,466  
$2,062,470  
$802,098  
-$160,978  
-$21,632  
-$182,610  
-7.8%  
-2.7%  
-6.4%  
TOTAL GRF SOURCES  
$2,681,958  
$2,864,568  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
2
May 2017  
Ohio Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2017 as of April 30, 2017  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on May 1, 2017)  
Percent  
Change  
STATE SOURCES  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
TAX REVENUE  
Auto Sales  
$1,136,967  
$7,626,008  
$8,762,975  
$1,143,000  
$7,828,400  
$8,971,400  
-$6,033  
-0.5%  
$1,109,618  
$7,487,296  
$8,596,914  
2.5%  
Nonauto Sales and Use  
Total Sales and Use Taxes  
-$202,392  
-2.6%  
1.9%  
-$208,425  
-2.3%  
1.9%  
Personal Income  
Corporate Franchise  
Financial Institution  
Public Utility  
$6,260,845  
$3,371  
$6,815,200  
$0  
-$554,355  
$3,371  
-$32,505  
-$1,334  
$13,906  
-$841  
-8.1%  
---  
$6,444,653  
$32,369  
$159,981  
$75,407  
$292,467  
$34,061  
$996,871  
$5,598  
-2.9%  
-89.6%  
-17.1%  
-3.8%  
3.5%  
$132,595  
$72,566  
$302,806  
$35,459  
$1,005,554  
$5,014  
$165,100  
$73,900  
$288,900  
$36,300  
$1,027,500  
$4,900  
-19.7%  
-1.8%  
4.8%  
-2.3%  
-2.1%  
2.3%  
5.6%  
95.0%  
---  
Kilowatt-Hour Excise  
Natural Gas Consumption (MCF)  
Commercial Activity Tax  
Petroleum Activity Tax  
Foreign Insurance  
Domestic Insurance  
Business and Property  
Cigarette  
4.1%  
-$21,946  
$114  
0.9%  
-10.4%  
5.5%  
$334,535  
$1,170  
$316,700  
$600  
$17,835  
$570  
$317,187  
$565  
107.1%  
-831.9%  
-3.6%  
5.7%  
-$678  
$0  
-$678  
$93  
$740,042  
$47,366  
$38,673  
$580  
$733,500  
$45,300  
$37,300  
$0  
$6,542  
$2,066  
$1,373  
$580  
0.9%  
4.6%  
3.7%  
---  
$768,021  
$44,822  
$37,501  
$1,613  
Alcoholic Beverage  
Liquor Gallonage  
3.1%  
Estate  
-64.1%  
-0.4%  
Total Tax Revenue  
$17,742,871  
$18,516,600  
-$773,729  
-4.2%  
$17,808,123  
NONTAX REVENUE  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$37,357  
$58,468  
$55,052  
$150,877  
$25,900  
$55,575  
$54,755  
$136,230  
$11,457  
$2,893  
$297  
44.2%  
5.2%  
$26,196  
$55,490  
$45,737  
$127,423  
42.6%  
5.4%  
0.5%  
20.4%  
18.4%  
Total Nontax Revenue  
$14,647  
10.8%  
TRANSFERS  
Budget Stabilization  
Other Transfers In  
Total Transfers In  
$0  
$96,862  
$96,862  
$0  
$41,600  
$41,600  
$0  
$55,262  
$55,262  
---  
132.8%  
132.8%  
$0  
$195,474  
$195,474  
---  
-50.4%  
-50.4%  
TOTAL STATE SOURCES  
Federal Grants  
$17,990,610  
$9,803,375  
$27,793,985  
$18,694,430  
$10,511,932  
$29,206,362  
-$703,820  
-$708,557  
-3.8%  
-6.7%  
-4.8%  
$18,131,020  
$10,311,786  
$28,442,806  
-0.8%  
-4.9%  
-2.3%  
TOTAL GRF SOURCES  
-$1,412,378  
*Estimates of the Office of Budget and Management as of August 2016.  
Detail may not sum to total due to rounding.  
May 2017  
3
Budget Footnotes  
Ohio Legislative Service Commission  
REVENUES  
Jean J. Botomogno, Principal Economist, 614-644-7758  
Overview  
For the fiscal year through April, total GRF sources1 of  
$
27.79 billion were $1.41 billion below expected revenues, due to the  
underperformance from the most important tax sources throughout  
FY 2017. The April 2017 income tax filing season concluded with a  
negative variance of $106.7 million for the personal income tax (PIT),  
based on the August 2016 OBM estimate. This poor result increased the  
PIT's year-to-date negative variance to $554.4 million, up from  
$
447.7 million through March 2017. In addition, sales and use tax  
April GRF tax  
revenue was  
revenues were $47.6 million below estimate in April, following a large  
shortfall of $40.5 million in the previous month. The latest revenue  
performance increased the year-to-date deficit for the sales and use tax to  
$159.1 million  
$
208.4 million.  
below estimate.  
The PIT and sales tax negative variances accounted for nearly the  
total monthly deficit of $159.1 million for all GRF tax sources in April.  
For the fiscal year, total GRF tax sources were below anticipated receipts  
by $773.7 million. That shortfall was partially offset by a surplus of  
$
69.9 million in revenue from nontax revenue and transfers in, thus  
resulting in a gap of $703.8 million for state-sources receipts for FY 2017.  
Federal grants were also below estimate by $21.6 million in April,  
increasing the fiscal year's negative variance for this GRF source to  
$
708.6 million. This shortfall, however, is primarily related to the level of  
spending in the Medicaid program which has been below anticipated  
expenditures. (See the "Expenditures" section of this publication.).2  
Tables 1 and 2 above show GRF sources for April and for FY 2017  
through April, respectively.  
FY 2017 GRF  
tax revenue  
was  
$
773.7 million  
On January 30, 2017, OBM revised downward its August 2016  
estimates of FY 2017 GRF tax revenue by $592.2 million, which was  
consistent with revenue experiences throughout the fiscal year. With two  
months left in FY 2017, it is likely that GRF tax revenue as a whole will  
end the year below the most recent estimate, as Ohio ended April with a  
year-to-date negative variance $181.6 million larger than the January  
below estimate  
through April.  
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 Through April, FY 2017 GRF Medicaid spending was $872.6 million  
below estimate.  
Budget Footnotes  
4
May 2017  
Ohio Legislative Service Commission  
estimate of the full-year variance. 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 remainder of FY 2017.  
For the month of April, GRF sources of $2.68 billion were FY 2017 federal  
$
182.6 million below the August estimate. In addition to the two largest  
grants were  
tax sources mentioned above, the financial institutions tax (FIT), the  
cigarette tax, the kilowatt-hour tax, and the foreign insurance tax were  
also below monthly projections by $6.3 million, $2.5 million, $2.1 million,  
$
708.6 million  
below estimate  
and $1.2 million, respectively. Those negative variances above were through April.  
partially offset by positive variances of $6.1 million from the commercial  
activity tax (CAT) and $1.0 million from the domestic insurance tax.  
The following chart illustrates the cumulative performance of total  
GRF sources relative to estimates through each month of FY 2017, broken  
down by its largest components. Through April, GRF sources were  
$
1,412.4 million below estimate, as labeled in the far right column.  
