A monthly newsletter of the Legislative Budget Office of LSC  
Volume: Fiscal Year 2019  
Issue: January 2019  
Highlights  
Ross Miller, Chief Economist  
The GRF ended the first half of FY 2019 with tax revenue $128.7 million above  
estimates and program expenditures $318.9 million below estimates; the  
estimates were published by the Office of Budget and Management (OBM) in  
August 2018. Generally favorable results for the first half came despite personal  
income tax (PIT) revenue falling short of estimate for the month of December by  
$
46.8 million. Income tax revenue fell short of estimates for the first half as well,  
but monthly withholding revenue under the tax increased by 5.9% compared to  
the first half of FY 2018.  
Ohio's November unemployment rate, 4.6%, remained the same as October's  
rate. Nonfarm payrolls increased by 5,200 jobs for the month.  
Through December 2018, GRF sources totaled $16.55 billion:  
Revenue from the sales and use tax was $136.4 million above estimate;  
PIT receipts were $44.2 million below estimate.  
Through December 2018, GRF uses totaled $17.84 billion:  
Program expenditures for Medicaid were $314.2 million below estimate;  
Expenditures in the Primary and Secondary Education program category  
were $45.3 million above expectations, and expenditures for Justice and  
Public Protection were $18.4 million above expectations;  
Spending in most other program categories was below estimate.  
In this issue...  
More details on GRF Revenues (p. 2), Expenditures (p. 11),  
the National Economy (p. 27), and the Ohio Economy (p. 29).  
Also Issue Updates on:  
Rural Opioid Response Grant (p. 19)  
Infant Mortality Report (p. 19)  
Additional Aid for Certain School Districts with Power Plants (p. 20)  
School District "028" adjustment (p. 21)  
Historic Preservation Tax Credits (p. 22)  
Water Pollution Control Loan Funding Plan (p. 23)  
Agricultural Easements (p. 24)  
State Forest Timber Sales (p. 25)  
Justice Assistance Grants (p. 26)  
Available online at: www.lsc.ohio.gov/Budget Central  
Legislative Budget Office of the Legislative Service Commission  
Table 1: General Revenue Fund Sources  
Actual vs. Estimate  
Month of December 2018  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on January 2, 2019)  
State Sources  
Tax Revenue  
Actual  
Estimate*  
Variance Percent  
Auto Sales  
Nonauto Sales and Use  
Total Sales and Use  
$113,211  
$844,949  
$958,160  
$109,100  
$837,200  
$946,300  
$4,111  
$7,749  
$11,860  
3.8%  
0.9%  
1.3%  
Personal Income  
Commercial Activity Tax  
Cigarette  
Kilowatt-Hour Excise  
Foreign Insurance  
Domestic Insurance  
Financial Institution  
Public Utility  
Natural Gas Consumption  
Alcoholic Beverage  
Liquor Gallonage  
Petroleum Activity Tax  
Corporate Franchise  
Business and Property  
Estate  
$761,503  
$10,029  
$73,194  
$22,477  
$8  
$808,300  
$9,800  
$75,900  
$22,500  
$0  
$0  
-$2,200  
$900  
-$46,797  
$229  
-$2,706  
-$23  
$8  
$0  
-$4,325 -196.6%  
$4,072 452.5%  
-$200 -100.0%  
-$2,922  
$272  
$1,332  
$988  
$0  
-5.8%  
2.3%  
-3.6%  
-0.1%  
---  
$0  
---  
-$6,525  
$4,972  
$0  
$1,578  
$4,272  
$2,732  
$988  
$200  
$4,500  
$4,000  
$1,400  
$0  
$0  
$0  
-64.9%  
6.8%  
95.1%  
---  
---  
---  
$0  
$0  
$0  
Total Tax Revenue  
$1,833,389 $1,871,600  
-$38,211  
-2.0%  
Nontax Revenue  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$33  
$555  
$232  
$819  
$0  
$681  
$1,732  
$33  
-$127  
-$1,501  
---  
-18.6%  
-86.6%  
-66.1%  
Total Nontax Revenue  
$2,414  
-$1,595  
Transfers In  
$0  
$0  
$0  
-$39,806  
-$83,175  
---  
-2.1%  
Total State Sources  
$1,834,208 $1,874,014  
$664,222 $747,396  
Federal Grants  
-11.1%  
-4.7%  
Total GRF Sources  
$2,498,430 $2,621,410 -$122,980  
*Estimates of the Office of Budget and Management as of August 2018.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 2  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 2: General Revenue Fund Sources  
Actual vs. Estimate  
FY 2019 as of December 31, 2018  
($ in thousands)  
(Actual based on report run in OAKS Actuals Ledger on January 2, 2019)  
State Sources  
Tax Revenue  
Auto Sales  
Nonauto Sales and Use  
Total Sales and Use  
Actual  
Estimate*  
Variance Percent FY 2018** Percent  
$743,565  
$4,594,584 $4,482,800  
$5,338,148 $5,201,700  
$718,900  
$24,665  
$111,784  
$136,448  
3.4%  
2.5% $4,405,251  
2.6% $5,104,587  
$699,336  
6.3%  
4.3%  
4.6%  
Personal Income  
Commercial Activity Tax  
Cigarette  
Kilowatt-Hour Excise  
Foreign Insurance  
Domestic Insurance  
Financial Institution  
Public Utility  
Natural Gas Consumption  
Alcoholic Beverage  
Liquor Gallonage  
Petroleum Activity Tax  
Corporate Franchise  
Business and Property  
Estate  
$4,373,242 $4,417,400  
-$44,158  
$11,654  
$3,113  
$1,207  
$12,337  
$2  
-1.0% $4,148,803  
5.4%  
5.4%  
-0.1%  
6.5%  
9.8%  
$768,754  
$420,313  
$179,207  
$159,037  
$2  
$757,100  
$417,200  
$178,000  
$146,700  
$0  
1.5%  
0.7%  
0.7%  
8.4%  
---  
$729,044  
$420,847  
$168,282  
$144,844  
$63 -97.3%  
-$28,380  
$73,072  
$20,253  
$27,055  
$25,171  
$4,750  
$1,179  
$0  
-$16,200  
$56,900  
$17,700  
$29,400  
$24,500  
$2,700  
$0  
-$12,180 -75.2%  
-$25,039 -13.3%  
$16,172  
$2,553  
-$2,345  
$671  
$2,050  
$1,179  
$0  
28.4%  
14.4%  
-8.0%  
2.7%  
75.9%  
---  
$55,565  
$16,761  
$29,626  
$24,034  
$3,280  
$2,938 -59.9%  
-$374 100.0%  
$114 -71.7%  
31.5%  
20.8%  
-8.7%  
4.7%  
44.8%  
$0  
---  
---  
$32  
$0  
$32  
Total Tax Revenue  
$11,361,836 $11,233,100  
$128,736  
1.1% $10,823,372  
5.0%  
Nontax Revenue  
Earnings on Investments  
Licenses and Fees  
Other Revenue  
$25,426  
$10,343  
$54,972  
$90,740  
$19,634  
$9,918  
$61,700  
$5,792  
$425  
-$6,728 -10.9%  
29.5%  
4.3%  
$15,841  
$8,970  
$31,282  
60.5%  
15.3%  
75.7%  
61.8%  
Total Nontax Revenue  
$91,251  
-$511  
-0.6%  
$56,092  
Transfers In  
$76,109  
$80,190  
-$4,081  
-5.1%  
$129,269 -41.1%  
Total State Sources  
$11,528,685 $11,404,541  
$124,144  
1.1% $11,008,734  
-4.5% $5,004,627  
-0.7% $16,013,361  
4.7%  
0.3%  
3.4%  
Federal Grants  
$5,021,310 $5,257,930 -$236,620  
$16,549,995 $16,662,471 -$112,476  
Total GRF SOURCES  
*
*
Estimates of the Office of Budget and Management as of August 2018.  
*Cumulative totals through the same month in FY 2018.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 3  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
1
Revenues  
Jean Botomogno, Principal Economist  
Overview  
GRF sources closed out the first half of FY 2019 with a cumulative negative variance of  
$112.5 million (0.7%) when compared to OBM's estimate released in August 2018. This was due  
to poor revenue for the month of December; through the first five months, they were essentially  
on target. The year-to-date (YTD) GRF negative variance was due to shortfalls of $236.6 million  
2
(
4.5%) for federal grants, $4.1 million (5.1%) for transfers in, and $0.5 million (0.6%) for nontax  
revenue. Those shortfalls were partially offset by a positive variance of $128.7 million (1.1%) for  
tax revenues. The YTD negative variance for federal grants results from GRF Medicaid spending  
being substantially below expectations throughout the fiscal year. In contrast, GRF tax sources  
have been above estimates every month, with the exception of December when this category  
experienced a deficit of $38.2 million. Tables 1 and 2 show GRF sources for the month of  
December and for FY 2019 through December, respectively. GRF sources consist of state-source  
receipts, which include tax revenue, nontax revenue, and transfers in, and federal grants.  
For the year to date, PIT exhibited a cumulative negative variance of $44.2 million,  
attributable to a deficit of $46.8 million for the month of December. Also, the cumulative shortfall  
3
for the financial institutions tax (FIT) increased to $12.2 million, up from $7.9 million through  
November; the alcoholic beverage tax posted a timing-related YTD shortage of $2.3 million. On the  
other hand, GRF tax sources above estimates included the sales and use tax ($136.4 million), the  
public utility tax ($16.2 million), the foreign insurance tax ($12.3 million), the commercial activity  
tax (CAT, $11.7 million), and the cigarette and other tobacco products tax ($3.1 million). In  
addition, the petroleum activity tax (PAT), the natural gas consumption tax, and the kilowatt-hour  
tax were above projections by $2.1 million, $2.6 million, and $1.2 million, respectively. The  
remaining taxes had smaller variances at the end of December.  
