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· August 15, 2011

Monthly report shows Ohioans struggling, tax collections underperforming

Late on August 10, the Office of Budget and Management released its monthly financial report for July, highlighting economic trends, state revenue collection and expenditures. As the first full month of the new biennium, the report offers the first glance into the accuracy of revenue and spending estimates made when the state budget was finalized just over a month ago. For the month, the General Revenue Fund collected $2.26 billion, while paying out $3.60 billion in disbursements. Bringing in $1.4 billion less than it spent does not necessarily mean the state budget is out of balance, as revenue collection can vary throughout the year. However, the law prevents the GRF from running a deficit greater than 10% of annual revenue from the prior year (or $2.7 billion), so this remains something to watch closely as an early indicator that a budget fix may be needed. Tax revenue was $16 million below estimate for the month, led by a nearly $9 million shortfall in the state’s personal income tax. This was primarily a factor of less than expected employer withholdings, indicating that the size of Ohioans’ paychecks or the number of income-earners is less than the administration projected just a month ago. Meanwhile, in a further sign that Ohioans are suffering the continued effects of the economy, Medicaid and public assistance programs continue to grow. Medicaid expenditures were up 3.5% over the prior year, and at 2.17 million enrollees, covered 27,392 more Ohioans in July than was projected. Spending on non-Medicaid and public assistance programs ran 3.4% above the prior year. Beginning next month, agencies will have locked in spending plans for the two-year biennium, so the August report will provide the first look at how well the administration is doing at achieving the necessary cost savings required by the budget.

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