Chart 1: GRF Source Fiscal Year Cumulative Performance  
by Component  
$
200  
$
0
-
$17.2  
-$145.4  
-$200  
-$400  
-$600  
-$800  
-
$235.0-$262.2  
-$611.3  
$713.7  
-
-
$845.7 -$911.2  
-$1,000  
-$1,200  
-$1,400  
-$1,600  
-
$1,229.8  
$1,412.4  
-
Federal Grants  
Tax Revenue  
Other State Revenue  
GRF tax revenue in FY 2017 was $65.3 million (0.4%) lower than  
receipts during the corresponding period in FY 2016. Most of the revenue  
decrease was due to lower collections from the PIT ($183.8 million).  
Receipts from the corporate franchise tax, the cigarette tax, and the FIT  
also decreased by $29.0 million, $28.0 million, and $27.4 million,  
respectively. On the other hand, sales and use tax revenue was  
$
166.1 million higher than in FY 2016 and revenue also grew for the  
May 2017  
5
Budget Footnotes  
Ohio Legislative Service Commission  
foreign insurance tax ($17.3 million), the kilowatt-hour excise tax  
($10.3 million), and the CAT ($8.7 million).  
Sales and Use Tax  
Following a shortfall of $40.5 million in March, the sales and use  
tax had another bad month in April. GRF sales and use tax revenue of  
913.3 million was $47.6 million (4.9%) below estimate, but $6.8 million  
0.8%) above revenue in the same month last year. For the fiscal year to  
date, GRF sales and use tax receipts of $8.76 billion were $208.4 million  
2.3%) below estimate, though they were $166.1 million (1.9%) above  
Sales and use  
tax receipts  
were  
$
(
$
208.4 million  
below  
(
receipts in FY 2016 through April. In January, OBM decreased FY 2017  
estimates for this tax by $259.3 million to $10.55 billion, down from  
estimates  
through April in  
FY 2017.  
$
10.81 billion. With two remaining months in the fiscal year, it is  
increasingly improbable the sales and use tax will meet the revised  
estimate.  
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; both tax sources were below  
projections in April. Auto sales and use tax collections generally arise  
from the sale of motor vehicles, but auto taxes arising from leases are  
paid at the lease signing and are mostly recorded under the nonauto tax  
3
instead of the auto tax.  
Nonauto Sales and Use Tax  
Nonauto sales  
and use tax  
Nonauto sales and use tax revenue to the GRF was $791.7 million  
in April, an amount $44.5 million (5.3%) below estimate, though  
$
follows another large negative variance of $37.4 million in March 2017.  
Collections from this segment of the tax have been below the estimate  
2.6 million (0.3%) above revenue in April 2016. This performance  
revenue was  
$
202.4 million  
below estimate every month this fiscal year, except in December. Comparing revenue,  
month by month, to revenue from the same month a year ago reveals  
growth, but the pace has decreased in the most recent months. For  
FY 2017 through April, nonauto sales and use tax revenue of $7.63 billion  
was $202.4 million (2.6%) below expectations, though receipts were  
through April in  
FY 2017.  
$
138.7 million (1.9%) above receipts in the corresponding period in  
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.  
Budget Footnotes  
6
May 2017  
Ohio Legislative Service Commission  
FY 2016. The soft yearly growth is the weakest recorded since the years  
preceding the 2008-2009 economic recession, and less than half the growth  
rate anticipated at the start of FY 2017. Chart 2 below illustrates the year-  
over-year growth of nonauto sales and use tax collections and its failure to  
meet estimates in FY 2017.  
Chart 2: 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  
Auto Sales and Use Tax  
After a strong performance that brought its revenue up to estimate  
for the year in February, the auto sales tax stumbled in the two subsequent  
months. For the month of April, the GRF received $121.6 million from this  
tax source, an amount that was $3.1 million (2.5%) below expectations,  
following a negative variance of $3.0 million (2.3%) in March. April auto  
Auto sales and  
use tax revenue  
was $6.0 million  
tax revenue was, however, $4.3 million (3.6%) above receipts in April below estimate  
2
016. For the fiscal year, GRF revenue of $1.14 billion was $6.0 million  
through April in  
FY 2017.  
(0.5%) below the August estimates and $27.3 million (2.5%) above revenue  
in FY 2016 through April. As Chart 3 below illustrates, the year-over-year  
growth generally picked up in the first-half of the fiscal year, but growth  
has slowed in 2017. For this tax source, the January downward revision  
was $60 million, compared to the August estimate. Based on the year-to-  
date results, this tax may meet the lowered estimate of $1.34 billion in GRF  
revenue (which is $6.4 million below actual FY 2016 revenue).  
May 2017  
7
Budget Footnotes  
Ohio Legislative Service Commission  
Chart 3: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
6
4
2
0
.0%  
.0%  
.0%  
.0%  
Actual  
Estimate  
-2.0%  
-4.0%  
-6.0%  
Nationwide, growth in vehicle sales appears to have stalled in  
2
1
017. The sales pace of light vehicles (autos and light trucks) fell to  
7.1 million units (seasonally adjusted annual rate) in the first four  
months of 2017, down from 17.5 million units sold during 2016. In the  
corresponding period of 2016, sales averaged 17.3 million units. The  
weakness is due to auto sales, which have fallen 12% in 2017, while light  
truck sales were about 4% above their 2016 level. Gasoline prices are still  
relatively low, inventory high, and sales incentives plentiful. The  
slowdown in overall light vehicle sales comes amid reports of a pullback  
in auto lending by big banks this year. Light truck sales have helped  
maintain Ohio auto sales tax revenue. Therefore, a substantial  
retrenchment in those sales would negatively affect sales and use tax  
revenue.  
Personal Income Tax  
The performance of the PIT has been underwhelming throughout  
the fiscal year and is the main culprit for the sustained weakness of GRF  
tax sources in FY 2017. Similarly to FY 2016, the April "surprise" in 2017  
was negative, due to poor revenue from payments due with annual tax  
returns and refunds that were higher than anticipated. April PIT receipts  
of $781.9 million to the GRF were 12.0% below the August estimate. This  
result increased the year-to-date deficit for this tax to $554.4 million, up  
from $447.7 million at the end of March 2017. Monthly PIT revenue had  
generally been below estimate throughout FY 2016, but the latest  
performance confirmed the tax source would end FY 2017 in substantial  
negative territory, and well below the January revised estimate of  
FY 2017 PIT  
revenue was  
$
554.4 million  
below estimate  
through April.  
$
7.93 billion.  
Budget Footnotes  
8
May 2017  
Chart 3: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
6
4
2
0
.0%  
.0%  
.0%  
.0%  
Actual  
Estimate  
-2.0%  
-4.0%  
-6.0%  
Ohio Legislative Service Commission  
Through the end of April 2017, total FY 2017 GRF revenue from the  
PIT was $6.26 billion and $183.8 million (2.9%) 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 withholdings, quarterly  
4
estimated payments, trust payments, payments associated with annual  
returns, and other miscellaneous payments.  
The performance of the tax is typically driven by employer  
withholdings. However in February, March, and April during the tax filing  
season, tax refunds and taxes due with annual returns are also significant  
components of net collections (though this year, refunds have been below  
estimate all year, except in December). In April, tax refunds were  
$82.0 million (20.4%) higher than projected and taxes due with annual  
returns were $28.3 million (5.7%) below estimate. Also, employer  
withholding experienced a shortfall of $6.8 million (1.0%). The negative  
variances were partially offset by surpluses of $5.0 million (6.4%) in  
quarterly estimated payments and $3.0 million (14.2%) in revenue from  
trusts.  
