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Tax revenues strong through first half of FY22

Written on Jan 14, 2022

Provided by Hannah News Service 

Ohio collected nearly a quarter billion dollars more in tax revenue than expected in December, setting records for income tax withholding and non-auto sales tax collections, according to preliminary data from the Office of Budget and Management. 

“Overall, this is just another indicator that we’re going in the right direction,” OBM Director Kim Murnieks told Hannah News in a phone interview. 

Total tax receipts reached $2.29 billion in December, $243.6 million or 11.9% higher than expected. Year-to-date collections of $13.21 billion are $580.3 million or 4.6% above projections. 

Sales tax collections were $90.7 million or 8.4% above estimate; the non-auto sales tax made up the bulk of the overage, bringing in $80.6 million or 8.5 percent more than expected. Auto sales tax collections were up $10.1 million or 7.8% versus estimates. Year-to-date collections are up $212.1 million or 3.4% over estimates. 

Income tax collections were up $130.6 million or 15.1 percent compared to projections. Year-to-date collections are $296.3 million or 6.4 percent over estimates. 

Murnieks said the income tax growth is a reflection of both wage increases and increased employment. Asked about the effect of inflation on the non-auto sales tax collections, Murnieks said it’s likely having an impact, but it’s not as easy to quantify the effect of increased prices as it is in the auto sales tax, where supply constraints have driven per-unit prices up, likewise increasing tax collections. 

Murnieks said OBM is monitoring sales tax trends along with the progression of the pandemic, saying the agency expects to see a shift of some spending on goods to spending on services. The former category is largely subject to sales tax, while the latter is generally not. 

Murnieks said she does not foresee a material effect on revenue forecasts from the apparent end of monthly payments to families under temporary expansion of the federal Child Tax Credit. Federal lawmakers temporarily expanded the credit to as much as $3,600 per child and provided for advance payment of the credit on a monthly basis for the past several months. Congressional Democrats have yet to win approval of a deal on President Joe Biden’s Build Back Better spending agenda to make the higher credits and monthly payments permanent. 

Compared to this time last year, the state has collected $505.8 million or 4% more for the first half of the fiscal year. While income tax collections technically lag figures for the comparable period of FY21, that reflects a timing issue. Delay in the income tax filing deadline in 2020 as a result of the pandemic shifted a large chunk of FY20 income tax revenue into FY21.