State budget concerns skewed, says Commissioner Levin

Ohio’s budget is struggling, but not for the reasons many suspect, according to Ohio Tax Commissioner Richard Levin, who addressed OSCPA’s Council of Leaders last week.

Instead of going to the general revenue fund (GRF) as intended, part of commercial activity tax (CAT) revenue was permanently allocated to school funding and the rest to local government for the next biennium, leaving a hole in GRF funds.

To boost GRF funds, the governor has proposed delaying the planned 4.2% state income tax cut. Levin assured the Council members that any increase in state tax liability will be small. Last year, 76% of taxpayers received a refund. Projections estimate 71% will still get refunds without the income tax reduction.

The rate freeze is currently pending approval by the Ohio Senate. Dec. 31 is the legal deadline to change the income tax for FY 09; however, the Tax Department hopes the practical deadline is much sooner to allow time to get information to taxpayers and accounting practitioners.

Council members questioned Levin about the impact of unpaid taxes on the budget. He assured the audience that unpaid taxes are not a factor. Instead, high unemployment rates have cut into the amount of income tax owed. Business failures have also translated into a loss of sales and business taxes, not to mention the loss of income tax from employees.

Further complicating matters are corporate bankruptcies such as Max & Erma’s and Damon’s, which impact collection efforts.
OSCPA’s Council of Leaders, which meets biannually, includes OSCPA members who are leaders and decision-makers in corporate, public accounting, government and education.

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