Revenue from  
For FY 2017 through April, the PIT revenue shortfall was also driven  
by refunds that were $353.5 million (24.3%) higher than expected; and employer  
employer withholding revenue was $199.0 million (2.8%) short of  
withholding was  
anticipated receipts. In addition to that negative variance, annual return  
payments, miscellaneous payments, and revenue from trusts were lower  
than expected by $14.4 million (2.2%), $9.9 million (11.4%), and $2.7 million  
$
199.0 million  
below estimate  
5.4%), respectively. Partly offsetting those shortfalls and the only in FY 2017  
through April.  
(
component above projections, quarterly estimated payments were above  
estimate by $13.1 million (2.2%). For the fiscal year, the negative variance  
for gross collections as a whole was $212.9 million (2.5%).  
Chart 4 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, despite the effects of  
5
policy changes (which led to reduced withholding rates in August 2015),  
but fell in the second fiscal quarter. Employer withholding began growing  
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.  
5 H.B. 64, the budget act for the current biennium, reduced income tax  
rates for all brackets by 6.3% for taxable years beginning in 2015, and the  
withholding rate reduction was implemented in August 2015.  
May 2017  
9
Budget Footnotes  
Ohio Legislative Service Commission  
again in December and early in 2017, though payroll growth appears to  
have weakened in the most recent observation, representing year-over-  
year growth for the three months ending in April.  
Chart 4: Monthly Withholding Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
8
7
6
5
4
3
2
1
0
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Actual  
Estimate  
-
1.0%  
2.0%  
-
FY 2017 revenues through April from each component of the PIT  
relative to estimates and to revenue received in the corresponding period of  
FY 2016 are detailed in the table below.  
FY 2017 Year-to-Date Personal Income Tax Revenue  
Estimate Variances and Year-over-Year Changes by Component  
Year-to-Date Variance  
from Estimate  
Year-to-Date Changes  
from FY 2016  
Category  
Amount  
Percentage  
Amount  
Percentage  
(
$ in millions)  
(%)  
($ in millions)  
(%)  
Withholding  
-$199.0  
$13.1  
-2.8%  
2.2%  
$91.1  
-$206.3  
$6.8  
1.3%  
-25.5%  
16.7%  
2.9%  
Quarterly Estimated Payments  
Trust Payments  
-$2.7  
-5.4%  
-2.2%  
-11.4%  
-2.5%  
24.3%  
-3.8%  
-8.1%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
Less Refunds  
-$14.4  
-$9.9  
$17.5  
-$7.1  
-8.5%  
-1.2%  
4.8%  
-$212.9  
$353.5  
-$12.0  
-$554.4  
-$97.9  
$83.0  
$2.9  
Less LGF Distribution  
GRF PIT Revenue  
1.0%  
-$183.8  
-2.9%  
FY 2017 gross collections were $97.9 million below collections  
through the first ten months of FY 2016. Most of the decline was due to  
lower quarterly estimated payments ($206.3 million) as taxpayers  
adjusted the payments to lower tax rates and lower taxation of business  
income. On the other hand, payroll continued to grow and employer  
withholding increased by $91.1 million compared to the corresponding  
period last year.  
Budget Footnotes  
10  
May 2017  
Ohio Legislative Service Commission  
Cigarette and Other Tobacco Products Tax  
Though monthly revenue was below estimate, for the fiscal year  
through April, the cigarette and other tobacco products tax continued to  
be the only major tax source that consistently outperformed expectations.  
April GRF revenue of $72.8 million from this tax was, however,  
FY 2017  
revenue from  
$
2.5 million (3.3%) below estimate and $6.2 million (7.9%) below revenue  
in April 2016. For the fiscal year, receipts from the tax were $740.0 million, the cigarette  
$
6.5 million (0.9%) above estimate. Of the total revenue, $688.2 million  
tax was  
was from sales of cigarettes and $51.8 million was from sales of other  
tobacco products. Compared to the corresponding period of FY 2016,  
receipts in FY 2017 were $28.0 million (3.6%) lower. Generally, cigarette  
$
6.5 million  
above  
tax receipts are trending downward long term; however, legislative estimate.  
6
changes led to increased receipts in the early months of FY 2016.  
Excluding floor tax receipts, FY 2017 receipts were 1.5% below receipts in  
FY 2016, with revenue from the tax on other tobacco products slightly  
above the year-ago level.  
Generally, combined cigarette tax revenues in May and June are  
about 25% of total revenue for the fiscal year. Thus, despite good year-to-  
date results for this tax source so far, with two months left in the fiscal  
year, it is uncertain whether this tax will finish above or below the  
projected yearly estimate.  
Commercial Activity Tax  
April revenue from the CAT was $45.6 million, $6.1 million (15.3%)  
above estimate, and $8.5 million (22.9%) above revenue in the same month  
last year. For the fiscal year through April, CAT revenues to the GRF  
totaled $1.01 billion, $21.9 million (2.1%) below estimate, and $8.7 million  
FY 2017  
revenue from  
the CAT was  
(0.9%) above GRF revenue in the corresponding period in FY 2016.  
According to OAKS, gross collections were $1.44 billion, $1.9 million $21.9 million  
(0.1%) above collections through April in FY 2016. The last fiscal year  
below  
payment for calendar quarter CAT taxpayers is due in May, and that  
payment will determine whether the CAT meets the January estimate  
estimate.  
(
variance in May would probably ensure the tax finishes the fiscal year at  
or above the revised estimate.  
which reduced the August estimate by $32.0 million). A positive revenue  
6
H.B. 64 increased the cigarette tax from $1.25 to $1.60 per pack of  
2
cigarettes in inventory at the time the new tax rate went into effect. Excluding the  
0 cigarettes, effective July 1, 2015. This led to the payment of a "floor tax" for  
effect of the floor tax, the year-over-year decline in tax revenue was about 0.6%.  
