Ohio income-tax take $229M shy of forecast
5/7/2010COLUMBUS - The crucial tax month of April brought more bad news for Ohio's coffers, but the state's number-crunchers said the lower-than-expected figures are no reason to panic.
Income tax collections, in particular, came in $229.4 million, or 16.3 percent, below projections last month, according to preliminary numbers released yesterday. That was offset somewhat by stronger-than-expected sales, cigarette, liquor, and other taxes, but the state still finished the month short of projections by a net $158 million, or 7.5 percent.
With the fiscal year set to end June 30, tax receipts for the first 10 months are off $217.7 million, or 1.6 percent.
Despite the somber numbers, Gov. Ted Strickland's budget and tax people found a silver lining that suggests Ohio may have cast off the last remnants of an economically dismal calendar year 2009 in favor of a stronger 2010.
The huge decline in income tax collections was due primarily to 2009 tax year returns that were due on April 15, they said. Ongoing income-tax withholdings from current paychecks were better than projected.
"My observation is we weren't bearish enough about the past," said budget Director Pari Sabety. "But if you look at other components, particularly withholding and other real-time tax sources that reflect what's really happening today, we weren't bullish enough. We're overperforming in many of those sources."
There's no talk of having to revisit the state budget, which still has another year to go beyond June 30. Ms. Sabety said lower-than-projected Medicaid spending, among other things, will help the state balance this fiscal year's books.
"The state is making steady progress," she said.
The Strickland administration's projections were largely on target for the first six months of this fiscal year. But the books have been in the red since then, chiefly because of bad months in January and April.
"This is absolutely no surprise," said Rob Nichols, spokesman for John Kasich, Mr. Strickland's Republican opponent in this fall's election. "Ted Strickland has mismanaged the state's budget from day one, which is why the state is facing an $8 billion hole. His answer will just be to raise taxes again to cover up his mess."
But yesterday, Mr. Strickland's budget people said they believed April was more aberration than trend.
"We think the April shortfall is just an April shortfall," said Deputy Tax Commissioner Fred Church. "Going forward, we don't think we are going to see that again. … The trends are clearly up."
In April, sales taxes on autos were a whopping 27 percent above expectations and 12.7 percent higher than for the same month last year. Other sales tax collections beat estimates by 7 percent, cigarette taxes by 17 percent, and alcoholic beverage sales by 17.3 percent.
Despite falling short on projections for this month, income tax collections for April, 2010, were $48 million, or 4.3 percent above what the state collected during the same month last year.
The state, however, continues to watch to see what impact the Gulf Coast oil spill could have on oil prices and whether the European debt crisis will spell trouble for Ohio exports.
Contact Jim Provance at:
jprovance@theblade.com
or 614-221-0496.