GRF sources of $2.50 billion in December 2018 were $123.0 million below estimate, with  
all categories underperforming. Federal grants and GRF tax sources were below their  
anticipated levels by $83.2 million and $38.2 million, respectively, and nontax revenue was  
$
OBM. Tax sources were brought down by the PIT shortfall, and negative variances of  
1.6 million below estimate. No transfers in occurred this month as none were expected by  
$
$
tax had another good month with a positive variance of $11.9 million, the public utility tax was  
4.3 million for the FIT, $2.9 million for the alcoholic beverage tax (likely due to timing), and  
2.7 million for the cigarette tax. Partially offsetting the negative variances, the sales and use  
1
This report compares actual monthly and year-to-date GRF revenue sources to OBM's  
estimates. If actual receipts were higher than estimate, that GRF source is deemed to have a positive  
variance. Alternatively, a GRF source is deemed to have a negative variance if actual receipts were lower  
than estimate.  
2
Federal grants are primarily federal reimbursements for Medicaid.  
3
The GRF typically pays out refunds under the FIT during the first half of a fiscal year as  
taxpayers make adjustments to previous tax filings. Receipts of the FIT are typically expected at the end  
of January, March, and May.  
Budget Footnotes  
P a g e | 4  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
$
shows cumulative variances of GRF sources through December.  
4.1 million above estimate, and the PAT exceeded projections by $1.3 million. Chart 1, below,  
Chart 1: Cumulative Variances of GRF Sources in FY 2019  
(
Variances from Estimates, $ in millions)  
$
$
$
200  
150  
100  
$
50  
$0  
-
$50  
-
-
-
-
-
$100  
$150  
$200  
$250  
$300  
Jul-18  
Aug-18  
Sep-18  
Oct-18  
Nov-18  
Dec-18  
Federal Grants  
Tax Revenue  
Total GRF Sources  
FY 2019 GRF sources increased $536.6 million relative to sources in the corresponding  
six months in FY 2018. GRF tax sources, nontax revenue, and federal grants were higher by  
538.5 million, $34.6 million, and $16.7 million, respectively. The increase was partially reduced  
$
by a decrease in transfers in of $53.2 million. A growing economy led to increases in receipts  
from the sales and use tax ($233.6 million), the PIT ($224.4 million), and the CAT ($39.7 million).  
Also, combined receipts from three utility-related taxes (the kilowatt-hour tax, the public utility  
tax, and the natural gas consumption tax) grew $31.9 million, and revenue from the foreign  
insurance tax increased $14.2 million.  
Sales and Use Tax  
First-half receipts to the GRF from the sales and use tax totaled $5.34 billion, an amount  
136.4 million (2.6%) above estimate, with both the nonauto and the auto portions of the tax  
$
ahead of projections. YTD GRF receipts from the sales and use tax were also 4.6% above  
revenue through December in FY 2018. For the month of December 2018, GRF receipts of  
$
performance from the auto sales and use tax. December sales and use tax receipts were also  
958.2 million were $11.9 million (1.3%) above estimate, propelled by another good  
$
43.0 million (4.7%) above revenue in the same month in 2017.  
For analysis and forecasting, revenue from the sales and use tax is separated into two  
parts: auto and nonauto. Auto sales and use tax collections generally arise from the sale of  
motor vehicles, but auto taxes arising from leases are paid at the lease signing and are mostly  
recorded under the nonauto tax instead of the auto tax.  
Nonauto Sales and Use Tax  
After a shortfall of $4.8 million in October 2018, the nonauto sales and use tax  
rebounded with positive variances of $58.4 million in November and $7.7 million in December.  
Budget Footnotes  
P a g e | 5  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
The latest monthly performance increased the cumulative positive variance of this tax source to  
$
111.8 million (2.5%), up from $104.0 million through November. Compared to revenue in  
December 2017, nonauto sales and use tax revenue increased $35.2 million (4.3%). For the year  
to date, GRF receipts of $4.59 billion were $189.3 million (4.3%) above revenue in the  
corresponding period in FY 2018. Chart 2, below, shows year-over-year growth in nonauto sales  
tax collections. Revenue growth for this tax in the August to December 2018 period has been  
excellent, averaging about 7% when compared to revenue i4n the corresponding period in  
FY 2018, after adjusting for a significant change in the tax base.  
Chart 2: Nonauto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year (With Tax Base Adjustment,  
Three-month Moving Average)  
8
7
6
5
4
3
2
1
0
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Jul-18  
Aug-18  
Sep-18  
Oct-18  
Nov-18  
Dec-18  
Auto Sales and Use Tax  
The auto sales and use tax was above both estimates and prior-year receipts every  
month in the second quarter of FY 2019. GRF receipts from this tax source of $113.2 million in  
December were above expected revenue by $4.1 million (3.8%). This performance increased  
this source's cumulative positive variance to $24.7 million (3.4%), up from $20.6 million at the  
end of the previous month. Through December, FY 2019 auto sales tax receipts of  
$
Chart 3, below, shows year-over-year growth in auto sales tax collections. After slowing earlier  
in the fiscal year, the rate of revenue growth picked up in the last fiscal quarter.  
743.6 million were $44.2 million (6.3%) above receipts in the corresponding period in FY 2018.  
4
Beginning July 1, 2017, the sales tax on Medicaid health insuring corporations (MHICs) was  
eliminated. Thus, the last payment of $71.7 million deposited in the GRF was made in July 2017  
(
excludes monthly revenue from MHICs in July 2017 so that changes in nonauto sales and use tax  
revenue are on a comparable basis.  
reflecting taxable activity in June 2017). So, to adjust for changes to the existing tax base, this chart  
Budget Footnotes  
P a g e | 6  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Chart 3: Auto Sales and Use Tax Receipts Trend  
Actual vs. Prior Year  
(
Three-month Moving Average)  
9
8
7
6
5
4
3
2
1
0
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
Jul-18  
Aug-18  
Sep-18  
Oct-18  
Nov-18  
Dec-18  
Though most analysts expected a market contraction in calendar year (CY) 2018,  
nationwide new light vehicle (auto and light truck) sales actually increased, buoyed by a  
resilient economy. The auto industry sold about 17.3 million units, slightly up from 17.2 million  
units in CY 2017. Remarkably, the auto industry achieved its fourth straight year of sales above  
1
7 million units, including all-time record sales of 17.6 million units in CY 2016. The record shift  
to higher-priced trucks (now at 69% of sales) from lower-priced cars has helped boost the  
average price per new vehicle to more than $35,000, and also increased prices of previously  
owned vehicles. The overall effect of those changes tends to increase the auto sales tax base  
and revenue from the tax. Data from the Ohio Bureau of Motor Vehicles suggest similar trends  
in Ohio. While the number of titled vehicles was slightly up in the first half of FY 2019, average  
prices for new and used vehicles in Ohio both increased compared to the corresponding period  
last year.  
Personal Income Tax  
The PIT experienced a shortfall of $46.8 million (5.8%) in December 2018, due to a large  
negative variance for quarterly estimated payments. The poor performance pushed the YTD  
variance of this tax into negative territory $44.2 million (1.0%) below estimate, from a cumulative  
positive variance of $2.6 million in the first five months. PIT GRF receipts totaling $761.5 million for  
the month were also $27.1 million (3.4%) below receipts in December 2017. However, YTD revenue  
growth was a respectable 5.4%, when compared to the first half of FY 2018.  
PIT revenue is comprised of gross collections, minus refunds and distributions to the Local  
Government Fund (LGF). Gross collections consist of employer withholdings, quarterly estimated  
5
payments, trust payments, payments associated with annual returns, and other miscellaneous  
5
Quarterly estimated payments are made by taxpayers who expect to be underwithheld by  
more than $500. Payments are due in April, June, and September of an individual's tax year and January  
of the following year. Most estimated payments are made by high-income taxpayers.  
Budget Footnotes  
P a g e | 7  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
payments. The performance of the tax is typically driven by employer withholdings, which is the  
largest component of gross collections (about 82% of gross collections in FY 2018). Larger than  
expected refunds could also greatly affect the monthly performance of the tax.  
For the month of December 2018, gross collections were $44.9 million below projections.  
In addition to a shortfall of $68.6 million for quarterly estimated payments, miscellaneous  
payments and trust payments posted negative variances of $1.9 million and $1.0 million,  
respectively. On the other hand, employer withholding and payments with annual returns were  
$25.1 million and $1.6 million above estimate. While the poor results for estimated payments  
could be worrisome, they are likely due to timing rather than an indicator of poor full-year  
performance, since estimated payments are due in January rather than December.  
For the year to date, revenues from each component of the PIT relative to estimates and  
to revenue received in FY 2018 are detailed in the table below. YTD gross collections were  
below estimate by $34.2 million. Shortfalls for quarterly estimated payments and miscellaneous  
revenue were partially offset by positive variances from withholding and annual return  
payments. The negative variance for gross collections was increased by higher than projected  
refunds and distributions to the LGF. FY 2019 refunds and LGF distributions also increased  
compared to their amounts in the corresponding period last year.  