May 2017  
11  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of April 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run May 2, 2017)  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
Primary and Secondary Education  
Higher Education  
$663,008  
$653,331  
$9,677  
1.5%  
$185,750  
$3,746  
$184,333  
$7,031  
$1,416  
-$3,286  
$7,808  
0.8%  
-46.7%  
0.9%  
Other Education  
Total Education  
$852,503  
$844,695  
Medicaid  
$1,106,279  
$124,172  
$1,107,355  
$140,049  
-$1,076  
-$15,878  
-$16,953  
-0.1%  
-11.3%  
-1.4%  
Health and Human Services  
Total Welfare and Human Services  
$1,230,451  
$1,247,404  
Justice and Public Protection  
General Government  
$189,239  
$31,805  
$197,845  
$34,009  
-$8,606  
-$2,204  
-4.3%  
-6.5%  
-4.7%  
Total Government Operations  
$221,044  
$231,854  
-$10,810  
Property Tax Reimbursements  
Debt Service  
$156,932  
$57,675  
$391,743  
$73,777  
-$234,811  
-$16,102  
-$250,913  
-59.9%  
-21.8%  
-53.9%  
Total Other Expenditures  
$214,606  
$465,520  
Total Program Expenditures  
$2,518,604  
$2,789,473  
-$270,869  
-9.7%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$0  
$44  
$44  
$0  
$18,852  
$18,852  
$0  
-$18,808  
-$18,808  
---  
-99.8%  
-99.8%  
TOTAL GRF USES  
$2,518,647  
$2,808,324  
-$289,677  
-10.3%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
12  
May 2017  
Ohio Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2017 as of April 30, 2017  
(
$ in thousands)  
(
Actual based on OAKS reports run May 2, 2017)  
Percent  
Change  
PROGRAM  
Actual  
Estimate*  
Variance  
Percent  
FY 2016  
Primary and Secondary Education  
Higher Education  
$6,956,452  
$1,918,996  
$65,942  
$6,946,824  
$9,628  
0.1%  
$6,666,459  
$1,856,055  
$62,120  
4.4%  
$1,928,781  
$68,220  
-$9,785  
-$2,278  
-$2,436  
-0.5%  
-3.3%  
0.0%  
3.4%  
6.2%  
4.2%  
Other Education  
Total Education  
$8,941,390  
$8,943,825  
$8,584,634  
Medicaid  
$14,503,409  
$1,165,466  
$15,668,875  
$15,375,971  
$1,234,115  
$16,610,086  
-$872,562  
-$68,649  
-$941,211  
-5.7%  
-5.6%  
-5.7%  
$15,103,503  
$1,136,687  
$16,240,190  
-4.0%  
2.5%  
Health and Human Services  
Total Welfare and Human Services  
-3.5%  
Justice and Public Protection  
General Government  
$1,766,592  
$317,702  
$1,798,457  
$335,937  
-$31,865  
-$18,235  
-$50,100  
-1.8%  
-5.4%  
-2.3%  
$1,709,427  
$304,318  
3.3%  
4.4%  
3.5%  
Total Government Operations  
$2,084,294  
$2,134,395  
$2,013,745  
Property Tax Reimbursements  
Debt Service  
$1,292,362  
$1,276,056  
$2,568,419  
$1,436,226  
$1,308,099  
$2,744,325  
-$143,864  
-$32,043  
-$175,907  
-10.0%  
-2.4%  
-6.4%  
$1,447,966  
$1,265,492  
$2,713,457  
-10.7%  
0.8%  
Total Other Expenditures  
-5.3%  
Total Program Expenditures  
$29,262,978  
$30,432,631  
-$1,169,654  
-3.8%  
$29,552,027  
-1.0%  
TRANSFERS  
Budget Stabilization  
Other Transfers Out  
Total Transfers Out  
$29,483  
$256,300  
$285,783  
$29,483  
$288,393  
$317,875  
$0  
-$32,092  
-$32,092  
0.0%  
-11.1%  
-10.1%  
$425,500  
$406,027  
$831,527  
-93.1%  
-36.9%  
-65.6%  
TOTAL GRF USES  
$29,548,760  
$30,750,506  
-$1,201,746  
-3.9%  
$30,383,554  
-2.7%  
*
August 2016 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
May 2017  
13  
Budget Footnotes  
Ohio Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on May 5, 2017)  
Month of April 2017  
Year to Date Through April 2017  
Actual Estimate* Variance  
$18,921,871 $20,052,747 -$1,130,876  
Department  
Medicaid  
Actual  
Estimate*  
Variance  
-$46,544  
Percent  
Percent  
$1,885,414  
$1,058,300  
$827,114  
$1,931,958  
$1,054,413  
$877,545  
-2.4%  
0.4%  
-5.7%  
-5.6%  
-5.6%  
-5.6%  
GRF  
$3,887  
$13,969,308 $14,804,569  
-$835,261  
-$295,614  
Non-GRF  
-$50,431  
$4,952,563  
$5,248,177  
Developmental Disabilities  
$191,127  
$42,372  
$202,965  
$47,204  
-$11,838  
-$4,833  
-$7,005  
-5.8%  
-10.2%  
-4.5%  
$2,064,355  
$467,869  
$2,184,994  
$479,337  
-$120,639  
-$11,468  
-$109,171  
-5.5%  
-2.4%  
-6.4%  
GRF  
Non-GRF  
$148,756  
$155,761  
$1,596,486  
$1,705,657  
Job and Family Services  
$14,119  
$5,060  
$9,059  
$11,324  
$5,202  
$6,123  
$2,795  
-$141  
24.7%  
-2.7%  
48.0%  
$174,115  
$58,205  
$207,022  
$84,472  
-$32,907 -15.9%  
GRF  
-$26,267 -31.1%  
Non-GRF  
$2,936  
$115,910  
$122,550  
-$6,640  
-5.4%  
Health  
GRF  
$1,481  
$271  
$1,385  
$254  
$96  
$17  
$79  
6.9%  
6.7%  
7.0%  
$22,346  
$3,194  
$21,662  
$2,744  
$684  
$449  
$235  
3.2%  
16.4%  
1.2%  
Non-GRF  
$1,210  
$1,131  
$19,152  
$18,917  
Aging  
$479  
$276  
$202  
$514  
$282  
$232  
-$35  
-$5  
-6.8%  
-1.9%  
$5,888  
$3,083  
$2,805  
$6,278  
$3,098  
$3,181  
-$391  
-6.2%  
GRF  
-$15  
-0.5%  
Non-GRF  
-$30  
-12.8%  
-$376 -11.8%  
Mental Health and Addiction  
$430  
$0  
$154  
$0  
$276 178.8%  
$0 ---  
$276 178.8%  
$4,602  
$1,750  
$2,851  
$3,565  
$1,750  
$1,815  
$1,036  
$0  
29.1%  
0.0%  
GRF  
Non-GRF  
$430  
$154  
$1,036  
57.1%  
Total GRF  
$1,106,279  
$986,771  
$1,107,355  
$1,040,946  
-$1,076  
-0.1%  
-5.2%  
$14,503,409 $15,375,971  
$6,689,768 $7,100,297  
-$872,562  
-$410,529  
-5.7%  
-5.8%  
Total Non-GRF  
-$54,175  
-$55,251  
Total All Funds  
$2,093,050  
$2,148,301  
-2.6%  
$21,193,177 $22,476,268 -$1,283,092  
-5.7%  
*Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
14  
May 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 May 5, 2017)  
April Year to Date Through April 2017  
Estimate*  
(
Payment Category  
Managed Care  
Nursing Facilities  
DDD Services  
Hospitals  
Actual  
Variance  
-$18,047  
$6,593  
Percent  
-1.9%  
5.3%  
Actual  
Estimate*  
$9,123,553  
$1,224,206  
$2,112,322  
$1,949,186  
$1,009,781  
$898,472  
$294,521  
$368,907  
$395,589  
$167,665  
$282,734  
$142,068  
$3,734,029  
$773,236  
Variance  
-$652,513  
$45,609  
Percent  
-7.2%  
3.7%  
$916,172  
$131,841  
$186,776  
$78,035  
$99,413  
$77,221  
$28,119  
$27,136  
$49,410  
$11,702  
$40,881  
$9,214  
$934,220  
$125,248  
$198,251  
$70,152  
$100,266  
$82,721  
$30,162  
$35,109  
$41,405  
$15,621  
$29,353  
$13,494  
$398,618  
$73,683  
$8,471,040  
$1,269,815  
$1,999,092  
$1,826,253  
$953,242  
$748,591  
$286,869  
$317,249  
$506,867  
$139,698  
$336,675  
$101,679  
$3,430,227  
$805,879  
-$11,475  
$7,883  
-5.8%  
11.2%  
-0.9%  
-6.6%  
-6.8%  
-22.7%  
19.3%  
-25.1%  
39.3%  
-31.7%  
-10.0%  
6.1%  
-$113,230  
-$122,933  
-$56,539  
-5.4%  
-6.3%  
-5.6%  
Behavioral Health  
Administration  
Aging Waivers  
Prescription Drugs  
Medicare Buy-In  
Physicians  
-$853  
-$5,500  
-$2,043  
-$7,973  
$8,005  
-$149,881 -16.7%  
-$7,652 -2.6%  
-$51,658 -14.0%  
$111,278 28.1%  
-$27,967 -16.7%  
$53,941 19.1%  
-$40,389 -28.4%  
-$3,919  
$11,528  
-$4,280  
-$39,665  
$4,494  
Medicare Part D  
Home Care Waivers  
ACA - Managed Care  
All Other  
$358,953  
$78,177  
-$303,802  
$32,644  
-8.1%  
4.2%  
-5.7%  
Total All Funds  
$2,093,050 $2,148,301  
-$55,251  
-2.6%  
$21,193,177 $22,476,268 -$1,283,092  
*
Estimates are from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
May 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  
For the first ten months of FY 2017, GRF program expenditures  
Through April,  
GRF program  
expenditures  
were below  
OBM's  
totaled $29.26 billion. These expenditures were $1.17 billion below the  
estimate released by OBM in August 2016. This negative year-to-date  
7
variance exceeds the $825 million downward adjustment made by OBM  
in January for GRF program expenditures as a whole for the full fiscal  
year. The negative variance in GRF Medicaid expenditures of  
$872.6 million represents almost 75% of the total negative variance in  
program expenditures. Due to timing issues, Property Tax  
Reimbursements were $234.8 million below estimate in April and  
August 2016  
estimate by  
$
143.9 million below the category's year-to-date estimate through April.  
