COLUMBUS — Ohio’s tax collections continued to lag expectations in April, off 7.8 percent or $159.1 million for the month.
The monthly numbers’ release came just a day after the state House of Representatives passed its version of Ohio’s next two-year budget that would take effect on July 1.
With two months left in this fiscal year, Ohio’s tax revenue is running $773.7 million, or 4.2 percent, behind projections.
Ohio Budget Director Tim Keen, House Speaker Cliff Rosenberger (R., Clarksville), Gov. John Kasich, and Senate President Larry Obhof (R., Medina), left to right, discuss the state budget in April.
Gov. John Kasich and Republican legislative leaders had already agreed to slice $400 million a year from the spending plan the governor presented to the House several months ago.
The governor’s budget director, Tim Keen, said the numbers seen in April were generally consistent with that preliminary total of $800 million over the two-year budget’s life.
“Throughout this fiscal year, the under-performance in [general revenue fund] tax revenues has been centered on the personal income tax and the nonauto sales tax,” he told the Senate Finance Committee. “And the April results continue that trend.”
The proposal the House passed on Tuesday punted part of the $800 million problem to the Senate. Mr. Keen agreed with the House’s math — that it had closed the gap by $632 million.
But he took exception with some of the decisions the House made, especially decisions affecting the expansion of Medicaid that Mr. Kasich has championed in partnership with the federal Affordable Care Act.
The administration agrees with the House’s idea of imposing work requirements, with some exceptions, on the more than 700,000 people covered under the expansion. But it opposes the House plan to require the governor to make its case every six months to the quasi-legislative Ohio Controlling Board for the state’s roughly 5 percent share of the costs.
A final budget must reach Mr. Kasich’s desk by the fiscal year’s June 30 end.
Personal income tax collections remain the biggest culprit — off $554.4 million, or 8.1 percent, to date. They were short $106.7 million, or 12 percent, for April alone.
Nonauto sales taxes trailed projections in April by $44.5 million, or 5.3 percent. So far this fiscal year, they’re off $202.4 million, or 2.6 percent.
“Why are we a little surprised by the under-performance in income tax since the last budget had income-tax reductions, this budget had some, as well as increases in sales tax and expansion of sales tax?” asked state Sen. Charleta Tavares (D., Columbus).
Mr. Keen said the tax reductions had been factored into projections around which Ohio’s current budget was built. He said current problems stem from bigger-than-expected refunds during the recent tax-filing season and consistently sluggish payroll withholding.
To reach its $632 million figure, the House abandoned Mr. Kasich’s proposal to trade higher taxes on sales, cigarette, tobacco, alcohol, and shale oil and natural gas production for another income tax cut.
Some lawmakers questioned whether the House budget could be considered balanced since it missed the $800 million savings goal by nearly $170 million.
In addition to trailing projections, the numbers are running behind this point last year. For the first 10 months of the fiscal year, the state has collected $65.3 million, or 0.4 percent, less overall in taxes than it did during the same period last year.
Mr. Keen remains confident the state will finish the year in the black, thanks in part to lower-than-expected spending — particularly in Medicaid — and a roughly $400 million cushion that had been built in.
Contact Jim Provance at: email@example.com or 614-221-0496.
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