FY 2019 Personal Income Tax Revenue Variance and Annual Change by Component  
YTD Variance from Estimate  
Changes from FY 2018  
Amount  
$ in millions)  
Percent  
(%)  
Amount  
($ in millions)  
Percent  
(%)  
Category  
(
Withholding  
$39.7  
-$89.1  
$2.4  
0.9%  
$241.0  
-$30.0  
$4.8  
5.7%  
Quarterly Estimated Payments  
Trust Payments  
-23.1%  
14.4%  
24.0%  
-19.5%  
-0.7%  
2.0%  
-9.2%  
33.6%  
47.7%  
-20.2%  
5.2%  
Annual Return Payments  
Miscellaneous Payments  
Gross Collections  
$21.3  
-$8.6  
-$34.2  
$7.1  
$35.5  
-$8.9  
$242.3  
$8.8  
Less Refunds  
2.5%  
Less LGF Distribution  
GRF PIT Revenue  
$2.9  
1.5%  
$9.0  
4.7%  
$44.2  
-1.0%  
$224.4  
5.4%  
Compared to FY 2018 through December, gross collections were higher in FY 2019 by  
242.3 million. Regarding the two most important components of the PIT, monthly withholding  
$
receipts grew 5.9% while quarterly estimated payments fell 9.2%. The chart below illustrates  
the growth of monthly employer withholdings on a three-month moving average relative to  
one year ago. It shows growth generally between 5% and 6% in FY 2019.  
Budget Footnotes  
P a g e | 8  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Chart 4: Monthly Witholding 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%  
Jul-18  
Aug-18  
Sep-18  
Oct-18  
Nov-18  
Dec-18  
Commercial Activity Tax  
In the second fiscal quarter, receipts to the GRF from the CAT were above estimate by  
31.7 million. This was an improvement over the July to September period when the tax had  
$
recorded a shortfall of $20.1 million. Thus, through December in FY 2019, the CAT had a  
cumulative positive GRF variance of $11.7 million (1.5%). For the month of December 2018,  
CAT GRF receipts were $10.0 million, an amount that was $0.2 million (2.3%) above estimate.  
YTD GRF receipts were $768.8 million, $39.7 million (5.4%) above revenue in the first half of  
FY 2018. Gross collections from the tax increased about 6.9% relative to collections through  
December last fiscal year but, as stated in previous editions of this publication, increased  
credit claims and refunds have restrained growth in net collections to the GRF.  
Under continuing law, CAT receipts are deposited into the GRF (85%), the School District  
Tangible Property Tax Replacement Fund (Fund 7047, 13%), and the Local Government Tangible  
Property Tax Replacement Fund (Fund 7081, 2%). Through December 2018, distributions to  
Funds 7047 and 7081 were $117.6 million and $18.1 million, respectively. The distributions are  
used to make reimbursement payments to school districts and other local taxing units,  
respectively, for the phase out of property taxes on general business tangible personal  
property. Any receipts in excess of amounts needed for such payments are transferred back to  
the GRF.  
Cigarette and Other Tobacco Products Tax  
In December, GRF revenue from the cigarette and other tobacco products tax was  
$
$
73.2 million, $2.7 million (3.6%) below estimate. Receipts for the month were however  
2.5 million (3.5%) above revenue in December 2017. Through December, FY 2019 revenue  
from this GRF source totaled $420.3 million, $3.1 million (0.7%) above estimate and $0.5 million  
0.1%) below receipts through December in FY 2018. YTD revenue included $382.8 million from  
the sale of cigarettes and $37.5 million from the sale of other tobacco products. Compared to  
(
Budget Footnotes  
P a g e | 9  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
FY 2018, receipts from cigarette sales fell $4.3 million while those from the sale of other  
tobacco products increased $3.8 million. On a yearly basis, revenue from the cigarette and  
other tobacco products tax usually trends downward generally at a slow pace due to a decline  
of cigarette revenue, though receipts from the sales of other tobacco products increase yearly.  
Other Taxes  
The kilowatt-hour tax generated $179.2 million during the first six months of the fiscal  
year. This was $1.2 million (0.7%) above estimate, and $10.9 million (6.5%) above revenue  
during the comparable months of FY 2018. The tax base generally is kilowatt-hours of electricity  
used, i.e., it generally does not depend on the price of electricity. Half of the allocation of GRF  
tax revenue to the Public Library Fund is debited against this tax for accounting purposes, thus  
good GRF tax revenue performance overall can make this tax look bad.  
YTD revenue from the public utility tax to the GRF was $73.1 million, an amount  
$
16.2 million (28.4%) above estimate, and $17.5 million (31.5%) above receipts in the first half  
of FY 2018. About 95% of the revenue from this tax comes from natural gas utilities and  
revenue depends on both prices and consumption volumes. Though natural gas prices fell in  
2
Administration, a federal agency. Natural gas delivered to all types of Ohio consumers  
increased over the last year, and, for electric power generation, sometimes substantially.  
018, consumption has been higher, according to data from the Energy Information  
6
The foreign insurance tax generated $159.0 million during the first half of FY 2019,  
$
12.3 million (8.4%) above estimate, and $14.2 million (9.8%) above receipts in the  
corresponding period in FY 2018. This tax is paid by insurance companies headquartered in  
other states, based on premiums they receive to provide insurance covering risks located in  
Ohio. The performance of the tax was likely affected by the timing of tax refunds which have  
been lower this fiscal year ($7.7 million) when compared to the corresponding period in  
FY 2018 ($24.1 million); but, the revenue experience so far this year reveals little about the full  
fiscal year experience from the tax as payments received so far represent advance payments  
based on previous year tax liabilities before credits.  
Similarly, almost no revenue has been received so far in FY 2019 from the domestic  
insurance tax (paid by insurance companies headquartered in Ohio), but that says little about  
the full year experience: virtually all revenue from the tax is received in May and June each  
fiscal year.  
6
The following are the four types of consumers: residential, commercial, industrial, and electric  
power generation.  
Budget Footnotes  
P a g e | 10  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 3: General Revenue Fund Uses  
Actual vs. Estimate  
Month of December 2018  
($ in thousands)  
(Actual based on OAKS reports run January 4, 2019)  
Program Category  
Actual  
Estimate* Variance Percent  
Primary and Secondary Education  
Higher Education  
$645,694  
$188,489  
$7,245  
$615,956 $29,739  
4.8%  
0.3%  
$187,996  
$4,243  
$493  
Other Education  
$3,002  
70.8%  
4.1%  
Total Education  
$841,429  
$808,195 $33,234  
Medicaid  
$1,086,133 $1,156,563 -$70,430  
$109,489 $111,594 -$2,105  
$1,195,622 $1,268,157 -$72,535  
-6.1%  
-1.9%  
-5.7%  
Health and Human Services  
Total Health and Human Services  
Justice and Public Protection  
General Government  
$207,923  
$29,628  
$200,197  
$35,324  
$7,726  
3.9%  
-$5,696 -16.1%  
$2,030 0.9%  
Total Government Operations  
$237,551  
$235,521  
Property Tax Reimbursements  
Debt Service  
$990  
$19,701  
$20,692  
$15,147 -$14,157 -93.5%  
$19,963 -$262 -1.3%  
$35,110 -$14,418 -41.1%  
Total Other Expenditures  
Total Program Expenditures  
Transfers Out  
$2,295,294 $2,346,982 -$51,689  
$0 $0 $0  
$2,295,294 $2,346,982 -$51,689  
-2.2%  
---  
Total GRF Uses  
-2.2%  
*August 2018 estimates of the Office of Budget and Management.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 11  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 4: General Revenue Fund Uses  
Actual vs. Estimate  
FY 2019 as of December 31, 2018  
($ in thousands)  
(Actual based on OAKS reports run January 4, 2019)  
Program Category  
Actual  
Estimate*  
Variance Percent FY 2018** Percent  
Primary and Secondary Education  
Higher Education  
$4,197,036  
$1,147,019  
$45,173  
$4,151,767  
$1,153,654  
$42,014  
$45,269  
-$6,635  
$3,159  
1.1% $4,143,826  
-0.6% $1,149,269  
1.3%  
-0.2%  
7.8%  
1.0%  
Other Education  
7.5%  
$41,908  
Total Education  
$5,389,228 $5,347,434  
$41,793  
0.8% $5,335,002  
Medicaid  
$7,789,622  
$675,073  
$8,103,831 -$314,210  
$724,303 -$49,230  
-3.9% $7,624,963  
2.2%  
3.1%  
2.2%  
Health and Human Services  
Total Health and Human Services  
-6.8%  
$654,805  
$8,464,694 $8,828,134 -$363,440  
-4.1% $8,279,768  
Justice and Public Protection  
General Government  
$1,197,257  
$193,952  
$1,178,894  
$200,832  
$18,363  
-$6,880  
$11,483  
1.6% $1,123,579  
6.6%  
2.4%  
6.0%  
-3.4%  
$189,479  
Total Government Operations  
$1,391,209 $1,379,726  
0.8% $1,313,058  
Property Tax Reimbursements  
Debt Service  
$905,520  
$934,361  
$913,447  
$935,139  
-$7,927  
-$778  
-0.9%  
-0.1%  
$906,420  
$897,879  
-0.1%  
4.1%  
2.0%  
Total Other Expenditures  
$1,839,880 $1,848,585  
-$8,705  
-0.5% $1,804,300  
Total Program Expenditures  
Transfers Out  
$17,085,011 $17,403,880 -$318,869  
$752,840 $751,933 $906  
$17,837,851 $18,155,814 -$317,962  
-1.8% $16,732,127  
2.1%  
0.1%  
$69,001 991.1%  
6.2%  
Total GRF Uses  
-1.8% $16,801,128  
*
*
August 2018 estimates of the Office of Budget and Management.  
