Best-Kept Secret in Ohio: The $700-Plus Million General Fund Surplus

Following up on the developing Ohio fiscal surplus situation reported here and here in mid-June, here are the final results for the state’s fiscal year that just ended in June (PDF from the Ohio Office of Budget and Management can be found by going here and clicking on the link for July 10, 2007):

• State revenues came in $256 million below budget. The main components were personal income taxes ($235 mil more than expected, despite/because of the income-tax rate reduction at the end of last fiscal year); corporate franchise taxes ($182 mil more than expected); sales/use tax ($186 mil less); and federal grants, principally Medicaid reimbursements ($477 mil less). The Strickland Administration’s claim that the state was hurt by last year’s income-tax cut is clearly incorrect.
• State expenses came in $945 million lower than budgeted. $668 million of that was lower spending on Medicaid (which explains the lower level of reimbursement cited earlier). Most other areas came in with relatively smaller favorable results (less spending IS a favorable results) that collectived added up to $277 million.
• After considering net transfers to and from other funds of about $32 million, the state’s general fund ended up $721 million ahead of budget ($945 - $256 + $32).

So how was that $700-plus million handled? Apparently only one Ohio Old Media outlet has cared; at least that’s what a Google News search on “Ohio surplus fiscal state” (not in quotes) shows (the Akron link listed later is to an article that pre-dates the budget report). The one currently relevant listing, a Cleveland Plain Dealer editorial, claims that the surplus is $1 billion (perhaps it is after taking all other funds into account), and notes that “State officials already have committed those dollars to the next two years’ budgets.”

At least half of the general fund surplus should have been earmarked for tax relief in the new budget. The $257 million in property-tax reductions achieved by making the senior-citizen homestead exemption, which had been means-tested, available to all seniors, is being separately covered by tobacco-settlement money (4th para at link). Ohio’s economy will grow more slowly than it should have because of this failure to let taxpayers keep, and mostly spend, more of their own money.