Week in Review: Oct. 8, 2023

FY24-25 BUDGET

Better than expected collections in the non-auto sales tax offset small dips in other sources to yield tax collections slightly above expectations in September, according to preliminary data from the Office of Budget and Management (OBM). Tax receipts were $5.2 million or 0.2% above expectations, reaching $2.3 billion for the month. Sales taxes were up overall by 2.1% or $22.3 million, with non-auto sales taxes up 3.8% or $43.2 million vs. forecasts but auto sales taxes down 7% or $11.8 million. Monthly sales tax collection reached $1.1 billion. The personal income tax missed expectations by 0.4% or $4.2 million, bringing in $1.07 billion. The Commercial Activity Tax yielded $21.1 million, $2.2 million or 9.5% below forecasts.

BUSINESS/CORPORATE

The Ohio Department of Development (DOD), Gov. Mike DeWine and Lt. Gov. Jon Husted recognized Friday, Oct. 6 as "Manufacturing Day," as the first Friday in October is designated that by the Manufacturing Institute. DOD noted the manufacturing industry has been one of the "principal economic drivers" in Ohio since the late 1800s and the state is now ranked third nationally. More than $114 billion in manufactured goods are produced in Ohio each year. It also ranks first in American aircraft engine production and is a leader in the production of primary and fabricated metals, machinery, electronic products, transportation equipment, food and beverages, as well as rubber and plastics. The industry accounts for over 691,000 jobs in Ohio, nearly 14% of total state employment. It is a leading sector in rural communities, with over 20% of the local labor force there.

ECONOMIC DEVELOPMENT

The Ohio Department of Development (DOD) announced Tuesday it is seeking additional partners in the Columbus, Cincinnati, Cleveland, Dayton, and Toledo regions to serve as Tier 1 Minority Business Assistance Centers (MBACs), helping entrepreneurs and emerging business owners. This is in addition to the previous selection of 10 hosts for the MBAC Network Program for the July 1, 2023 to June 30, 2025 grant period. These MBACs support minority-owned, women-owned, veteran-friendly, and socially and economically disadvantaged businesses with no-cost counseling, state certification support, and trainings focused on creating jobs and increasing sales during ideation and start-up phases. Organizations interested in the MBAC request for proposals (RFP) -- including replying, reviewing the eligibility requirements and viewing the overall process -- can visit https://tinyurl.com/mr3mznhn. The RFP question and answer period opened Monday and runs through Thursday, Oct. 12. Questions can be sent to ohiombac@development.ohio.gov and responses will be posted on Tuesday, Oct. 17. The RFP deadline is Friday, Nov. 17.

ECONOMY

Ohio's minimum wage is scheduled to increase to $10.45 per hour for non-tipped employees and $5.25 per hour for tipped employees on Monday, Jan. 1, 2024, the Ohio Department of Commerce (DOC) announced. The minimum wage will apply to employees of businesses with annual gross receipts of more than $385,000 per year, according to DOC. The current 2023 minimum wage is $10.10 per hour for non-tipped employees and $5.05 per hour for tipped employees. The 2023 Ohio minimum wage applies to employees of businesses with annual gross receipts of more than $372,000.

POVERTY

Approximately 986,000 families across the state would receive a refundable tax credit under legislation introduced by Reps. Casey Weinstein (D-Akron) and Lauren McNally (D-Youngstown). The legislation, HB290, would provide up to $1,000 per child age zero to five and up to $500 per child age six to 17, Weinstein said during a Statehouse press conference on Tuesday. "Families earning less than $65,000 annually would qualify for the full benefit amount, with benefits tapering off for families earning $65,000 to $85,000," Weinstein said. "Children in all 88 of Ohio's counties would benefit, and we've estimated 300,000 -- or more than 55 percent of families in Ohio's 32 Appalachian counties -- would be eligible for the credit." Weinstein said the bill aims to replicate the success of the pandemic-era federal child tax credit, which expired at the end of 2021.

TAXATION

The sponsors of a bill that would give a property tax break to Ohio homeowners who are over the age of 70 and have an income of under $70,000 told the House Ways and Means Committee that they chose those numbers as a starting point and are not set on staying at that number for their "70/70" plan. Reps. Thomas Hall (R-Middletown) and Dani Isaacsohn (D-Cincinnati) said their HB263 (Hall-Isaacsohn), which would implement a property tax freeze for individuals, is an opportunity to continue supporting those most vulnerable to increasing property tax costs. It would also reimburse local governments and schools for revenue that is lost.

The General Assembly should "fix the tax problem of the equation rather than artificially changing the value side" in order to address rising property taxes across the state, Warren County Auditor Matt Nolan told the Senate Ways and Means Committee on Tuesday. Nolan, who serves as co-chair of the County Auditors' Association of Ohio's (CAAO) Property Tax Committee, provided opponent testimony on SB153 (Lang-Johnson) during the meeting. He said SB153 and companion bill HB187 (Hall-Bird) would cause harmful unintended consequences. Nolan suggested the following three alternative solutions for the Legislature to consider:

- Use American Rescue Plan Act (ARPA) or Rainy Day Fund dollars to grant a property tax credit to each property owner who sees an increase in taxes as a result of an increase in values.

- Apply the difference in taxes as a refundable income tax credit.

- Values would increase as already approved by the Ohio Department of Taxation, but instead of school rates hitting the 20-mill floor "hard," the floor would adjust down based on value increases and inflation, Nolan said. "If values increase by 30 percent and inflation is 5 percent at the time, schools at the floor would not get the 30 percent increase they would today, but would rather get 5 percent. This approach allows school districts and local governments to continue to see increases in revenue at a rate that was traditionally intended by the creation of the floor, but does not allow for excessive increases that the current market conditions have created."

TREASURER OF STATE

Starting in January 2024, Ohioans will be able to utilize a new state program to earn extra interest while saving to buy a house, Treasurer of State Robert Sprague said Thursday. "It's going to offer an above market interest rate to prospective home buyers who deposit money at these participating financial institutions," Sprague said during remarks at the Ohio Community Development Corporation (Ohio CDC) Association conference on housing issues. "Let's say you're able to save up $5,000 in this homeowners savings account. Normally you would get 4 percent or so, maybe 5 percent at your local lending institution right now, in terms of the CD rate," Sprague continued. "Well, the treasurer's office comes along and we're able to give you anywhere from 1 to 4 percent additional on top of that, and you're at 8 or 9 percent. That's a pretty good rate of return. And you get an income tax deduction from the state of Ohio too, so now you're over a 10 percent rate of return for your investment in this homeowners savings account. And it's FDIC insured. It's risk free. It's a risk-free investment. You get 10 percent on it. You all should sign up. This is fantastic!"

UNEMPLOYMENT COMPENSATION

The state of Ohio is still lagging behind most states in two key jobless claims metrics, according to financial advisory website WalletHub. Ohio ranks 40 in unemployment claims per 100,000 people in the labor force, and 27 when measuring which states saw the largest decreases in weekly jobless claims. Among Ohio's neighbors, Kentucky had the fewest jobless claims per 100,000 people in the labor force, ranking 5. The Bluegrass State was followed by West Virginia (24), Indiana (28), Michigan (42) and Pennsylvania (46).

WORKERS’ COMPENSATION

The Ohio Bureau of Workers Compensation (BWC) Board of Directors voted Friday to approve a 1% rate cut for about 38,000 public employers. The reduction in collectible premium represents an average cut across public employer taxing districts. During the board's review of finances, staff told directors the agency had $22.7 billion in assets versus $15.2 billion in liabilities as of August, meaning a $7.6 billion in net position, about even with the position seen a year earlier.