*Cumulative totals through the same month in FY 2018.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 12  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 5: Medicaid Expenditures by Department  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on January 4, 2019)  
Month of December 2018  
Year to Date through December 2018  
Actual Estimate* Variance Percent  
Department  
Medicaid  
GRF  
Actual  
Estimate* Variance Percent  
$1,021,539 $1,095,116 -$73,577  
$1,278,289 $1,038,900 $239,389  
-6.7% $7,432,716 $7,743,849 -$311,133  
-4.0%  
Non-GRF  
23.0% $4,419,348 $5,019,563 -$600,215 -12.0%  
$
2,299,829 $2,134,017 $165,812  
7.8% $11,852,064 $12,763,411 -$911,348  
-7.1%  
All Funds  
Developmental  
Disabilities  
GRF  
$55,243  
195,081  
250,324  
$54,646  
$199,240  
$253,886  
$597  
-$4,159  
-$3,562  
1.1%  
$307,026  
$309,092  
-$2,065  
-$29,016  
-$31,081  
-0.7%  
-2.5%  
-2.1%  
$
-2.1% $1,122,180 $1,151,196  
-1.4% $1,429,206 $1,460,288  
Non-GRF  
All Funds  
$
Job and Family Services  
GRF  
$8,305  
$16,993  
25,298  
$5,861  
$12,886  
$18,748  
$2,443  
$4,107  
$6,550  
41.7%  
31.9%  
34.9%  
$44,971  
$92,313  
$45,672  
$76,510  
-$701  
$15,803  
$15,102  
-1.5%  
20.7%  
12.4%  
Non-GRF  
$
$137,284  
$122,182  
All Funds  
Health, Mental Health and Addiction, Aging, Pharmacy Board, and Education  
GRF  
$1,046  
$2,064  
$3,111  
$940  
$2,905  
$3,845  
$106  
11.3%  
$4,908  
$16,769  
$21,678  
$5,219  
$19,859  
$25,078  
-$311  
-6.0%  
Non-GRF  
-$841 -28.9%  
-$734 -19.1%  
-$3,090 -15.6%  
-$3,400 -13.6%  
All Funds  
All Departments:  
GRF  
$1,086,133 $1,156,563 -$70,430  
$1,492,429 $1,253,933 $238,496  
-6.1% $7,789,622 $8,103,831 -$314,210  
19.0% $5,650,610 $6,267,128 -$616,518  
7.0% $13,440,232 $14,370,959 -$930,727  
-3.9%  
-9.8%  
-6.5%  
Non-GRF  
$
2,578,562 $2,410,496 $168,066  
All Funds  
*September 2018 estimates from the Department of Medicaid.  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 13  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Table 6: All Funds Medicaid Expenditures by Payment Category  
Actual vs. Estimate  
($ in thousands)  
(Actuals based on OAKS report run on January 4, 2019)  
Month of December 2018  
Year to Date through December 2018  
Actual Estimate* Variance Percent  
Payment Category  
Actual  
Estimate* Variance Percent  
Managed Care  
CFC†  
$1,478,785 $1,587,471 -$108,686  
-6.8% $8,359,733 $8,654,509 -$294,776  
-3.4%  
-2.0%  
-7.3%  
-1.0%  
-2.0%  
4.2%  
$486,709  
$340,971  
$233,900  
$76,297  
$497,435  
$378,385  
$237,502  
$79,053  
-$10,726  
-$37,414  
-$3,602  
-$2,756  
$6,844  
-2.2% $2,927,934  
-9.9% $2,103,375  
-1.5% $1,399,484  
$2,988,230 -$60,295  
$2,269,998 -$166,623  
Group VIII  
ABD†  
$1,413,918  
$471,214  
$1,220,216  
$290,935  
-$14,434  
-$9,199  
$51,766  
ABD Kids  
-3.5% $462,014  
3.3% $1,271,982  
$194,944  
MyCare  
P4P & Insurer Fee†  
$211,940  
$128,969  
$205,096  
$190,000  
-$61,031 -32.1%  
-$95,990 -33.0%  
Fee-For-Service  
ODM Services  
DDD Services  
Hospital - HCAP†  
Hospital - Other  
$934,560  
$371,992  
$244,921  
$317,647  
$0  
$653,530 $281,029  
43.0% $4,038,143 $4,619,271 -$581,128 -12.6%  
$405,966  
$247,565  
-$33,974  
-$2,644  
-8.4% $2,213,053  
-1.1% $1,382,583  
$2,426,141 -$213,089  
$1,410,055 -$27,472  
-8.8%  
-1.9%  
$0 $317,647  
-
-
$317,659  
$124,848  
$635,291 -$317,631 -50.0%  
$0  
$0  
$147,784  
-$22,936 -15.5%  
Premium Assistance  
Medicare Buy-In  
Medicare Part D  
$89,182  
$51,808  
$37,374  
$98,772  
$60,119  
$38,653  
-$9,590  
-$8,311 -13.8%  
-$1,279  
-9.7%  
$530,414  
$304,837  
$225,577  
$563,176  
$331,100  
$232,075  
-$32,761  
-$26,264  
-$6,498  
-5.8%  
-7.9%  
-2.8%  
-3.3%  
Administration  
Total  
$76,034  
$70,722  
$5,313  
7.5%  
$511,941  
$534,003  
-$22,061  
-4.1%  
-6.5%  
$2,578,562 $2,410,496 $168,066  
7.0% $13,440,232 $14,370,959 -$930,727  
*September 2018 estimates from the Department of Medicaid.  
P4P - Pay For Performance, Insurer Fee - Health Insurer Fee.  
CFC - Covered Families and Children; ABD - Aged, Blind, and Disabled; HCAP - Hospital Care Assurance Program;  
Detail may not sum to total due to rounding.  
Budget Footnotes  
P a g e | 14  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Expenditures7  
Melaney Carter, Assistant Director  
Ivy Chen, Principal Economist  
Overview  
In the month of December, GRF program expenditures were $51.7 million (2.2%) below  
estimate, increasing the negative YTD variance to $318.9 million (1.8%). As expected, there  
were no transfers out in December, so the YTD positive variance remained at $0.9 million  
(
through December, which was $318.0 million (1.8%) below estimate. Tables 3 and 4 detail GRF  
0.1%). Including both program expenditures and transfers out, GRF uses totaled $17.84 billion  
uses for the month of December and for FY 2019 through December, respectively.  
Medicaid expenditures had the largest negative variances for both the month of  
December and year to date. Medicaid expenditures in December were $70.4 million below  
estimate, increasing this category's negative YTD variance to $314.2 million (3.9%). Medicaid is  
mainly funded by the GRF but it is also supported by several non-GRF funds. More details on  
both the GRF and non-GRF variances in Medicaid expenditures are discussed in the section that  
follows this overview.  
In addition to Medicaid, the Health and Human Services, General Government, and Debt  
Service categories increased their negative YTD variances in December. At the end of  
December, Health and Human Services had the second highest negative YTD variance of  
$
49.2 million (6.8%); General Government had a negative variance of $6.9 million (3.4%); and  
Debt Service had a negative YTD variance of $0.8 million (0.1%). Three categories added to  
positive YTD variances in December: Primary and Secondary Education had a positive YTD  
variance of $45.3 million (1.1%) at the end of December; Justice and Public Protection had a  
positive YTD variance of $18.4 million (1.6%); and Other Education was $3.2 million (7.5%)  
above its YTD estimate. Higher education had a small positive monthly variance in December,  
but maintained a negative YTD variance of $6.6 million (0.6%). Finally, the Property Tax  
Reimbursements category's YTD variance turned from a positive variance of $6.2 million (0.7%)  
at the end of November to a negative variance of $7.9 million (0.9%) at the end of December. A  
discussion of the more significant of these variances follows the discussion of Medicaid.  
Medicaid  
Although GRF Medicaid expenditures were $70.4 million (6.1%) below estimate for the  
month of December, non-GRF Medicaid expenditures were $238.5 million (19.0%) above  
estimate. For the year to date through December, both GRF and non-GRF Medicaid  
expenditures were below estimates, by $314.2 million (3.9%) and $616.5 million (9.8%),  
respectively. Including both the GRF and non-GRF, all funds Medicaid expenditures of  
$
variances is the delay of two Health Care Assurance Program (HCAP) payments. The Ohio  
13.44 billion were $930.7 million (6.5%) below the YTD estimate. The primary reason for these  
7
This report compares actual monthly and YTD expenditures from the GRF to OBM's estimates.  
If a program category's actual expenditures were higher than estimate, that program category is  
deemed to have a positive variance. The program category is deemed to have a negative variance when  
its actual expenditures were lower than estimate.  
Budget Footnotes  
P a g e | 15  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Department of Medicaid (ODM) planned to make two HCAP payments, both non-GRF funded,  
in September and in October. However, the first payment of $317.6 million did not occur until  
December, which resulted in a positive variance in non-GRF Medicaid expenditures for the  
month. The second payment has yet to be made. This delay has resulted in negative variances  
in both YTD non-GRF and all funds expenditures. The delay accounts for 51.5% of the YTD non-  
GRF variance and 34.1% of the YTD all funds variance. When the payment is made it will cause  
these YTD variances to narrow.  
Table 5 shows GRF and non-GRF Medicaid expenditures for ODM, the Ohio Department  
of Developmental Disabilities (ODODD), and six other "sister" agencies that also take part in  
administering Ohio Medicaid. ODM and ODODD account for about 99% of the total Medicaid  
budget. Therefore, they also account for the vast majority of variances in Medicaid  
expenditures. The other six agencies Job and Family Services, Health, Aging, Mental Health  
and Addiction Services, State Board of Pharmacy, and Educationaccount for the remaining  
one percent of the total Medicaid budget. Unlike ODM and ODODD, the six "sister" agencies  
incur only administrative spending.  
