Revenue lag could ‘have enduring negative consequences’ for the 2021 fiscal year

By Todd DeFeo - The Center Square

(The Center Square) — Tax revenues continue to lag in Ohio, and the aftermath of the COVID-19 pandemic could “have enduring negative consequences” through the 2021 fiscal year.

In May, General Revenue Fund (GRF) non-auto sales and use tax collections were $133.4 million, or 16.4 percent below the estimate, according to state numbers. Despite the drop, non-auto sales tax revenues are $94.5 million, or 1.1 percent, above last year.

Total revenues for the year are $528.8 million, or 1.7 percent lower than a year ago, but in March, before COVID-19 restrictions crippled the state’s economy, revenues were up $643.8 million over a year ago, the numbers reveal. Personal income tax revenue accounts for the most significant decline at $933.1 million, or 11.6 percent, down from a year ago.

“The most severe effects of the recession are expected to be seen in the second quarter of the calendar year 2020, which we are currently in, with attendant adverse tax revenue impacts during the final months of fiscal year 2020,” Kimberly Murnieks, director of the Ohio Office of Budget and Management (OBM), wrote in a memo. Ohio’s 2020 fiscal year ends June 30.

“Even recognizing the unique nature of the second quarter, the recession and its aftermath will have enduring negative consequences through fiscal year 2021,” Murnieks added. “The duration of the downturn and path of recovery are the fundamental unknowns.”

According to new figures from the state, the number of new claims for unemployment compensation filed in Ohio fell during the first three weeks of May. However, Ohio saw an increase in week-over-week claims for the week ending June 6.

In April, Ohio averaged 94,635 new unemployment claims per week. For the first three weeks of May, the number dropped to 41,341, Murnieks wrote.

On Thursday, the state House approved House Bill 614, legislation aimed at improving Ohio’s unemployment compensation system. According to the Ohio Department of Job and Family Services (ODJFS), more than 1.3 million Ohioans have filed for unemployment since March.

“This staggering number has led to countless calls and emails from our constituents expressing difficulties in applying for and receiving unemployment compensation,” state Rep. Mark Fraizer, R-Newark, said in a news release. “I want Ohioans to know I heard them and we are doing something about it.”

The bill creates the bipartisan Modernization and Improvement Council to evaluate the claim filing process and technological infrastructure. The council will explore how to maximize the responsiveness for individual applicants and employers and create a report within six months.

It also requires ODJFS to streamline the complaint process, develop a “strategic staffing plan” for employees who handle inquiries and create a referral system for state lawmakers to report issues directly to ODJFS. The state auditor will also make recommendations on the efficiency of the claims process.

By Todd DeFeo

The Center Square

Todd DeFeo is a contributor to The Center Square

Todd DeFeo is a contributor to The Center Square