$
1.17 billion,  
of which  
872.6 million  
This category is expected to finish the fiscal year somewhat below  
estimate.  
$
The only program category that had a positive year-to-date  
variance at the end of April was Primary and Secondary Education. In  
addition to variances in foundation funding that have continued  
throughout the fiscal year, this category also has a significant positive  
variance in spending on student assessments; this variance is a timing  
issue that should be largely resolved in May.  
occurred in  
Medicaid.  
Tables 3 and 4 show GRF uses for the month of April and for  
FY 2017 through April, respectively. GRF uses mainly consist of program  
expenditures but also include transfers out. Including both program  
expenditures and transfers out, year-to-date GRF uses were $1.20 billion  
(
3.9%) below OBM's August 2016 estimate.  
Medicaid  
Medicaid is primarily funded by the GRF, but 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.  
7
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  
16  
May 2017  
Ohio Legislative Service Commission  
Table 5 shows GRF and non-GRF Medicaid expenditures for the  
Ohio Department of Medicaid (ODM) and ODM's five "sister" agencies –  
Developmental Disabilities, Job and Family Services, Health, Aging, and  
Mental Health and Addiction Services. Through April, all-funds Medicaid  
expenditures totaled $21.19 billion, $1.28 billion (5.7%) below estimate.  
Year-to-date GRF Medicaid expenditures were below estimate by  
Across all  
funds, year-to-  
date Medicaid  
expenditures  
were  
$
872.6 million (5.7%), and non-GRF Medicaid expenditures were below  
estimate by $410.5 million (5.8%).  
Table 6 details all-funds Medicaid expenditures by payment  
category. As seen from the table, all payment categories have negative  
year-to-date variances except for Nursing Facilities, Medicare Buy-In,  
Medicare Part D, and All Other. Managed Care and ACA Managed Care  
are the largest payment categories and have the largest negative variances  
$
1.28 billion  
below estimate  
at the end of  
April.  
($652.5 million and $303.8 million, respectively). Of the approximately  
3
million Ohioans receiving Medicaid, more than 80% of them receive  
services through Managed Care. Negative variances in spending in  
Managed Care continue to be driven by lower than forecasted managed  
care rates. Actual rates (which are set at the beginning of each calendar  
year) for calendar years 2016 and 2017 were both below the rates used in  
the estimate. Therefore, the negative variances in Managed Care and  
ACA Managed Care will likely continue to grow through the end of  
FY 2017.  
The largest positive year-to-date variance ($111.3 million) was in  
the Medicare Buy-In category. This positive variance has been driven by  
larger than anticipated increases in Medicare Part B premiums for both  
calendar years 2016 and 2017. The Medicare Buy-in Program pays  
Medicare premiums, deductibles, and coinsurance for certain low-income  
Ohioans.  
Also worth noting, the All Other category had a positive year-to-  
date variance of $32.6 million due partly to payments for the new  
Comprehensive Primary Care (CPC) Program. 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. The first payments were  
made in February.  
May 2017  
17  
Budget Footnotes  
Ohio Legislative Service Commission  
ISSUE UPDATES  
Department of Natural Resources Awards Over $216,000 in Grants to  
Volunteer Fire Departments in Rural Counties  
Tom Wert, Budget Analyst, 614-466-0520  
On April 17, 2017, the Department of Natural Resources (DNR) announced that  
6 volunteer fire departments in 20 rural counties would receive grants under the  
3
federal Volunteer Fire Assistance (VFA) Grant Program. The program, administered by  
DNR's Division of Forestry, provides grants of up to $10,000 to volunteer fire  
departments in communities with populations of fewer than 10,000 residents. The  
communities must provide matching funds to qualify for the award. Grant funds may  
be used to purchase wildland fire slip-in pumper units, wildland fire personal  
protective equipment, all terrain and utility vehicles, and Multi-Agency Radio  
Communication System (MARCS) compatible equipment and radios. For 2017, seven  
volunteer fire departments were awarded the maximum grant of $10,000. These include  
Jackson Township Fire Department (Coshocton County), Jewett Volunteer Fire  
Department (Harrison County), Scioto Township Volunteer Fire and Rescue Inc.  
(Jackson County), Fayette Fire Department (Lawrence County), Licking Township Fire  
Company (Licking County), Camp Creek Volunteer Fire Department (Pike County),  
and Minford Volunteer Fire Department Inc. (Scioto County). In all, more than $216,000  
was awarded under the VFA Program in 2017. A complete list of the volunteer fire  
departments that received grants under the VFA Program can be found online at  
http://forestry.ohiodnr.gov/portals/forestry/pdfs/2017vfagrantrecipients.pdf.  
Bureau of Workers' Compensation Announces  
$
1.1 billion in Premium Rebates  
Terry Steele, Senior Budget Analyst, 614-387-3319  
On April 28, 2017, the Ohio Bureau of Workers' Compensation (BWC) approved  
a $1.1 billion rebate for private employers and public taxing districts. This rebate  
includes an estimated $967 million to private employers and $133 million to public  
taxing districts, which includes $92 million to local governments and $41 million to  
school districts. In total, approximately 200,000 employers will receive these rebates,  
which total nearly 66% of their prior year premium payments. For private employers,  
the rebate will be based on their payments for the July 1, 2015-June 30, 2016 policy year.  
