Economic Update State and Local Issues Oct 2012
- 1. BY Chris Mohr President K-12 Business Consulting, Inc.
- 3. GLOBAL • Global Economy CY2011 = $79 Trillion – $79,000,000,000,000 • EU= $15.9 T #1 • USA = $15.1 T #2 ….(National Debt Oct 27, 2012 = $16.2T) • China = $11.3T #3 • Exports to European Union = 3.5% of US GDP or $528.5B • Euro Debt crisis could affect USA but direct effect of little significance…but financial sector entangled causes Dow to fluctuate • US growth rate CY 2012 est. 2% Global 3.3 % • China growth rate Est. 7.5% Est.
- 4. National • Economic growth Est. 2 to 2.3% 2012 • Unemployed 3.26 M ~ new claims 373,000 Oct 25th • Unemployment rate 7.8% down to 44 month low • Under employment Oct 25th per Gallup 16.2% • Misery index 9.71 lowest since 8.5 in Sept 2009 (Adds Unemployment rate and inflation rate) • U of Michigan Confidence Index up 82.6 up from 78.3in Sept. Highest since September 2007. • Retails Sales up 1.1% September • New home sales rose 27.1 % in past 12 months highest in 2 years …September was up 5.7% • Why does confidence matter? U.S. Consumer = 70% GDP
- 5. NATIONAL • Fiscal Cliff January 2013 If Congress Doesn’t Act to Increase Debt Limit • Why? Super Committee Failed to Cut Debt in August 2011 • Both Bush Era and Obama Payroll Tax Cuts Expire Dec 2012 • Major Cuts in National Defense and Social Programs • Title I and IDEA Funds Likely Cut and RTTT Could Be • Tax Exempt Financing State and Local Govt. Eliminated = $37 B a year in taxes to US Treasury • Cut Interest Subsidy for QSCB’s and BAB’s • Could slow economic recovery by .5% in 2013 hurt consumer confidence at a pivotal time
- 6. STATEWIDE LEVEL • Ohio jobless rate down to 7% from 8.6% a year ago • New business filings up from year ago to 66,734 new filings • State revenue in September up $59.35 M over estimates in FY13, but is up $373.8M over same time in FY12. • Personal income tax up $29.7 M over est. and Corp Franchise Tax up $30.3 M over estimates. • State expenditures down $145.5M under estimates in FY13 • Biggest variance is Education down $85 M and Public Assistance and Medicaid down $90.5 M under Est. • We have built a $481.9 M Rainy Day Fund at Sept. 12 State is Looking good • Cleveland Akron Area CPI 1.8% • Inflation under control and economy growing • Hard to cut state aid to schools when economy good and lots of talk about investing in education…may see a reshuffle by cutting guarantee • Or new charge off
- 7. STATE & LOCAL LEVEL • Ohio Tax Burden Rank falls to 20th from 7th overall tax 9.7% • Ohio home sale prices up 4.5% to avg. $135,627 • 3rd quarter home sales up 10.8% over 3rd qtr. Year ago • “Prices have begun to trend up”– Ohio Association of Realtors • 85% of Realtors describe housing market moderate to strong • 83% Realtors moderate to strong expectations for next 6 mos. • Tristate Area had 3rd highest avg. sale price increase of 7.8%– Belmont, Harrison, Jefferson county area. • Ohio median income $44,648 in 2011 down from $47,333 in 2010 • Ohio Wage Income Tax expected to grow 4.2% per ODT = form increase wages and new jobs. • Look for value to moderate in reappraisals and updates
- 8. HOT ECONOMIC ITEMS REGIONALLY • Utica Shale Est. U.S. Geological at 38 Trillion CFT of natural gas and 940 Million barrels of oil. Worth combined $224B but others say reserve is way low and could be $500B in value • In 2013 USA expected to produce over 11.6 M Bbls. a day surpassing Saudi Arabia as #1 oil producer on earth…USA could be the new Middle East. • What’s it mean to this part of the state for school districts? • Will it increase property taxes…how and by how much? • Will it increase SDIT revenues? • Lets first understand what all the fracking is about.
- 9. The Next Saudi Arabia of oil? New Technology allows drillers to access the lower source beds of our earlier oil discoveries decades ago.
- 11. Conventional drill several holes vertically Unconventional drill vertically then horizontally