Insights on Ohio's Budget and Tax Revenues
Delve into the analysis of Ohio's tax revenues and budget trends, including factors impacting auto sales and personal income tax. Explore the implications of recent legislation and upcoming changes in the state's financial landscape, offering valuable insights for policymakers and stakeholders.
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Bills, Budget, and Beyond Some Thoughts on the 133rdGeneral Assembly and Some National Issues Ohio University Leadership Project Presentation by BASA March 7, 2019
GRF Revenues Actual $ Received YTD 01/19 and 01/18 ($ in thousands) Actual FY19 per 01/31/19 Actual FY18 per 01/31/18 Category Difference Non-Auto Sales $ 5,426,451 $ 5,198,500 $ 227,951 Auto Sales & Use $ 867,854 $ 818,381 $ 49,474 Subtotal - Sales $ 6,294,305 $ 6,016,881 $ 277,424 Personal Income $ 5,384,887 $ 5,264,194 $ 120,693 Corp. Franchise/Financial $ 48,546 $ 31,167 $ 17,377 Commercial and Petroleum Activity Tax $ 839,838 $ 804,773 $ 35,066 Public Utility, KWH, MCF Tax $ 304,694 $ 271,541 $ 33,153 Foreign/Domestic Insurance $ 153,377 $ 145,420 $ 7,957 Other Business $ 0 $ (263) $ 263 Sin Taxes $ 556,624 $ 565,183 $ (8,560) Estate $ 32 $ 118 $ (86) Total Tax Receipts $ 13,582,303 $13,099,014 $ 483,288
GRF Revenues Actual $ Received Comparing 01/19 with YTD Estimates ($ in thousands) Actual FY19 per 01/31/2019 Estimated FY19 per 01/31/2019 Category Difference Non-Auto Sales $ 5,426,451 $ 5,319,200 $ 107,251 Auto Sales & Use $ 867,854 $ 832,500 $ 35,354 Subtotal - Sales $ 6,294,305 $ 6,151,700 $ 142,605 Personal Income $ 5,384,887 $ 5,506,400 $ (121,513) Corp. Franchise/Financial $ 48,546 $ 34,000 $ 14,546 Commercial and Petroleum Activity Tax $ 839,838 $ 829,300 $ 10,538 Public Utility, KWH, MCF Tax $ 304,694 $ 283,000 $ 21,694 Foreign/Domestic Insurance $ 153,377 $ 147,200 $ 6,177 Other Business $ 0 $ 0 $ 0 Sin Taxes $ 556,624 $ 552,500 $ 4,124 Estate $ 32 $ 0 $ 32 Total Tax Receipts $ 13,582,303 $13,504,100 $ 78,203
The Current Budget Why are auto sales tax revenues above last year by over $49 million? Light trucks now comprise 70.9% of new vehicle sales; carry a nearly 50% higher average retail price than cars Edmunds.com reported that the average used vehicle price in first quarter of 2018 was up 17.6% from five years earlier Why are personal income tax revenues below estimates by over $121 million with most of the shortfall occurring in quarterly estimates? One possible explanation: the Tax Cuts and Jobs Act of 2017 (TCJA) Annual limitation of $10,000 on amount of state and local taxes paid that can be claimed as a deduction Would some taxpayers simply delay quarterly estimates and pay in April?
The Next Budget Effective January 1, 2019, Ohio employer withholding rates reduced by 3.3% to be consistent with House Bill 64 (2015) Not a tax cut! Will result in one-time reduction in personal income tax revenue during January-June 2019 estimated to cost $148.5 million Ohio will not recoup this money until returns are filed during first quarter of 2020 Potential impact of increase in gasoline tax Right now, school districts will be eligible for a rebate
The Next Budget (continued) The budget for fiscal years 2020 and 2021 (due by March 15) As of end of January, the current FY 2019 revenues are more than $483 million ahead of the same point last year and are over $78 million ahead of estimates Estimates were increased in July 2018 by $531.1 million, meaning that estimates are now about $609.3 million more than what was estimated in June 2017 But then, there is SAL The state appropriation limitation for the previous fiscal year multiplied by either three and one-half per cent, or the sum of the rate of inflation plus the rate of population change, whichever is greater Can be overridden by 60% majority of General Assembly
Is Ohio a red state? Registered Republicans outnumber registered Democrats by nearly 600,000 voters statewide The 4.3 million votes cast for governor was record in off-year election Mike DeWine defeated Rich Cordray by 4.2% (50.7% to 46.5%) President Trump won Ohio by an 8.1% margin in 2016 In loss, Cordray actually received more votes than Governor Kasich in both of his election wins Interestingly, Senator Sherrod Brown easily won re-election as well as both Democratic candidates for Supreme Court Justice
Is Ohio a red state? Democrats picked up five seats in the Ohio House, which results in a 61-38 Republican majority Where did the seats change? No change in Republican majority in Senate (24-9) Both chambers have sufficient votes to override Governor s veto Republicans will again control redistricting after 2020 census Apportionment Committee: Governor, Auditor, Secretary of State and two legislators from each party New district maps need approval of two minority party members
Recap of the 132ndGeneral Assembly Ohio House saw 796 bills introduced and enacted 108 of them Does not include 31 continuing resolutions, 21 joint resolutions, and 645 House resolutions Ohio Senate had 348 bills introduced with 48 of them enacted Does not include 27 continuing resolutions, 6 joint resolutions, and 794 Senate resolutions Former Governor Kasich signed 32 bills into law on Wednesday, December 19 and an additional 12 on Friday, December 21 None had an emergency clause
The approved legislation HB 58 Cursive Handwriting ODE required to include supplemental instructional materials on the development of handwriting in the ELA model curriculum for grades K-5 Districts not required to adopt HB 291 Employee Dishonesty Insurance Districts may purchase employee dishonesty and faithful performance of duty insurance policy and forego surety bonds HB 338 School Bus Driver Exams Adds chiropractic physicians and nationally recognized medical examiners to list of those who can perform physical exams for school bus drivers who are subject to Ohio State Highway Patrol rules
