COLUMBUS — Final state tax receipts for fiscal year 2002 are in, and they're ugly.

        The state collected $7.3 billion in general revenue fund income taxes between July 2001 and June 2002, just a half-percent more than the previous year.

        That's even after Ohioans paid a 7 percent higher tax rate last year because they didn't get an income tax break. In the late 1990s, more than $2 billion in surplus money was returned to taxpayers.

        “You have to take into account the different rates,” said Tim Keen, assistant director of the governor's Office of Budget and Management. “What it does is illustrate how weak the receipts were this year.”

        Income tax receipts have dropped only once in Ohio history — in 1986, when Senate Republicans reduced the tax rate.

        Dismal tax collections have forced Gov. Bob Taft and state lawmakers to fix two budget deficits totaling $3.4 billion. A week ago, Mr. Taft announced $375 million in cuts for this fiscal year, slicing some agency budgets 15 percent.

        The main contributors to slumping tax revenue are capital gains, investment profits and business profits, Mr. Keen said.

        The stock market slumped after Sept. 11 and has remained down in the wake of a series of accounting scandals at major corporations. In addition, profits for large and small businesses are down from last year.

        Ohio's corporate franchise tax, a reflection of corporation profits, was down 22 percent this year.

        Slumping sales in the retail and service industries were reflected in a slight dip in non-auto sales tax collections last year. The state brought in $5.11 billion in 2002, about $14 million less than the prior year.

        “It's a case where we have a slowdown in the economy, and people are tighter with their dollars,” said Larry Stelzer, general counsel for the Ohio Council of Retail Merchants. “When people are tight with their dollars, it has an impact across the economy.”

        The lone bright spot on the state's ledgers was the automotive sales tax, pumped up by months of zero-percent financing offers. Ohio brought in $968 million last year, a 19 percent jump over 2001.

        “We do not believe that this fiscal year's pace is sustainable,” Mr. Keen said. “It would be nice if it was, but autos are not something you go out and buy every couple of months.”

        State officials hope the state's economy has bottomed out. Their budget estimates for this fiscal year are counting on some type of economic recovery.

        “Our assumptions are we are in a recovery and the economy will continue to strengthen,” Mr. Keen said. “Four months ago that was pretty much the consensus. Now, I think people are generally of that belief, but they're a little more cautious.”

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