Revenue projected to be $1 billion below estimate
Senate Republicans were wise to pass a budget this week that accounted for a $1 billion revenue shortfall, considering the new revenue estimate.
The Ohio Legislative Service Commission announced Thursday that it is revising its February estimate downward by $1.02 billion for the new two-year budget period that starts July 1. It also projects that the state will need to spend $59 million more for Medicaid than was originally forecast.
State Budget Director Tim Keen revised down his general-revenue fund estimate by $949 million, while also projecting the state’s share of Medicaid costs to increase by $138 million, due to shifts among programs that get different federal matching rates.
Sluggish non-auto sales-tax and income-tax collections are driving the reduced revenue estimate, Keen said.
“The executive budget submitted in February factored in weak revenue performance through January ... but did not anticipate the very weak personal incometax filing season,” Keen said. “Based on the action of both houses, we are wellpositioned in this conference committee to put in place a structurally balanced fiscalyear ‘18-19 operating budget.”
Keen and members of the commission testified Thursday to a joint conference committee that is tasked with working out a final budget by the end of next week. Rep. Ryan Smith, R-Bidwell, said the goal is to have the bill ready for final votes on Wednesday.
Summary descriptions of the differences between the executive, House and Senate versions of the budget stretch more than 500 pages.
One issue that will get attention over the next week, Smith said, is finding long-term help for local governments and transit authorities, which stand to lose about $200 million per year because the state is no longer allowed to charge sales tax on Medicaid managed-care services.
“There’s a lot of members that are really concerned,” Smith said. “There’s a definite commitment to have that discussion and try to figure something out.”
The budget contains some short-term relief for counties, but Keen said he does not support funding a permanent replacement. Long term, Franklin County would lose $12 million per year, and the Central Ohio Transit Authority would lose more than $5 million a year.
Asked if the budget should address what Congress is doing regarding health care, Keen advised legislators not to speculate.
“When we know what is happening, we should assess that and then determine if there is any adjustment we might need to make,” he said.
Thursday’s new budget estimates contrast with the generally rosier revenue projections that legislators heard at this point in the previous few budget processes.
Keen’s office warned legislators in April that they should prepare to adjust the new budget downward by $800 million. As tax-revenue collections, particularly from the income tax, continued to fall short of monthly estimates, Senate President Larry Obhof, R-Medina, said his chamber would pass a budget accounting for a $1 billion shortfall.
“We are very close to where we need to be,” Keen said, adding that the Senatepassed $65.4 billion budget is off by only $20 million to $25 million.
Through 11 months of this fiscal year, tax revenue was $841 million below the estimate. Keen said underspending on Medicaid, debt payments and property-tax reimbursements, plus moves such as raiding unused money from certain funds, will allow the budget to finish in the black.
Keen said his projection for income-tax growth is 1 percent less than the forecast from consulting firm IHS Economics. The budget office, he said, created its own forecast based on the historical gap between Ohio’s income growth and that of the nation.