Table 6 shows all funds Medicaid expenditures by payment category. Overall  
expenditures from all four major payment categories, Managed Care, Fee-For-Service (FFS),  
Premium Assistance, and Administration, were below their YTD estimates. The FFS category had  
the largest overall negative variance of $581.1 million (12.6%), followed by Managed Care  
(
(
$294.8 million, 3.4%), Premium Assistance ($32.8 million, 5.8%), and Administration  
$22.1 million, 4.1%).  
The negative variance in FFS was primarily due to the delay in one of the HCAP  
payments ($317.6 million) indicated earlier. Under HCAP, the state makes subsidy payments to  
hospitals that provide uncompensated care to low-income and uninsured individuals at or  
below 100% of the federal poverty level. Another contributing factor to the negative variance in  
the FFS category was lower than expected FFS caseloads. Beginning January 1, 2018, newly  
eligible individuals are removed from FFS and enrolled onto managed care shortly after  
receiving Medicaid benefits. Previously, when ODM prepared the estimates, newly eligible  
individuals could remain in the FFS system for several weeks while they decided which  
managed care plan in which to enroll.  
Expenditures from all Managed Care categories were below their YTD estimates except  
for MyCare, which had a positive YTD variance of $51.8 million (4.2%). MyCare is a managed  
care program for Ohioans who are eligible for both Medicaid and Medicare. Group VIII  
(
individuals who became eligible for Medicaid through the federal Affordable Care Act, also  
known as ACA) had the largest negative YTD variance of $166.6 million (7.3%) within the  
Managed Care category, followed by P4P & Insurer Fee (Pay for Performance and Health  
Insurer Fee) at $96.0 million (33.0%), and CFC (Covered Families and Children) at $60.3 million  
(
2.0%). The negative variances for Group VIII and CFC were mainly due to lower than expected  
caseloads. For the first six months of FY 2019, on average the monthly managed care caseloads  
for Group VIII and CFC were 7.3% (46,800) and 1.9% (29,600), respectively, below estimates.  
Finally, $61.0 million of the $96.0 million negative YTD variance in the P4P & Insurer Fee  
category was due to the variance in the Health Insurer Fee. The Health Insurer Fee a source of  
funding for the Marketplaces under ACA is a tax by the federal government on certain entities  
Budget Footnotes  
P a g e | 16  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
that provide health insurance. The tax applies to M8edicaid managed care and is incorporated  
into Ohio's Medicaid managed care capitation rates.  
Health and Human Services  
The negative YTD variance in the Health and Human Services program category  
increased $2.1 million in December to $49.2 million (6.8%). The most significant negative YTD  
variance was $32.9 million for the Ohio Department of Job and Family Services (ODJFS),  
followed by $8.4 million for the Ohio Department of Mental Health and Addiction Services  
(ODMHAS) and $8.0 million for the Ohio Department of Health (ODH).  
Of the 21 GRF line items in the ODJFS budget that are included in this program category,  
only two had positive YTD variances, one of which was significant600502, Child Support-  
Local, with a positive YTD variance of $2.4 million, which fell from $3.9 million at the end of  
November. Item 600502 provides the state share of the administrative costs of local child  
support enforcement agencies. Of the many line items with negative YTD variances, the most  
significant were 600416, Information Technology Projects, with a negative variance of  
$
8.1 million, falling from $10.1 million at the end of November and 600521, Family Assistance –  
Local, with a negative variance of $5.2 million. Item 600416 provides funding for the  
development, implementation, and maintenance of computer systems used by ODJFS and the  
county departments of job and family services (CDJFSs). Item 600521 is used to provide CDJFSs  
the state's share of their administrative costs for public assistance programs.  
The negative YTD variance for ODMHAS came primarily from two line items. Item  
3
3
$
36510, Residential State Supplement, had a negative YTD variance of $4.2 million and item  
36423, Addiction Services Partnership with Corrections, had a negative YTD variance of  
2.6 million. Item 336510 is used to provide cash assistance and case management to aged,  
blind, or disabled adults who reside in approved alternate living facilities such as group homes  
and residential care facilities. Item 336423 funds services provided by ODMHAS inside of  
correctional facilities used by the Department of Rehabilitation and Correction (DRC). Also of  
note, item 336412, Hospital Services, had a positive variance for the month of December of  
$
operating costs of the state's regional psychiatric hospitals.  
2.2 million, reducing its negative YTD variance to $1.3 million. Item 336412 funds the  
Most of ODH's line items had negative variances at the end of December. The largest  
were items 440459, Help Me Grow; 440474, Infant Vitality; and 440482, Chronic Disease/Health  
Promotion, with negative YTD variances of $2.0 million, $1.4 million, and $1.1 million,  
respectively. Item 440459 is used to distribute funds to counties to operate the Help Me Grow  
Home Visiting Program, which is the state's parenting education program for parents at highest  
risk for poor child outcomes. Item 440474 is used by ODH for programs that address infant  
mortality. Item 440482 supports the Bureau of Health Promotion's efforts to prevent and  
control chronic diseases.  
8
The Health Insurer Fee was in effect from 2014 through 2016. The U.S. Congress approved a  
one-year moratorium for 2017 but the tax went back into effect (and remains in effect) for 2018.  
Congress suspended the tax once again in 2019; if not further delayed, it will be collected again  
beginning in 2020.  
Budget Footnotes  
P a g e | 17  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Primary and Secondary Education  
The Ohio Department of Education's (ODE's) positive YTD variance of $45.3 million was  
dominated by item 200550, Foundation Funding, which had a positive YTD variance of  
$
49.1 million at the end of December, increasing by $23.8 million from the end of November.  
Item 200550 is primarily used to provide operating subsidies to public schools through the  
state's school funding formula. This item often has variances as ODE collects and updates  
various data that are used in the formula. Item 200502, Pupil Transportation, had a positive YTD  
variance of $8.7 million, almost all of which occurred in the month of December. Item 200502 is  
used to fund the transportation portion of the school funding formula, as well as transportation  
funding for students with disabilities that is provided outside of the formula.  
These positive variances are partially offset by negative variances in several other line  
items, including negative YTD variances of $4.5 million in item 200408, Early Childhood  
Education, and $3.8 million in item 200511, Auxiliary Services. At the end of November, item  
2
00408 had a positive variance of $1.2 million, but a negative variance in the month of  
December of $5.7 million pushed its YTD variance into negative territory. Item 200408 funds  
early childhood education programs for low-income children. Item 200511 supports the  
provision of certain secular services to chartered nonpublic schools and is distributed on a per  
pupil basis.  
Justice and Public Protection  
The positive YTD variance in the Justice and Public Protection category increased by  
7.7 million in December to $18.4 million, mostly due to positive monthly and YTD variances for  
$
DRC of $8.8 million and $17.7 million, respectively. The Attorney General also had a significant  
positive YTD variance of $3.7 million at the end of December, which fell from $5.2 million at the  
end of November.  
DRC's positive YTD variance was dominated by item 501405, Halfway House, with a  
positive variance of $16.1 million for both the month and year to date. Item 501405 is used to  
pay contracts to community residential programs that provide supervision and treatment  
services for certain offenders. Three appropriation items with significant YTD variances at the  
end of November had variances in December that were offsetting to their November YTD  
variances. Item 501407, Community Nonresidential Programs, had a positive YTD variance of  
$
5
sanctions programming for felony offenders in lieu of prison or jail commitments. Item 501321,  
Institutional Operations, which had a positive monthly variance of $10.3 million in November,  
had a negative $4.1 million variance in December, changing its YTD variance from a positive  
3.9 million at the end of December, which fell from $8.9 million at the end of November. Item  
01407 funds grants to counties to operate intensive supervision and other community  
$
3.4 million at the end of November to a negative $0.8 million at the end of December. Item  
5
01321 is the state's main source of funding for prison operations. Finally, item 505321,  
Institution Medical Services, decreased its negative YTD variance of $4.0 million at the end of  
November to a negative YTD variance of $2.5 million at the end of December. Item 505321 is  
used to provide medical services to offenders in the state's prison system.  
The Attorney General's positive YTD variance primarily came from item 055321,  
Operating Expenses, which had a positive YTD variance of $5.0 million. Item 055321 is the  
Attorney General's main appropriation for the office's operating expenses.  
Budget Footnotes  
P a g e | 18  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Issue Updates  
Ohio University Receives $200,000 in Rural Opioid  
Response Planning Funds  
Ryan Sherrock, Economist  
On December 4, 2018, the Ohio University's Voinovich School of Leadership and Public  
Affairs was awarded a $200,000 federal Rural Communities Opioid Response Program Planning  
grant. The purpose of the grant is to reduce the morbidity and mortality associated with opioid  
use disorder in high-risk rural counties by strengthening infrastructural and organizational  
capacity. Specific grant activities will include developing a consortium of various health care  
professionals, researchers, and community health authorities to conduct a detailed community  
needs assessment. This assessment will identify gaps in prevention and treatment services and  
in the recovery workforce itself. After this has been completed, the consortium will develop a  
strategic plan to address identified gaps in healthcare access and a workforce plan to help  
ensure communities have sufficiently trained personnel to deal with the opioid crisis. Activities  
will focus on local communities in Ashtabula, Fairfield, Sandusky, Seneca, and Washington  
counties. To carry out the grant, the Voinovich School is partnering with the Pacific Institute for  
Research and Evaluation, a nonprofit organization specializing in prevention strategies that  
collaborates with many government agencies, businesses, universities, and foundations across  
the nation. The Institute also received a separate, complementary $200,000 grant, which will be  
used to assist the Voinovich School with these activities.  
