Spending in each state budget is only achieved thanks to money that comes to the State in the form of revenue. State revenue can include taxes paid, fees collected, and grants from the federal government.
When talking about state funds, we typically refer to General Revenue Funds. While this only makes up just under half of the money the state spends, it represents those funds which are most flexible, in most cases not designated for a specific purpose. Major sources of general revenue include:
Federal grants & reimbursements
Federal stimulus (in the 2011-2012 budget)
Corporate Franchise tax
Public Utility/Kilowatt-hour tax
The global recession has caused state tax collections to decline dramatically.
In addition to recessionary pressures, Ohio budgets continue to be impacted by changes made in the budget passed by the Republican-dominated General Assembly in 2005. That budget cut income taxes, eliminated the tangible personal property tax and corporate franchise tax, and created the new commercial activities tax for businesses. The result was dramatically less revenue for the state, coupled with a need to reimburse local governments and schools districts for revenue lost from the tangible personal property tax. The 2012-2013 budget will be no different. Revenue will continue to decline as the final reduction in the income tax takes effect, and the general revenues of the state will be on the hook to reimburse local government and school districts.
In fiscal 2011, the State anticipated general revenues of $29.2 billion. Of this amount, $1.7 billion came from federal stimulus, a one-time source of money. Many estimate that the 2010-2011 budget included a total of over $8 billion in one-time sources, money that will not be available again for the next budget. All budgets use one-time sources, but 2010-2011 used more than is typical, resulting in some uncertainty about whether spending levels can be maintained without another influx of one-time money.