Written By: Ishton W. Morton – December 9th, 2016
On Tuesday, December 6th, 2016 Governor John Kasich told the Ohio House our state is on verge of a recession. The latest state tax receipts has shown revenue is continuing to have a significantly lag behind estimates. Such looming will add insults to injuries. Federal regulators will be putting an end to the process of Ohio charging sales tax on Medicaid managed-care organizations. This action or process has allowed Ohio to collect hundreds of millions of dollars per year in federal Medicaid matching funds.
It is estimated that the state stand to lose will $1.1 billion state funding over the next two-year budget. Meanwhile local counties and transit authorities stand to lose another $400 million.
Additionally, the total tax revenues for November came in $99 million well below projected estimates, thus putting the state off its mark by approximately 5 percent. Accordingly, income taxes tend to be off its projections by a little more than 10 percent. Expert believes revenue in October was off by 4.7% or $88 million.
There could be grave consequences. The missing tax revenues must come from some place. As a general rule, government(s) functions or relies on taxes to pay for goods and services. When streams of revenues evaporate and then come the relentless pains consequences.
Because the fiscal year runs through June 30th, 2017; does this means the state still have a small window of hope to repair those months of poor performances which have dragged down state revenue to almost 3% below estimates for the year, or $259 million?
These shortfalls can only be met through tax increases of lay-offs. Either way no one will be welcoming these parts of the equation.
Subsequently, Tim Keen the Budget Director together with Kasich administration has been circulating warnings that the next two-year budget is going to be extremely inflexible. However, Keen continues to say, he expects the cushion that is built into the current budget to be sufficient to cover any revenue shortages this year without a need for making adjustments. Nonetheless, the downward shrivel within the revenue will continue pushing future estimates to lower levels.
Although one Columbus expert economist has said he isn’t ready to use the word recession seems to be in agreement with the governor.
Moreover, Bill Lafayette have said; “I think employment growth in the coming year will be significantly slower than average. It is worrisome if this trend continues, and I think it will.”
Nonetheless; as of now, there has been not talk of higher taxes, lay-offs or cut-backs in goods and services. This is a thin silver lining.
Lafayette has pointed to dramatically lower manufacturing employment growth in the state: 0.2% so far this year, compared to 1.7% last year. Also, retail hiring is weak. Output hasn’t slowed at Ohio’s factories, though, so companies might be replacing positions with machines or technology. The robots are here and they’re here in greater numbers.”
If this trend is true, that robots are here and they’re here in greater numbers replacing human workers, then we all will be subjected to enormous painful and relentless consequences. This is the time we call upon elected official to provide some measures of adjustment to keep humans working. Seemingly we are becoming an extremely lazy race and do not want to work.
Apparently, since 2010, Ohio jobs have grown by 9.7% compared to 11.7% for the U.S. as a whole. Central Ohio is the state’s jobs oasis, with employment having grown by 16.1% since 2010.
Moreover, the slowing tax revenue is just one of the issues impacting the funding available the state’s budget for the next two-year. Also, Kasich and state’s lawmakers must deal with the loss of federal Medicaid dollars that will not be related to any changes to Obamacare that President-elect Donald Trump and Congress may make. We may be in for a dubious ride. Brace yourself and fasten the seat-belts!