The Rural Communities Opioid Response Program Planning grant is provided by the  
Health Resources and Services Administration (HRSA) of the U.S. Department of Health and  
Human Services. In total, HRSA awarded $19 million in grant funds to 95 rural health  
organizations across the country. Each recipient received $200,000, which was the maximum  
amount allowed. Both public and private entities who serve high-risk rural communities were  
eligible to apply. According to HRSA, additional funds may be available in future years to  
provide continued support.  
Ohio Infant Mortality Rate Decreases in 2017  
Jacquelyn Schroeder, Budget Analyst  
On December 6, 2018, ODH released its 2017 Ohio Infant Mortality Report, which found  
9
that Ohio's infant mortality rate for all races decreased from 7.4 in 2016 to 7.2 in 2017. Ohio's  
goal is to attain a rate of 6.0 or lower for every race or ethnic group. The white infant mortality  
rate has met this goal since 2014 and continues to experience improvement decreasing from  
5
.8 in 2016 to 5.3 in 2017. However, neither the infant mortality rate for blacks nor Hispanics  
has achieved this goal. While the rate for Hispanics decreased from 7.3 in 2016 to 7.2 in 2017,  
the rate for blacks actually increased from 15.2 to 15.6 during this time period. According to the  
report, the number of black infant deaths increased by 9% during the neonatal period (first 27  
9
The infant mortality rate is the number of infant deaths in the first year of life per 1,000 live births.  
Budget Footnotes  
P a g e | 19  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
days of life) but decreased by 7% for the post-neonatal period (28 through 364 days of life).  
Deaths during the neonatal period are often attributed to preterm birth, low birth weight, or  
health problems experienced by the mother before and during pregnancy.  
The state has taken numerous steps to address infant mortality over the past several  
years. Current efforts include increasing access to long-acting reversible contraceptives to  
promote safe birth intervals, increasing the use of progesterone treatment to reduce preterm  
birth, and establishing grant programs to reduce smoking rates for pregnant women. In  
addition, there have been numerous efforts focusing on areas with high risk of infant mortality.  
An example of a targeted effort, which launched in the fall of 2018, uses local community  
health workers to identify at-risk pregnant women and connect them to healthcare and other  
necessary social services.  
To read the report in its entirety or to learn more about Ohio's efforts to reduce infant  
mortality, please refer to ODH's Infant and Fetal Mortality Reports page on its website  
(www.odh.ohio.gov).  
State Foundation Formula Provides Additional $7.8 Million over  
the Biennium for Districts Affected by Power Plant Devaluation  
Alexandra Vitale, Budget Analyst  
For FY 2018 and FY 2019, the state foundation formula provides a total of $7.8 million to  
school districts through provisions designed to counteract potentially significant reductions in  
local property tax revenue due to devaluation of power plants. The devaluation provisions  
benefit three school districts by a total of $1.8 million in FY 2018 and four districts by an  
estimated total of $6.0 million in FY 2019, as shown in the following table.  
Additional State Foundation Aid for School Districts Benefiting from  
Power Plant Devaluation Provisions  
FY 2018  
Additional  
Aid  
FY 2019  
Estimated  
Additional Aid  
Biennium Total  
Additional Aid  
County  
District  
Adams  
Lake  
Manchester Local SD  
Perry Local SD  
$936,756  
$2,059,937  
$2,310,325  
$888,582  
$2,996,693  
$2,310,325  
$1,445,685  
$1,042,460  
$7,795,163  
Clermont New Richmond Exempt Village SD  
Hamilton Three Rivers Local SD  
$557,103  
$305,987  
$1,799,846  
$736,473  
Total  
$5,995,317  
The devaluation provisions make exceptions to the way in which the formula typically  
works by (1) calculating an eligible district's state share index using the lesser of (a) the district's  
most recent year property value and (b) its three-year average property value for tax years  
(TYs) 2014, 2015, and 2016 and (2) lifting the district's funding cap, if any, up to the loss in local  
Budget Footnotes  
P a g e | 20  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
property tax revenues. Using the lesser of the two property values in the formula increases a  
district's state share, which could potentially increase the district's overall foundation aid.  
To be eligible for the devaluation provisions in FY 2018, the formula required a district  
to satisfy all of the following criteria: (1) public utility tangible personal property (PUTPP) value  
must represent at least 10% of total taxable value for TY 2015, (2) PUTPP value must decrease  
by 10% or more between TY 2015 and TY 2016, and (3) the total taxable value of power plants  
in the district must decrease by 10% or more between TY 2015 and TY 2016. The formula uses  
the same eligibility criteria in FY 2019 but takes into consideration property value data for  
TY 2016 and TY 2017.  
Five other school districts River View Local (Coshocton), Northeastern Local (Defiance),  
Edison Local (Jefferson), Benton Carroll Salem Local (Ottawa), and Carlisle Local (Warren) –  
were also eligible for the devaluation provisions. However, they do not actually benefit from  
them or bene0fit by less than $500, mainly due to these districts' position on the formula's  
1
"
guarantee." While an eligible district on the guarantee may have greater levels of "core"  
foundation aid (i.e., aid before the guarantee is applied) due to its increased state share as a  
result of using the lesser of two property values, the district's guarantee funds decrease by a  
corresponding amount and result in no net increase in overall state foundation aid.  
Thirteen School Districts' State Aid for FY 2018 Adjusted by  
PUTPP Recomputation Provision  
Jason Glover, Budget Analyst  
Pursuant to R.C. 3317.028, FY 2018 state foundation aid was recalculated for 13 school  
districts with substantial changes in their PUTPP values for TY 2017. The recomputation  
resulted in additional state aid payments totaling $6.2 million for ten of the 13 districts and  
state aid deductions totaling about $545,000 for the other three districts (see table below).  
Payments due to the recomputation are paid from an earmark of GRF line item 200550,  
Foundation Funding. Deductions will be spread throughout FY 2019 as debits against the  
district's semimonthly foundation aid payments.  
The PUTPP value recomputation, which is performed annually, is designed to ensure  
that the PUTPP tax revenue received by a district during a given fiscal year is no1 t substantially  
1
different than the one assumed in that year's foundation aid formula. The FY 2018  
recomputation applied to a school district whose PUTPP value decreased by more than 10%  
between TY 2016 and TY 2017 or whose increase in PUTPP value between those years exceeded  
1
0% of the district's total taxable value for TY 2016. The recomputation replaced an eligible  
district's three-year average total taxable value for TYs 2014, 2015, and 2016, which is used in  
the formula to calculate the district's FY 2018 state foundation aid, with the district's total  
taxable value for TY 2017 and removed the district's funding cap, if any. The payment or  
10  
In general, the guarantee ensures a district is allocated between 95% and 100% (depending on  
district enrollment loss) of its FY 2017 state foundation aid allocation in FY 2018 and FY 2019.  
11  
TY 2017 PUTPP values were not used in the state foundation aid formula for FY 2018.  
However, the actual PUTPP tax revenues received by school districts during FY 2018 were partly based  
on TY 2017 PUTPP values.  
Budget Footnotes  
P a g e | 21  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
deduction is the lesser of (1) the difference between the district's foundation funding prior to  
recomputation and the district's recomputed foundation funding and (2) the applicable  
increase or decrease in the district's local property taxes from TY 2016 to TY 2017.  
RC 3317.028 State Aid Adjustment, FY 2018  
County  
Lake  
Adams  
Clermont New Richmond Exempt Village SD  
District  
Perry Local SD  
Manchester Local SD  
Amount  
$2,268,013  
$1,916,581  
$852,410  
$504,552  
$479,801  
$108,376  
$26,600  
Hamilton  
Lake  
Three Rivers Local SD  
Willoughby-Eastlake City SD  
Coshocton River View Local SD  
Defiance  
Allen  
Ayersville Local SD  
Elida Local SD  
$13,934  
Ottawa  
Preble  
Benton Carroll Salem Local SD  
College Corner Local SD  
$10,025  
$3,697  
Total payments $6,183,989  
Mahoning Lowellville Local SD  
Trumbull Weathersfield Local SD  
Clermont Felicity-Franklin Local SD  
-$189  
-$144,811  
-$400,266  
Total deductions -$545,266  
Total net adjustment $5,638,723  
Development Services Agency Awards $26.1 Million in Ohio  
Historic Preservation Tax Credits  
Tom Middleton, Senior Budget Analyst  
On December 12, 2018, the Development Services Agency (DSA) approved 26 awards  
totaling $26.1 million in Round 21 of the Ohio Historic Preservation Tax Credit (OHPTC) Program.  
These awards will be used for the rehabilitation of 28 historic buildings. The table below displays  
the awards by region, including the number of awards, total value of awards, total project costs,  
and the average percentage of the project cost covered by the award in each region.  
