COLUMBUS — Ohio’s tax coffers are overflowing, but state budget number-crunchers warn that dark economic clouds may be on the horizon.
Earlier this week, lawmakers crafting the state’s next two-year budget learned they will have nearly $400 million extra to work with than they had expected. But that money comes from a surplus this year, one-time dollars that budget prognosticators fear the state may not be able to duplicate going forward.
“Indeed, the strength of growth in state revenues has been difficult to reconcile with other economic indicators, some of which imply a recent slowing of economic growth in Ohio,” Mark Flanders, director of the Legislative Service Commission, told members of a legislative conference committee.
The committee is expected to approve a final budget next Monday or Tuesday, resolving differences between versions passed by the House and Senate. Final votes by each chamber will follow with a final budget expected on Gov. John Kasich’s desk before June 30.
Both chambers’ respective budgets were built on the legislative commission’s numbers in February, which were more optimistic than those from the Kasich administration. But while Kasich budget Director Tim Keen raised his revenue projections for the next two years on Tuesday, the commission’s estimates remained largely flat because of the concerns of economic forecasters.
The impacts of federal budget cuts triggered Congress and President Obama failed to reach a budget deal earlier this year are expected to be more keenly felt in coming months.
While Ohio’s unemployment rate is down compared to a year ago, it has stagnated at about 7 percent in recent months with shorter unemployment lines attributed largely to Ohioans giving up the job search.
LSC lowered its tax revenue forecast delivered to lawmakers by $21.8 million in 2014 but raised it by $11.5 million in 2015. Both fluctuations are statistically minor in a two-year budget that, as passed by the Senate earlier this month, totals $61.7 billion.
Mr. Keen estimated that the state will finish the current fiscal year on June 30 with $709 million more in tax revenue than expected, 80 percent of which is from the personal income tax. But he warned that a lot of that may be due to a one-time surge from bonuses and investment dividends accelerated into the 2012 calendar year because of uncertainty over federal tax policy going forward.
Some of that surplus had already been expected and worked into the legislature’s budget plans. A huge chunk will also go into the state’s rainy day fund reserves, restoring it to a balance of nearly $1.5 billion after having been all but emptied during the recession.
“Clearly, a lot of the (fiscal year 2013) overage is a result of these one-time factors…,” Mr. Keen said.
That leaves $396.8 million not already spoken for and available for additional tax cuts, as Mr. Kasich would prefer, or more spending, as local governments and schools would like.
Contact Jim Provance at: email@example.com or 614-221-0496.