For public employers, the policy year coincides with the calendar year, and their rebates  
Budget Footnotes  
18  
May 2017  
Ohio Legislative Service Commission  
will be based on premium payments for 2016. BWC will begin issuing the rebates in  
July 2017.  
To qualify for the actual premium rebate, both private employers and public  
taxing districts must pay into the State Insurance Fund, have been billed premiums for  
the most recent applicable policy year, and be current in meeting policy requirements.  
Premium rebates for employers with outstanding balances will be applied to the  
balances first, with any remainder going toward the new premium billing. All rebates  
are paid from the State Insurance Fund. The State Insurance Fund, as of this writing,  
has a net position of $9.6 billion.  
I-Corps@Ohio Selects Third Cohort of Participants  
Edward M. Millane, Senior Budget Analyst, 614-995-9991  
In early April, I-Corps@Ohio, a research commercialization initiative of the  
8
Department of Higher Education, announced a third cohort of faculty and graduate  
student researchers that will participate in the program, which assists participants in  
evaluating the market viability of their technologies and launching start-up companies.  
This cohort consists of 20 teams of researchers from Case Western Reserve University,  
Cleveland State University, Ohio University, University of Akron, University of  
Cincinnati, University of Toledo, and Nationwide Children's Hospital that will be  
focused on medical technology and science and engineering. Beginning in May, each of  
the teams will begin a seven-week, hands-on training program designed to help the  
teams understand the market for their technology, develop a commercialization  
strategy, and attain new skills that can be used to sustain a long-term career in research  
and development.  
Under the program, grants of $15,000 are offered on a competitive basis to teams  
of faculty and graduate students from any accredited Ohio university, college, or  
community college. A portion of the grants must be used for travel expenses to attend  
certain program events in Columbus with the remainder available for participant  
stipends, mentor compensation, and other project-related expenses. Since the program's  
inception in FY 2015, I-Corps@Ohio grants have been supported by the proceeds of  
Third Frontier bonds through an annual appropriation of $800,000 from Fund 7014  
appropriation item 235696, Research Incentive Third Frontier Tax.  
8 Previous cohorts were announced in 2015 and 2016.  
May 2017  
19  
Budget Footnotes  
Ohio Legislative Service Commission  
Person-Centered Staff Engagement Project Begins  
Wendy Risner, Fiscal Supervisor, 614-644-9098  
On April 1, 2017, a two-year Person-Centered Staff Engagement Project was  
launched to improve resident care and quality of life for nursing home residents.  
During this two-year period, 100 nursing homes will engage staff in person-centered  
practices. The focus of the project will be on implementing individualized care at  
participating nursing homes through the adoption of practices such as consistent  
assignment of staff, daily staff huddles or meetings to discuss resident care, and the  
involvement of nurse aides in care planning. The project will also introduce best  
practices in preventing avoidable hospitalizations and eliminating off-label usage of  
antipsychotics. Specific goals of the project include measurable improvements in clinical  
outcomes for residents, as well as a reduction in both resident complaints and citations  
issued against participating nursing homes.  
The Office of the State Long-Term Care Ombudsman will administer the  
program in collaboration with Ohio's 12 regional programs, which will provide training  
and assistance to the participating nursing homes. The Office, which is under the  
Department of Aging, advocates for long-term care consumers receiving home and  
community-based services and residents of long-term care facilities. Specific  
ombudsman activities include complaint handling, advocacy services, and public  
education.  
The federal Centers for Medicare and Medicaid Services approved  
approximately $2 million for the project. These funds come from civil monetary  
penalties imposed on nursing homes that do not meet federal health and safety  
standards. States are required to use civil monetary penalties to improve residents'  
outcomes in Medicaid- or Medicare-certified nursing homes.  
Ohio History Connection Awards History Fund Grants  
Adam Wefler, Budget Analyst, 614-466-0632  
On March 1, 2017, Ohio Statehood Day, the Ohio History Connection (OHC)  
awarded $74,000 to seven Ohio History Fund grant recipients. The awards ranged from  
2,500 to $15,000. The 2017 recipients, project descriptions, and award amounts are  
$
described in the table below. The History Fund Grant Program provides competitive  
grants to local history organizations, nonprofits, and local governments for projects  
designed to support historic preservation and education. Grant amounts depend on the  
type of project seeking funding, and may range from a $1,000 minimum for an  
organizational development project to a $20,000 maximum for brick-and-mortar or  
programs and collections projects. The grants require a local match of between 20% and  
Budget Footnotes  
20  
May 2017  
Ohio Legislative Service Commission  
4
0%, depending on the project. The grant program receives support primarily through a  
state income tax check-off.  
2017 Ohio History Fund Grant Recipients  
County  
Fairfield  
Organization  
Project Description  
Award Amount  
Window restoration at the Fairfield County  
Children's Home (now known as the  
Rutherford House), constructed in 1886  
Lancaster-Fairfield  
Community Action Agency  
$15,000  
Repair and preservation of porches and  
pergola at the Westcott House, designed  
by Frank Lloyd Wright  
Clark  
Westcott House Foundation  
$15,000  
$14,000  
Rehabilitation of historic steeple at Bronson  
Church, located within Cuyahoga Valley  
National Park  
Peninsula Valley Historic &  
Education Foundation  
Summit  
Study of ceramic and stone artifacts of the  
Hopewell people; assistance with  
nomination of the Hopewell sites for World  
Heritage status  
University of Akron,  
Department of Archaeology  
and Classical Studies  
Summit  
$12,500  
Dayton Society of Natural  
History  
Montgomery  
Seneca  
New exhibit space at SunWatch Village  
$12,000  
$3,000  
Seneca County  
Commissioners  
Strategic planning for the Seneca County  
Museum's advisory board  
Kent State University,  
Department of Anthropology  
Archaeological survey of the Berlin Lake  
Reservoir  
Portage  
$2,500  
Total  
$74,000  
Additional $3.7 million in Funding for Development Services Agency's  
Small Businesses Collateral Enhancement Program  
Tom Middleton, Senior Budget Analyst, 614-728-4813  
On April 10, 2017, the Development Services Agency (DSA) received Controlling  
Board approval to use an additional $3.7 million of federal funding for the Small  
Business Collateral Enhancement Program (SBCEP). As of March 2017, all of the  
$
5.6 million originally appropriated for the line item that funds the program was  
committed. The SBCEP provides the 28 participating lending institutions with cash  
collateral deposits of up to 30% of the loan amount (or up to 50% for a minority-owned  
business or a business located in an economically distressed area) to supplement  
collateral support for loans they make to eligible businesses. Eligible businesses must be  
Ohio-based, have fewer than 250 employees, and generate revenues of less than  
$
20 million annually. They must also commit to creating or retaining jobs with the  
money loaned to them. The maximum loan amount is $5 million. The loans can be used  
for real estate purchases, equipment acquisition, or working capital. Lenders approved  
2
29 loans to eligible businesses under the SBCEP in FY 2016.  
May 2017  
21  
Budget Footnotes  
Ohio Legislative Service Commission  
The SBCEP is one of the three prongs of the federal State Small Business Credit  
Initiative (SSBCI) that is designed to encourage lending to small businesses. The other  
two programs are the Ohio Capital Access Program and the Technology Targeted  
Investment Program. Ohio was awarded $55.2 million by the U.S. Department of  
Treasury in FY 2012 under the SSBCI initiative.  