Budget Footnotes  
P a g e | 22  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Ohio Historic Preservation Tax Credit Awards, Round 21  
Number of  
Awards  
Total Value of  
Awards  
Total Project  
Costs  
Award as % of  
Total Project Costs  
Region  
Northeast  
Southwest  
West  
10  
6
$12,346,845  
$6,136,000  
$4,133,458  
$2,801,000  
$491,186  
$120,606,598  
$75,904,176  
$20,459,578  
$29,449,139  
$3,720,197  
$662,300  
10.2%  
8.1%  
1
20.2%  
9.5%  
Central  
6
Northwest  
Southeast  
2
13.2%  
22.6%  
10.4%  
1
$149,496  
Total  
26  
$26,057,985  
$250,801,988  
The goal of the OHPTC Program is to spur investment within historic areas, restore  
buildings that will attract new businesses, and generate new jobs. To be eligible, generally a  
building must be listed on the National Register of Historic Places or designated as a local  
landmark by a certified local government. The program is administered through a partnership  
between DSA and the Ohio History Connection. Each year, $60 million is allocated to the  
program; however, an additional amount in tax credits may be awarded if projects that were  
previously approved under the program have been withdrawn or if there is a surplus of tax  
credits from prior fiscal years. DSA awards two rounds of funding each year. Round 22 project  
applications are due April 1, 2019, and the awards will be announced by the end of June.  
Ohio EPA Announces up to $1.9 Billion in Water Pollution  
Control Loan Funding for CY 2019  
Robert Meeker, Budget Analyst  
On December 7, 2018, the Ohio Environmental Protection Agency (Ohio EPA) published  
the Water Pollution Control Loan Fund (WPCLF) 2019 Final Program Management Plan detailing  
their intent to award standard, discounted, and principal forgiveness loans totaling up to  
12  
$1.9 billion in CY 2019. The WPCLF offers assistance opportunities to public entities for projects  
including wastewater treatment plant improvements and expansion, new and replacement  
sanitary sewers, excess sanitary sewer infiltration and inflow correction, combined sewer  
overflow correction, storm water projects, and nonpoint source water pollution reduction.  
The plan describes how the Ohio EPA proposes to prioritize projects, distribute funds, and  
administer the fund during 2019. It includes details for financing the planning, design, or  
construction costs of up to 461 wastewater projects as follows: (1) 367 construction projects for a  
12  
See the full report at https://www.epa.state.oh.us/.  
Budget Footnotes  
P a g e | 23  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
total of $1.8 billion, (2) 82 design projects for a total of $70.2 million, and (3) 12 planning projects  
for a total of $8.7 million. These projects have been identified by the Ohio EPA as priority  
candidates that are eligible for funding in 2019. The actual loan amount and related terms and  
conditions will depend on available funds for the intended purpose at the time of application. In  
CY 2017, the most recent year for which actual WPCLF loan data has been released, $913 million,  
or 55.1%, of the planned $1.7 billion was released within the project year.  
The loans are backed with money drawn from the WPCLF, which is managed by the Ohio  
EPA with assistance from the Ohio Water Development Authority. Created in 1989, the WPCLF  
generally provides low-interest financing and incentives to public entities (municipalities,  
counties, and sewer districts) to protect or improve the quality of Ohio's water resources. The  
fund consists of federal capitalization grants, loan repayments, and bond proceeds.  
Department of Agriculture Announces $8.5 Million Allocated for  
Agricultural Easement Purchases in 2019  
Shannon Pleiman, Budget Analyst  
On November 20, 2018, the Ohio Department of Agriculture (ODA) announced that 26  
land trusts, counties, and local soil and water conservation districts would receive a total of  
8.5 million in 2019 to manage the state's Local Agricultural Easement Purchase Program  
LAEPP). These 26 sponsors are now certified to accept LAEPP applications from landowners in  
$
(
up to 36 counties. The application period is January 15, 2019, to April 15, 2019. Funding for the  
program comes from ODA's allocation under the state's Clean Ohio Conservation Fund, which is  
funded by the proceeds of general obligation bonds that were approved by voters in 2008.  
Additional funding to support the purchase of agricultural easements is provided by the  
U.S. Department of Agriculture's Agricultural Conservation Easement Program or through local  
matching funds once easements are selected.  
The LAEPP allows landowners to voluntarily sell easements on their farms to the state,  
ensuring that the qualifying land remains in agricultural production permanently. The process is  
overseen by local sponsor organizations that score applications and forward their  
recommendations for funding to ODA. Sponsor organizations can be counties, cities, townships,  
soil and water conservation districts, or land trusts. Eligible farms must be at least 40 acres, in  
active use, enrolled in the Current Agricultural Use Valuation Program, and removed from  
development. In addition, farm owners must show proper stewardship of the land and have  
support from local government for their farmland to qualify. Payments from the Clean Ohio  
Conservation Fund are capped at $2,000 per acre with a maximum of $500,000 per farm.  
Statewide, as of November 2018, 449 farms in 59 counties have collectively preserved more than  
73,500 acres under LAEPP.  
Budget Footnotes  
P a g e | 24  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
State Forest Timber Sales Provide $2.3 Million to Local  
Governments and School Districts  
Shannon Pleiman, Budget Analyst  
On December 11, 2018, the Department of Natural Resources (DNR) announced that  
6 school districts, 26 townships, and 12 county governments will receive more than  
2.3 million from the sale of timber from state forest lands in FY 2018. Under current law, 65%  
1
$
of the net proceeds from the sale of timber must be distributed to the county, townships, and  
school districts from which the timber was harvested. The remaining 35% is retained by DNR's  
Division of Forestry and deposited to the credit of the State Forest Fund (Fund 5090). Of the  
amount distributed to local communities, 50% goes to school districts, 25% goes to townships,  
and 25% goes to the county. The table below shows the amounts received by each type of  
recipient by county in this latest distribution of timber sales revenue. A full list of recipients can  
be found at: http://forestry.ohiodnr.gov/portals/forestry/pdfs/ttt/treestotextbooksFY18.pdf  
FY 2018 Timber Sale Distributions by Recipient Type  
County  
Vinton  
School Districts  
$500,271  
$271,554  
$138,749  
$59,474  
$42,849  
$39,841  
$37,086  
$31,068  
$28,955  
$2,957  
County  
$250,135  
Townships  
$250,135  
Total  
$1,000,541  
$543,108  
$277,497  
$118,948  
$85,697  
$79,681  
$74,172  
$62,136  
$57,911  
$5,915  
Scioto  
$135,777  
$69,374  
$29,737  
$21,424  
$19,920  
$18,543  
$15,534  
$14,478  
$1,479  
$135,777  
$69,374  
$29,737  
$21,424  
$19,920  
$18,543  
$15,534  
$14,478  
$1,479  
Pike  
Adams  
Athens  
Ross  
Jackson  
Perry  
Muskingum  
Ashland  
Meigs  
$1,825  
$913  
$913  
$3,651  
Highland  
$1,372  
$686  
$686  
$2,744  
Total  
$1,156,001  
$578,000  
$578,000  
$2,312,001  
Budget Footnotes  
P a g e | 25  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Criminal Justice Services Awards $3.9 Million in Federal  
Edward Byrne Memorial Justice Assistance Grants  
Maggie West, Senior Budget Analyst  
On November 9, 2018, the Department of Public Safety's Office of Criminal Justice  
Services announced the award of $3.9 million in federal grants from the Edw3 ard Byrne  
1
Memorial Justice Assistance Grant (JAG) Program to 121 projects in 47 counties. Under the  
JAG program, units of local government, state agencies, state-supported universities, statewide  
and local nonprofit or faith-based organizations, and law enforcement agencies may apply for  
new or renewal funding to support a broad range of crime prevention and control activities in  
five program areas. Renewal projects accounted for 83 of the 121 projects receiving JAG  
Program funding in November.  
Funding for the projects ranged from $5,036 for Immigrant Survivors of Partner Violence  
in Hamilton County to $112,500 for the METRICH Enforcement Unit in Richland County. The  
following table lists, for each program area, the number of projects funded and the total  
amount of funding awarded. All JAG Program awards are for 12 months of funding, beginning  
January 1, 2019. The required match (cash or in-kind) is either 25%, 50%, or 75% depending on  
the number of years a project has been funded but may be waived under certain  
circumstances.  
Federal JAG Awards by Program Area  
Number of  
Program Area  
Total Funding  
Projects  
Law Enforcement  
62  
$2,110,693  
$615,304  
$570,277  
$342,074  
$282,419  
$3,920,767  
Courts, Defense, Prosecution, and Victim Services  
Crime Prevention  
19  
24  
Adult and Juvenile Corrections, Community Corrections, and Reentry  
Cross-agency and Cross-system Collaboration, Training, and Research  
Total  
10  
6
121  
13  
A
complete list of funded projects by county can be found at:  
https://www.ocjs.ohio.gov/links/FUNDED_Subgrant_List_by_County.pdf.  
Budget Footnotes  
P a g e | 26  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
TErric Maakcelak, Eiconnomgist the Economy  
Overview  
The national economy continued its expansion in November, with household spending  
growing strongly. According to the U.S. Bureau of Labor Statistics (BLS), job gains were strong in  
December, but the national unemployment rate increased 0.2 percentage point to 3.9%. In light  
of current and expected economic g4rowth, labor market conditions, and inflation, the Federal  
1
Open Market Committee (FOMC) raised the federal funds rate (FFR) target again in  
December. The industrial production index (IPI) reached an all-time high in November.  
Aggregate industrial output, as measured by the IPI, ha5 s grown over the past year, and was  
1
6
.0% higher in November than in September 2017. Data from the Institute for Supply  
Management suggested that growth in the economy slowed notably in the month of  
December, though growth did continue. Nationally, sales of existing homes were 7.0% lower  
this November than in November 2017.  
Ohio's nonfarm payroll employment rose by 5,200 jobs in November, with most job  
gains coming in the private, service-providing sector. The state unemployment rate remained at  
4
1
.6% in November. Ohio's third-quarter growth of personal income was a strong 4.1%, up from  
.9% in the second quarter. Sales of existing homes in Ohio were up 0.8% in November.  
