COLUMBUS, Ohio — Ohio’s Office of Budget and Management (OBM) says state revenue is up despite being in the midst of a pandemic.
In its Monthly Financial Report for September, data shows Total General Revenue receipts finished half a percentage point above the budgeted estimate. According to OBM’s Director Kimberly Murnieks, revenues in the first quarter of the state’s fiscal year were boosted by the federal stimulus package and pent-up spending demand. She says efforts to keep COVID-19 under control were also working.
“However, in September, the two categories that make up the majority of Ohio’s general fund budget – personal income tax and non-auto sales tax – missed monthly estimates for the first time this fiscal year. And we are seeing worrisome increases in COVID cases in recent weeks,” Murnieks said in a statement.
“I think the next couple of months will be interesting to see if good news continues or if we’re going to see revenues start dropping below forecasts,” says Rea Hederman Jr., the executive director of the Economic Research Center and Vice President of Policy at The Buckeye Institute.
He says if the numbers get worse, then Ohio should dip into its $2.7 billion Rainy Day Fund and not rely on help from Washington.
“The problem with relying on federal stimulus dollars, this is basically a one-time payment that sometimes can lead to permanent spending by Ohio which means that taxes have to go up in the future or Ohio’s going to be spending money on projects that don’t make sense,” Hederman says.
Hederman believes if the federal government decides to give out money again it should be targeted towards small businesses for things like interest free loans.
“I think that makes a lot more sense because we know a lot of small businesses need liquidity. They need money in their checking accounts so they can make payroll,” says Hederman.
Hederman says chances are Ohio is going to see slower economic growth over the next year and state policy makers should be looking at ways to tighten the biennial budget. However, he and OBM agree, if folks can take care of their health then their money will be in good shape as well.
“We know for example that if Ohio has to go through another shutdown, then yes economic activities going to fall. Tax revenues are going to fall,” Hederman says.
A spokesperson for Gov. Mike DeWine (R-Ohio) says if the worst case scenario happened, the governor would not hesitate to dip into the Rainy Day Fund but says it is fiscally prudent to make that the last resort.
