Ohio revenue beats projection by $350M

Legislators seek to spend surplus

5/5/2012

COLUMBUS -- Gov. John Kasich's efforts to resist legislative pressure to spend part of a potential budget surplus may have just become a bit harder as his administration revealed it has collected almost $350 million more in taxes through April than expected.

For the first 10 months of the fiscal year ending June 30, Ohio has brought in $349.9 million, or 2.3 percent, over projections. In April alone, the state collected $84.5 million, or 4.1 percent, more than expected, thanks largely to robust auto and other sales, personal income, and cigarette-tax collections.

Updated spending numbers for April were not available Friday, but through the end of March, overall spending was running well below expectations.

Recently, the Republican-led House Finance and Appropriations Committee slipped a provision into one of a number of policy-laden midbudget review bills to prevent any excess year-end surplus from being automatically transferred into the state's rainy-day fund reserves.

That could allow lawmakers at the last minute to funnel some of the excess to school districts and local governments that suffered significant cuts in the current $55.8 billion, two-year budget. The midbudget bill, which has moved to the Senate, also contains $30 million more for nursing homes than had been appropriated.

Democrats, meanwhile, have been beating the drum to use Mr. Kasich's proposed expansion in the state's severance tax on shale oil and natural gas to provide more to schools and local governments. They've chosen to ignore the second part of the Republican governor's plan to use that extra revenue to underwrite an income-tax cut for all Ohioans.

"April was a good month," said Tim Keen, Mr. Kasich's budget director. "Tax receipts continue to be modestly above our estimates, 2.3 percent. But while the income tax was modestly above estimates, [payroll] withholding continues to be weak."

That, he said, was offset in April by lower-than-expected income tax refunds.

"With the corporate franchise tax, significant refunds have been paid, and that will likely continue through the remainder of the year," Mr. Keen said. "It will be substantially lower than estimated levels at the end of the year."

Rep. Michael Ashford (D., Toledo), a House Finance member, said the rosier revenue numbers should translate into relief for local governments, K-12 schools, and college tuition. But he said he doesn't expect it to happen.

"Under the policies of [former Democratic Gov. Ted] Strickland and [President] Obama, Ohio is beginning to turn around, but it's not because of our current governor," he said. "They saved the auto industry in Ohio by themselves. That's having a trickle-down effect on those that feed off the big auto plants."

For the year to date, auto-sales tax collections are running $70 million, or 8.8 percent, ahead of projections.

Mr. Kasich has vowed not to spend the budget surplus and instead has urged that much of it be used to replenish budgetary reserves that just two years ago held less than $1.

"If there is more money at the end of the year, it would be one-time money," Mr. Keen said. "There's no guarantee these resources will recur. If we begin to spend one-time money, we'll be in the same situation we faced in 2011 when we used significant one-time money for ongoing programs, and the governor is not supportive of that."

He also noted there is still a Democratic constitutional challenge pending to Jobs- Ohio, the state's new private economic development corporation that is slated to pay a lump sum to the state in exchange for future profits from Ohio's liquor wholesale operation. If that case isn't resolved in the state's favor soon, it would create a $500 million hole in the budget.

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.