The National Economy  
In the July-September quarter, the nation's inflation-adjusted (or "real") gross domestic  
product (GDP) grew at a 3.4% annual rate, revised down 0.1 percentage point from previous  
estimates. This follows growth at a 4.2% rate in the previous quarter, and 2.2% in the year's  
first quarter. Growth in the most recent two quarters was the strongest in four years. The  
deceleration in real GDP growth in the third quarter was most notably due to a decrease in  
exports, as well as slowing growth in nonresidential fixed investment and personal  
consumption expenditures (PCE). Real GDP growth is expected to slow during 2106 18 Q4 and  
2
019 Q1, as compared to the previous two quarters, according to multiple sources.  
The Employment Situation, published by the U.S. Bureau of Labor Statistics (BLS), was  
particularly noteworthy this month due to7 larger than usual movements and changes in key  
1
indicators. The U.S. unemployment rate rose 0.2 percentage point in December to 3.9%.  
Although rising, the unemployment rate is still relatively low in a historical context. The labor  
1
8
force participation rate also rose 0.2 percentage point. Compared to a year ago, when the  
unemployment rate stood at 4.1%, the nation has gained approximately 2.9 million employed  
14  
15  
16  
17  
The FOMC is a committee within the Federal Reserve that decides U.S. monetary policy.  
September 2017 was chosen for comparison due to the visible trough in the IPI.  
Macroeconomic Advisers, LLC, Moody's Analytics.  
The unemployment rate is measured by the estimated number of unemployed persons  
divided by the estimated number of persons in the labor force.  
18  
People are considered in the labor force if they are employed or actively seeking work.  
Budget Footnotes  
P a g e | 27  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
persons, while the labor force has increased by around 2.6 million persons. The employment-  
1
9
population ratio was 60.6% in December, unchanged from November.  
Nonfarm payroll employment increased by 312,000 in December. Employment gains in  
health care were 50,000 in December, while job gains in food services and drinking places  
totaled 41,000. Construction employment rose by 38,000 over the month, and manufacturing  
employment increased by 32,000 workers nationally. Over the month of December,  
employment in retail trade rose by 24,000, and was up by 92,000 in 2018.  
Chart 5: U.S. Employment and Unemployment  
1
1
1
1
1
1
1
1
1
52  
49  
46  
43  
40  
37  
34  
31  
28  
11.0%  
10.0%  
9.0%  
8.0%  
7.0%  
6.0%  
5.0%  
4.0%  
3.0%  
2
008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018  
Nonfarm Payroll Employment Unemployment Rate (right scale)  
According to the Institute for Supply Management (ISM), activity in the manufacturing  
sector expanded in December, although growth was less widespread among survey  
respondents than in November; ISM's overall manufacturing production index registered its  
largest month-over-month decrease since 2008. In particular, the New Orders Index registered  
a decrease of 11 percentage points from November to December, the largest change of any ISM  
manufacturing indicator. Increases in production and prices were also slower in December, as  
compared to the prior month.  
During their December meeting, members of the FOMC raised the target range for the  
FFR to between 2.25% and 2.5%, signaling an attempt to maintain a balance between maximum  
employment and controlling inflation. FOMC projections for real GDP growth in calendar year  
2
unemployment is unchanged. The anticipated increase in the FFR over the next two years also  
declined from September.  
019 were 0.2 percentage point lower than they were in September, while the projection for  
The consumer price index (CPI) did not rise in the month of November, and was 2.2%  
above its year-earlier level. The cost of food rose 0.2% in November, while the price index for  
19  
As defined, this statistic refers to the civilian noninstitutional population, defined as civilian  
persons 16 years of age and older who are not residing in penal, mental, or aging institutions.  
Budget Footnotes  
P a g e | 28  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
2
0
all energy commodities fell; the cost of energy services did not drop in line with the price of  
commodities. The CPI excluding food and energy was 2.2% higher than a year earlier. The price  
of services less energy services was 2.9% higher than in November 2017.  
The Ohio Economy  
Ohio's unemployment rate for November was 4.6%, unchanged from a month prior and  
substantially higher than the U.S. unemployment rate of 3.7%. Ohio's unemployment rate was  
4
.9% in November 2017. The number of unemployed Ohioans was down 3,000 from October,  
to a total of 263,000.  
Nonfarm employment was increased by approximately 5,200 over the month of  
November, according to the BLS. Manufacturing added 1,400 jobs and employed 703,300  
people as of the time of the November survey. The private service-providing sector added 4,600  
jobs, primarily in professional and business services (+2,800) and educational and health  
services (+1,700). Government employment, currently at 790,300, decreased by 600 workers as  
losses in local government (-1,500) were greater than the gains in federal government (+900);  
there was no change in state government employment.  
Chart 6: Ohio Employment and Unemployment  
5
5
5
5
5
5
5
5
5
4
.8  
.7  
.6  
.5  
.4  
.3  
.2  
.1  
.0  
.9  
12.0%  
1
1
9
8
7
6
5
1.0%  
0.0%  
.0%  
.0%  
.0%  
.0%  
.0%  
4.0%  
2
008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018  
Nonfarm Payroll Employment Unemployment Rate (right scale)  
A total of 11,789 existing homes were sold in November in the state of Ohio, up 0.8%  
from a year prior, according to Ohio REALTORS. For 2018 through November, the number of  
existing home sales decreased 0.5% year over year. The market value of existing home sales in  
Ohio in 2018 was $25.7 billion to date, up 4.9% from this time in 2017. The average sales price  
for existing homes was $178,882 in November, and the year-to-date average sale price has  
increased by 5.4% from 2017 to 2018. The Columbus, Ohio metro area was rated as one of the  
hottest metro areas according to Realtor.com's Market Hotness Index, which rates areas  
nationwide based on views and time on the market data.  
20  
Mostly gasoline (all types) and fuel oil.  
Budget Footnotes  
P a g e | 29  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
According to the Bureau of Economic Analysis (BEA), personal income of Ohioans  
increased at an annualized rate of 4.1% in the third quarter of 2018, compared to growth of  
only 1.9% in the second quarter. Increases in net earnings, measured as wages, salaries, and  
proprietors' income less contributions for government social insurance, were the largest  
contributor to the rise in Ohio personal income in the third1quarter. Net earnings in Ohio grew  
2
faster than the national average, while financial receipts and transfer receipts grew more  
slowly than the national average. Among sectors of the Ohio economy, state and local  
government, health care and social assistance, and construction contributed the largest  
percentage point increases in earnings.  
According to the U.S. Census Bureau, Ohio's population grew 0.2% from July 2017 to  
July 2018, while the nation's resident population grew 0.6%. As of July 1, 2018, Ohio's resident  
population was estimated to be211,689,442. Of the total growth, 68.6% of the increase was  
2
attributable to natural increase, with the rest attributed to in-migration. The Census Bureau  
2
3
estimates that Ohio gained 1.8 international migrants per 1,000 average population, while it  
lost 1.0 domestic residents per 1,000 average population.  
Economic Forecasts  
GRF tax revenue depends on the state of the economy, implying that the accuracy of  
revenue forecasts depends on the accuracy of forecasts of important economic variables. Tax  
revenue was higher than expected in FY 2018 and has continued higher than expected through  
December of 2018. LSC, together with OBM and the Department of Taxation, contracts with IHS  
Markit, an economic forecasting firm, for forecasts of key economic variables used to predict  
revenues. So far, the IHS Markit forecasts have been fairly close to actual experience since the  
budget was crafted.  
The following table is intended to compare, for selected variables, the most recent  
economic forecasts from IHS Markit with that organization's forecasts released in May 2017  
and presented in the Economic Conditions and Outlook section of the biennial budget forecast  
to the Conference Committee for H.B. 49 of the 132nd General Assembly, the current operating  
budget act. The table presents data for FY 2019. Annual data are based on simple averages of  
the four quarters of each fiscal year. The "Conference Committee" forecast refers to the May  
2
made in May 2017 and December 2018.  
017 forecasts. The column at the right shows the difference between growth rate estimates  
24  
21  
22  
23  
Dividends, interest, and rent.  
Births minus deaths.  
International migrant total includes foreign-born individuals, native-born individuals moving  
from or back to United States, and net movement of the Armed Forces population.  
24  
The May 2017 forecast for Ohio's personal income was not part of the usual IHS release, but  
part of a customized release requested by LSC and OBM, based on a shared view that the May IHS  
projections appeared optimistic relative to Ohio income tax revenue in that fiscal year.  
Budget Footnotes  
P a g e | 30  
January 2019  
Legislative Budget Office of the Legislative Service Commission  
Forecasts for Selected Variables, FY 2019  
(
percent change from previous year)  
H.B. 49 Conference  
Percentage Point  
Change  
Committee  
4.2%  
December 2018  
Ohio personal income  
4.2  
4.0  
3.4  
0.0  
Ohio wage & salary income  
Ohio industrial production  
4.7%  
3.0%  
-0.7  
+0.4  
As the table shows, IHS Markit's December 2018 forecast for Ohio personal income  
growth in FY 2019 is about in line with the forecast made in May 2017, revised as indicated  
above. The May 2017 baseline forecast from IHS predicted Ohio wage and salary income would  
rise at an annual rate of 4.7% in FY 2019 but is now projected to lag past estimates by a margin  
of -0.7 percentage 2p5oint for 2019. However, the outlook for industrial production in the state  
was revised higher.  
25  
State industrial production indices are constructed by economic forecasting firm IHS Markit  
Economics using industry-level national IPIs and corresponding U.S. and state payroll employment.  
Budget Footnotes  
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January 2019