The approved legislation HB 491 The Education Christmas Tree ODE substitute licenses for licensed related service providers Limited liability for superintendents and treasurers for loss of public funds (except for dishonesty or negligence) Partial credit for class assignments completed during a suspension SROs serving on 11/02/2018 grandfathered from preservice training Alternative pathways for Class of 2018 extended to Class of 2019 Same for Class of 2020 except for meeting attendance criteria and cumulative GPA of 2.50 for both grades 11 and 12 ODE to issue guidelines for capstone projects, community service, etc. Long-term graduation proposal by April 1, 2019
The approved legislation HB 477 Eliminate Education Programs Originally intended to remove from law education provisions no longer relevant (e.g. Race to the Top, McGruff Safe House, etc.) Added civil immunity arising from decision not to provide or procure mental health services to parents of K-3 pupil suspended/expelled from school Proper certification for paraprofessionals if they provide academic support in core subject area and are employed in program supported with Title I funds HB 66 Undergraduate Mission Study Committee Provisions of SB 82 (parental notification of student absence) amended into HB 66 on Senate floor
The approved legislation HB 502 Youth Suicide Prevention Training In-service training in youth suicide awareness and prevention must be completed every two years Previously required (effective in 2013) but no particular frequency specified HB 425 Police Body Cameras Public Records Infrastructure record of public school is not a public record Also exempts from public record law a risk assessment of infrastructure performed by a law enforcement agency Does not mean a simple floor plan disclosing only the spatial relationship of components of the building
The 133rdGeneral Assembly Graduation requirements School/district report card Property tax issues Board of Revision property value challenges (notifications, adoption of resolution in public session, thresholds, etc.) HB 343 Ballot language changing how tax issue is worded on ballot SB 21 (HB 342) Elimination of August special election (or reduction of opportunities) The heartbeat bill Academic Distress Commissions
Introduced in the 133rdGeneral Assembly SB 4 School Facilities Assistance Would appropriate $100 million to continue with school facility program HB 22 OFCC ODE School Building Amenities Would require OFCC and ODE to conduct study regarding certain school building amenities (including air conditioning and school security) SB 26 Tax Deduction Teacher Classroom Supplies Would permit teacher up to a $250 deduction on state income taxes to offset the cost of classroom supplies purchased by the teacher SB 34 School employees and Educator Licensure Would make licensure suspensions and revocations in compliance with federal law
Introduced in the 133rdGeneral Assembly HB 23 F-1 Visa School Athletics Would authorize any student from a country or province outside the U.S. to participate in interscholastic athletics if student holds at F-1 visa HB 75 Property Value Contests Remake of HB 343 from 132ndGeneral Assembly Would require local governments contesting property values to formally pass an authorizing resolution for each contest and to notify property owners HB 76 Ballot Language Uniformity Remake of HB 342 from 132ndGeneral Assembly Would modify form of election notices and ballot language for property tax levies to add cost expressed for each $100,000 of property s market value HB 43 School District Property Acquisition Eliminates requirement to lease or sell certain unused real property to community schools, STEM schools, etc. and eliminates right of first refusal
Introduced in the 133rdGeneral Assembly School Bus Stops (HB 83, HB 89, HB 105) would enhance penalties for failing to stop for a school bus and to permit cameras installed on bus as corroborating evidence of offense HB 111 School Record Transfer Would require that schools transmit a transferred student s records within five school days HB 90 Unborn Child Education Would require development of instructional program and materials and dissemination of those materials to protect the humanity of the unborn child (with an appropriation)
The National View for 2019 Budget battles The Wayfair decision: 19 states have already begun to enforce Fastest growing major spending category nationwide: higher education Education funding Teacher strikes: Arizona, North Carolina, Oklahoma, West Virginia Funding for charter schools (particularly with for-profit operators) Ohio: Cupp-Patterson, the Ohio House, and the administration Medicaid Nationally state share of Medicaid consumes 20% of state spending Should participants be required to work, actively seek employment, or attend school or job training?
The National View for 2019 Mental illness and substance abuse General population: 3.2% of men and 4.9% of women have serious mental illness Prison population: numbers rise to 14.5% of men and 31% of women Will community-based treatment for mental illness and substance abuse be expanded? Preparing the workforce Career-tech programs will receive more emphasis while high stakes testing will receive less Transportation infrastructure With more efficient vehicles and more electric vehicles, how will roads and bridges be repaired and improved?
The National View for 2019 Elections (particularly looking ahead to 2020) Voter registration or suppression, ID requirements, election security Utility infrastructure Gas-powered generation continue to replace coal and nuclear? Achieving a two-way system grid rather than one-way? Apportionment after the 2020 census Gainers: TX (3); FL (2); CO, AZ, NC, and OR (1 each) Losers: AL, IL, MI, MN, NY, OH (maybe), PA, RI, and WV (1 each) If this happens, RI will have 2 US senators and 1 member in US House of Representatives
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