Ohio EPA Public Water Project Loans Save Recipients Money  
Robert Meeker, Budget Analyst, 614-466-3839  
The Ohio Environmental Protection Agency (Ohio EPA) awards two types of  
loans to help local entities lower the costs of financing public wastewater and water  
system projects. The public wastewater project loans are backed with money drawn  
from the Ohio Water Pollution Control Loan Fund (WPCLF) and the public water  
system project loans are backed with money drawn from the Water Supply Revolving  
Loan Account (WSRLA). Both funds are managed by the Ohio EPA with assistance  
from the Ohio Water Development Authority. The WPCLF provides below-market rate,  
9
zero interest rate, and principal forgiveness loans for the planning, design, and  
construction of wastewater treatment facilities and sewer systems. The WSRLA  
provides below-market rate loans to public water systems for the planning, design, and  
construction of improvements to community water systems and nonprofit  
noncommunity public water systems. Both the WPCLF and WSRLA are funded with  
federal capitalization grants, loan repayments, and bond proceeds.  
WPCLF and WSRLA loans save recipients money relative to the cost of going to  
the open market for a similar loan. Ohio EPA awards these loans throughout the year.  
The table below shows examples of WPCLF and WSRLA project loans and estimated  
savings. These loans were all made in March 2017. As seen from the table, in March,  
1
1 local governmental entities were awarded wastewater project loans with a combined  
estimated savings of $4.3 million and four local governments were awarded water  
system project loans with a combined estimated savings of $396,000. The Northwestern  
Water and Sewer District (NWSD) is the only entity that received both wastewater and  
water system project loans.  
9 Principal forgiveness loans are loans in which eligible capital costs of a project are  
reduced by the principal forgiveness amount, thereby eliminating a portion of the principal  
(
and interest) that the borrower must repay.  
Budget Footnotes  
22  
May 2017  
Ohio Legislative Service Commission  
Examples of Ohio EPA Public Wastewater and Water System Project Loans and Savings  
Recipient (County)  
Loan Type  
Project Description  
Savings  
WPCLF Public Wastewater Project Loans, March 2017  
Principal  
Forgiveness  
Bellmore Village (Putnam)  
Willoughby City (Lake)  
Fayette County  
Installation of centralized sewage system  
$2,026,239  
$653,000  
$419,000  
$419,000  
$252,442  
$207,000  
$210,000  
$56,674  
$8,000  
Below-Market  
Interest Rate  
Construct Quentin Road underground  
storage basin for sanitary sewage  
Principal  
Forgiveness  
Home sewage treatment system repair  
and replacement  
Principal  
Forgiveness  
Home sewage treatment system repair  
and replacement  
Ross County  
Below-Market  
Interest Rate  
Sanitary sewer rehabilitation in (1) Millbury  
and (2) Williamsburg-on-the-River  
NWSD (Wood)  
Below-Market  
Interest Rate  
Location and removal of unauthorized  
sanitary sewer connections  
Toledo City (Lucas)  
Clermont County  
Principal  
Forgiveness  
Home sewage treatment system repair  
and replacement  
Below-Market  
Interest Rate  
High Street sanitary sewer overflow  
planning  
Warren City (Trumbull)  
Chardon City (Geauga)  
Caldwell Village (Noble)  
Perrysville Village (Ashland)  
Below-Market  
Interest Rate  
Upgraded sanitary sewer design  
Below-Market  
Interest Rate  
Wastewater collection system  
improvement study  
$4,700  
Zero Interest  
Rate  
Assessment of wastewater treatment  
plant  
$786  
WPCLF Total  
$4,256,841  
WSRLA Project Loans, March 2017  
Below-Market  
Interest Rate  
Installation of new 150,000-gallon water  
tank and related infrastructure  
Belle Center Village (Logan)  
Hamilton City (Butler)  
NWSD (Wood)  
$225,112  
$148,600  
$17,057  
Below-Market  
Interest Rate  
Replacement of the River Road water  
main  
Below-Market  
Interest Rate  
Inspection of 12 miles of water mains and  
planning for any rehabilitation  
Below-Market  
Interest Rate  
Design of a new drinking water plant and  
well  
DeGraff Village (Logan)  
$4,757  
WSRLA Total  
$395,526  
May 2017  
23  
Budget Footnotes  
Ohio Legislative Service Commission  
TRACKING THE ECONOMY  
Philip A. Cummins, Senior Economist, 614-387-1687  
Thomas Kilbane, Economist, 614-728-3218  
Overview  
New economic data reported in April and early May revealed a  
mixed performance thus far in 2017. Nationwide employment growth  
rebounded in April from a weak March and has grown in 2017 at the  
same pace as 2016, while wage gains in the private sector continued to  
outpace inflation. But the Bureau of Economic Analysis (BEA) reported  
inflation-adjusted gross domestic product (real GDP) growth in the first  
quarter of 2017 was the slowest in three years. Inflation-adjusted  
consumer spending and disposable personal income growth also hit  
multi-year lows during the first quarter. The real estate market remained  
growing at a healthy pace in the aggregate, but with severe local  
variance.  
Real GDP  
growth in the  
first quarter of  
2
017 was the  
slowest in  
three years.  
In Ohio, nonfarm payroll employment declined in March, but over  
the last 12 months is averaging an increase of 3,000 per month. The state's  
unemployment rate was 5.1% in March, and has been stuck between  
4
.9% and 5.1% for over a year. Overall economic activity is still  
increasing in the region though, as reported by the Federal Reserve's  
survey of local business contacts, and March home sales in the state were  
the highest in over 20 years.  
In May, the Federal Reserve10 kept its short-term interest rate  
target range at 0.75% to 1.0%, after raising it a quarter point at its meeting  
six weeks prior. At the prior meeting, the governors projected two more  
incremental increases of the interest rate target during 2017, and gave no  
indication of a change to that plan in the post-meeting statement in early  
May.  
The National Economy  
Employment and Unemployment  
The national unemployment rate fell to 4.4% in April, its lowest  
rate since 2007 (see Chart 5). Healthy employment gains combined with a  
labor force which has grown slowly in recent months (55,000 per month  
10 The Federal Open Market Committee is the policy-setting body within  
the Federal Reserve. Its most recent meeting concluded on May 3.  
Budget Footnotes  
24  
May 2017  
Ohio Legislative Service Commission  
over the last seven) has led to the drop. The unemployment rate is  
1
1
measured as the percent of the labor force that is unemployed.  
Chart 5: 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  
unemployment  
rate in April  
The U.S. added 211,000 jobs12 in April, rebounding from March  
+79,000) and continuing a streak of 79 straight months with employment  
(
4.4%) was the  
(
lowest since  
gains. Thus far in 2017, job growth has averaged 185,000 per month,  
matching the pace during 2016 nearly exactly, when the average per  
month was 187,000. Leisure and hospitality (+55,000), health care and  
social assistance (+36,800), and professional and business services  
2007.  
(
sectors. The information industry lost jobs during the month, about 8,700  
combined from the broadcasting and telecommunications subsectors.  
+39,000) continued to lead the way in April for job gains among industry  
Average hourly earnings among private, nonfarm employees rose  
in April for the 22nd straight month. Overall, earnings for these workers  
grew 2.5% in the last 12 months, outpacing inflation during the same  
period.  
Production, Shipments, and Inventories  
Growth of economic output slowed in the first quarter of 2017.  
