December tax collections either lagged or exceeded targets by big margins, depending on whether a transfer related to last year’s expanded sales tax holiday is factored into the totals, but normal revenue streams were generally on target, according to the Office of Budget and Management (OBM).
In the most recent budget bill, 135-HB33 (Edwards), lawmakers created an expanded sales tax holiday on most items priced at $500 or less, supported by a $750 million fund lawmakers set aside to cover the revenue loss. However, the actual fiscal effect was nowhere near that. As a result, the September revenues reported in October 2024 appeared to exceed estimates by more than half a billion dollars. And in the December revenues reported Tuesday, a smaller than expected transfer from that sales tax holiday fund lawmakers created made overall tax revenues look like they missed by $140.8 million. Excluding effects of the transfer makes revenues appear to be nearly $320 million over estimates.
The administration made a transfer of about $123 million for the holiday, below the $584 million transfer they had expected to make.
In terms of routine sales tax collections, the non-auto sales tax brought in shy of $1.1 billion, $16 million or 1.4 percent below estimates, while the auto sales tax brought in almost $147 million, $1.2 million or 0.8 percent below estimates.
The state did see a big swing in personal income tax collections, which at $1 billion were about $360 million or 52.9 percent ahead of expectations, as a result of smaller than expected income tax refunds.
The Commercial Activity Tax (CAT) brought in about $16 million versus $8.9 million expected, a 79.9 percent overperformance.
Through the first half of FY25, tax revenues reached $14.1 billion, $352.7 million or 2.6 percent ahead of estimates.
Compared to this point in the prior fiscal year, tax collections are 3.9 percent or $563 million behind FY24 numbers.
“Overall, tax revenues to the GRF are solid through the first six months of fiscal year 2025, running 2.6 percent ahead of projections, mostly due to lower-than-anticipated income tax refunds. Combined sales tax revenues are right at estimate for the fiscal year-to-date, with a positive $7.6 million variance compared to forecast. Ohio’s budget is conservative and balanced, and OBM continues to analyze the data to inform our forecast for the upcoming biennium,” said OBM Director Kimberly Murnieks in a statement.