Fiscal Year 2021 State Revenue Stays Strong in August

Last week, Ohio’s Office of Budget and Management (OBM) released preliminary data on general revenue fund (GRF) receipts for the month of August. Last month, I wrote a blog on the first month of the fiscal year commenting on the strength of the revenue numbers, but then wondered if this was a one-time boost from both the extension of the tax filing deadlines and use of federal stimulus money.  I am happy to write that the revenues in August continued to beat the budget estimates.

The total tax receipts for the month of August were ahead of estimates by 3.2%. This equates to $69 million above estimates. The total revenue produced from the tax receipts were nearly $2.24 billion dollars. Both non-auto and auto sales tax receipts were above estimates. Sales tax from auto sales beat estimates by 9.9% and sales tax from other goods and services beat estimates by 2.9%. This is very good news as Ohio continues to deal with a public health pandemic. OBM commented in the report that sales tax revenues appear to reflect the dynamism caused by recovery and adaption to the public health conditions and a shift in consumption from services toward goods. (OBM August 2020 Monthly Report published September 10, 2020, page 11.) The commercial activity tax (CAT) fell below estimates by 9.9%, but this period reflects the second quarter of the calendar year which was the steepest part of the economic decline caused by the reaction to the pandemic.

Finally, as the pandemic causes further economic disruption, it requires more government resources to aid Ohioans with their health and economic needs as the COVID-19 pandemic continues. However, the August report from OBM reflects a below estimate disbursement of 2.4% in the functional reporting categories. This is largely due to the reduction in property tax reimbursements made to local governments. Either because of later due dates for real property taxes or slower reimbursement rates requested by local governments. I expect to see more positive variances in later months, and the Ohio Chamber of Commerce will keep an eye on this specific category as we monitor spending in future months of the fiscal year.