1
3
Based on estimates from the BEA, real GDP grew just 0.7% during the  
11 The labor force is the number of civilians age 16 and over who are  
either currently employed or unemployed but looked for work in the last four  
weeks.  
12 Nonfarm payroll, seasonally adjusted.  
13 Seasonally adjusted annual rate.  
May 2017  
25  
Budget Footnotes  
Ohio Legislative Service Commission  
quarter, which would make it the slowest quarter of growth in three  
years. It also continued a recent pattern of slow first quarters. Three of  
the four slowest quarters of growth since 2014 have come during the first  
quarter of a calendar year. Overall however, the four-quarter pace of  
growth in the U.S. seems to be holding fairly steady, remaining near 2%  
(see Chart 6).  
Chart 6: U.S. Real GDP Growth  
6
5
4
3
2
1
0
.0  
.0  
.0  
.0  
.0  
.0  
.0  
-
1.0  
2.0  
-
Single Quarter (Seasonally Adjusted Annual Rate)  
12-Month Growth  
Industrial production increased in March as the result of a pickup  
in the output of utilities, but manufacturing output took a step back,  
decreasing 0.4% during the month according to data from the Federal  
Reserve. Over all though, both manufacturing (2.7% annual rate) and  
mining (12.1%) increased at healthy rates during the first quarter of 2017.  
Real consumer  
spending  
growth in the  
first quarter of  
Consumer Spending and Incomes  
Price-adjusted (real) consumer spending rebounded in March  
after declining in January and February. For the quarter though, real  
spending was nearly flat (0.3% growth at a seasonally adjusted annual  
rate). It was the slowest quarter of consumer spending growth since the  
fourth quarter of 2009. Spending during the first quarter was held in  
check by significant decreases of spending for motor vehicles and parts,  
as well as energy goods and services. Real disposable personal income  
grew by just 1.0% (seasonally adjusted annual rate) during the quarter as  
well, its slowest quarter of growth since the fourth quarter of 2013.  
2
017 was  
slower than  
any other since  
the fourth  
quarter of  
2
009.  
Sales of motor vehicles in April remained at a slowed pace relative  
to the record-setting 2016. Through April, cars and light trucks sold at an  
Budget Footnotes  
26  
May 2017  
Ohio Legislative Service Commission  
average seasonally adjusted annual rate of 17.1 million units, down 2.3%  
compared to the whole of 2016 when the rate was 17.5 million units. The  
slowed growth continues to come in cars, while light truck and SUV sales  
remain elevated.  
Construction and Real Estate  
Markets for new and used housing continue to recover. Though  
starts on new housing units fell about 7%, seasonally adjusted, in March,  
building permits rose. For the year to date, housing starts were 8% higher  
than a year earlier, after a 6% increase in all of 2016. Year-to-date permits  
were 10% higher. Home sales continue to rebound. New single-family  
home sales in this year's first three months were 12% above year-earlier  
Nationwide  
public  
sales, following a 12% rise in 2016. Sales reported by the National construction  
Association of Realtors, mostly previously occupied homes, were 5%  
higher in January-March than a year ago, after a 4% rise in 2016.  
was 7% lower  
in the first  
Continued recovery in the housing market has been accompanied  
quarter of 2017  
than the first  
by rising home prices. An index of nationwide prices of houses sold rose  
4
6
.4% in the year to February, after a 5.8% increase in the previous year.1  
This index has risen well above its peak prior to the 2007-2009 recession. quarter of  
Conditions vary widely in local markets around the country.  
2016.  
The total dollar value of construction put in place nationwide in  
this year's first three months was 5% higher than a year earlier, after a  
similar increase in all of 2016. The year-to-date value of private residential  
building was 9% higher than a year ago, and nonresidential construction  
was 8% higher on this basis, but public construction was down 7%.  
Inflation  
Seasonally adjusted consumer prices declined in March, after  
significant increases in the first two months of the calendar year. The drop  
was led by gasoline prices, which declined by 6.2% as measured by the  
consumer price index for urban consumers. Core prices, typically noted  
for a higher level of stability, declined in March as well, as measured by  
the price index of personal consumption expenditures less food and  
energy. For this subset, it was the first monthly decline since  
December 2008. Large monthly price declines were noted in the apparel  
category (a reversal of recent trend), as well as vehicles (a continuation of  
recent trend). Prices for used cars and trucks decreased significantly in  
particular, and are now 4.7% lower than they were in March one year ago,  
according to the Bureau of Labor Statistics.  
14 The index cited is the Federal Housing Finance Agency's index of U.S.  
house prices for mortgages sold to or guaranteed by Fannie Mae or Freddie Mac.  
May 2017  
27  
Budget Footnotes  
Ohio Legislative Service Commission  
The decline in prices during March was felt by producers as well,  
about three quarters of which was attributable to the cost of services.  
Prices for final demand goods fell in March also, though mostly due to  
gasoline. Prices for final demand less food, energy, and trade services  
edged up 0.1% in March.  
The Ohio Economy  
Employment and Unemployment  
Total nonfarm payroll employment in March was down from  
February by 4,100 persons (0.1%), but was higher than a year earlier by  
3
6,500 (0.7%). Statewide unemployment was 5.1% of the labor force in  
March, the same as in February and up from 5.0% in March 2016. Trends  
in Ohio employment and unemployment are shown in Chart 7.  
Chart 7: Ohio Employment and Unemployment Rates  
5
5
5
5
5
5
5
4
.6  
.5  
.4  
.3  
.2  
.1  
.0  
.9  
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 drop in employment in the latest month mainly reflected  
declines in several service industries. Higher total employment  
compared with a year ago resulted from gains in both goods-producing  
and private service industries, notably construction which added  
7
1
,900 employees (3.7%) and health care and social assistance with  
3,100 (1.6%) more employees than a year ago. Government employment  
was below the year-earlier level by 7,700 (1.0%) as the number of both  
state and local government jobs fell.  
Longer term, trend growth in total employment in the state has  
slowed from almost 2% per year in 2012, when the state's economy was  
climbing out of recession, to near 1% per year in 2017.  
Budget Footnotes  
28  
May 2017  
Ohio Legislative Service Commission  
Statewide unemployment has risen from a post-recession low of  
.7% of the labor force in 2015. Since then, growth in the number of  
people who want jobs has outpaced increases in the number employed.  
4
Ohio home  
sales prices  
were up 7%  
year-over-year  
in the first  
Ohio Home Sales  
The number of homes sold in March was highest ever for the  
month, in data tracked since 1998 by the Ohio Association of Realtors. In  
the first three months of 2017, home sales were 3% higher than in the  
year-earlier period. Prices of homes sold in the first quarter averaged 7%  
higher than in January-March 2016.  
quarter of  
2
017.  
Regional Economy  
A report on this region's economy from the Cleveland Federal  
1
5
Reserve Bank noted continued growth in activity. Spending by  
consumers was characterized as stable while factory output rose.  
Commercial builders reported growing backlogs of work to be done. The  
volume of freight transported rose. Prices and wages were said to be  
increasing. Employment rose except at retail stores.  
15 This summary is from Cleveland's section of the April issue of the  
Beige Book, a collection of comments on economic conditions gathered by  
Federal Reserve Banks from business and other contacts in each region.  
May 2017  
29  
Budget Footnotes