On Monday, Ohio’s Office of Budget and Management (OBM) released preliminary data on general revenue fund (GRF) receipts for the month of May, the eleventh month of the current fiscal year. Through May, GRF receipts for the fiscal year are 4.9% below estimates. In May alone tax receipts missed estimates by $271.3 million – (13% below estimates). Receipts are down in all tax categories. For the month of May, sales and use tax receipts are down by 17.6%, personal income tax receipts are down by 15.1% and commercial activity tax receipts are down by 3.2%. Before the COVID-19 public health emergency required changes in our daily movement and economic activities in late March, the state of Ohio had revenue receipts above budget estimates and the state was spending money at rates lower than budgeted estimates. As Ohio approaches the last month of the fiscal year, the GRF receipts are now $1 billion below estimates. Read OBM’s release and support documents here.
As the public health emergency continues for the foreseeable future, along with the increase in unemployment, it is clear that the state of Ohio will miss estimates for GRF receipts in June as well. However, the numbers for May were markedly better than April and indicate some positive economic news as the state of Ohio emerges from the stay at home orders. Some of the April reduction can be explained by the movement of the personal income tax filing deadline from April to July. This will allow fiscal year 2021 to record income taxes from two filing deadlines – 2019 due July 15 and 2020 due April 15, 2021.
Last month, the governor announced reductions in both non-GRF and GRF spending for the remainder of the fiscal year that total nearly $1.1 billion. Hopefully, the announced cuts along with improving economic activity and tax receipts from that activity will be enough to balance the budget on June 30, 2020.
Thankfully, the governor did not call for tax increases to balance the 2020 fiscal year budget. Any increase in taxes or tax rates would be the wrong method to balance the budget while Ohioans try to maintain household income and businesses struggle to survive during the pandemic.