Transcript Document

Ohio’s TEL/TABOR:
Closing the Door to Public Libraries?
What is TEL?
What is TABOR?
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Ohio’s TEL is a state-wide ballot issue to
amend the Ohio Constitution
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Originally planned for November 2005 petition
drive by “Citizens for Tax Reform”
Certified for the November 2006 ballot
Ken Blackwell, Ohio Secretary of State
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Chair/Spokesperson of “Citizens for Tax Reform”
Secretary of State
Candidate for Governor
What is TEL?
What is TABOR?
TEL = Tax Expenditure Limitation
TABOR = TAxpayer Bill Of Rights
Colorado passed its TABOR in 1992
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What is the same
• Constitutional Amendment
• Limits tax expenditures based on formula
• Requires approval by voters to exceed limits
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What is the difference
• Mechanical details and additional restrictions
What’s in Ohio’s TEL?
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Limits state government spending using a formula
Also applies to local governments and public
libraries
Requires ballot approval to override limits
Any increase in state taxes requires a ballot
referendum
Creates a Budget Reserve Fund for the state’s
unspent funds
Earmarks 5% of state funds for local governments
Prohibits unfunded mandates by State
Government
Requires a majority of registered voters to
approve a local levy
TEL: How it works
Limits spending increases of tax dollars to 3.5%
annually or the sum of inflation plus population
change; which ever is higher.
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Example #1:
3.40%
-0.51%
2.89%
2000 CPI-Midwest (Consumer Price Index) inflation rate
2000 population change (down) for Montgomery County
Limit on tax spending for 2001 would be 3.5% higher than in 2000
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Example #2:
3.40%
0.90%
4.49%
2000 CPI-Midwest (Consumer Price Index) inflation rate
2000 population change (up) for Clermont County
Limit on tax spending for 2001 would be 4.49% higher than in 2000
Spending Limits
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Exempt
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Gifts
Grants
Federal money
Not exempt
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LLGSF and other local government funds
Investment income
Overdue book fines and charges
Any fees for materials or services
Overriding the Limits
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Voted overrides are required annually to
exceed limits
Expense of running the elections
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Election fees – charged against library
Advocacy costs – must come from other
sources
Library Boards cannot place overrides on
ballot
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Taxing Authorities can only place levies
Elected Library Boards?
Majority of Electors?
TEL’s language is mixed. Courts
generally interpret mixed language as
intentional.
State spending, new taxes and tax increases
“majority of electors voting at
such an election…”
Local Government spending, new taxes and tax
increases
“majority of electors in that
political sub-division…”
Recent Voter Turnout
Ohio Election
Number of
Registered Electors
Number of
Electors Voting
Turnout
Percentage
November 8, 2005
7,684,320
3,093,968
40.26%
November 2, 2004
7,972,826
5,722,443
71.77%
November 4, 2003
7,138,932
2,614,354
36.62%
November 5, 2002
7,113,826
3,356,258
47.81%
November 6, 2001
7,153,796
2,574,915
35.99%
November 7, 2000
7,531,555
4,800,009
63.73%
November 7, 1999
7,146,985
2,467,736
34.53%
November 3, 1998
7,096,423
3,534,782
49.81%
November 3, 1997
7,022,866
3,128,446
44.54%
Source: http://www.sos.state.oh.us/sos/ElectionsVoter/electionResults.aspx
Budget Reserve Fund
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A budget reserve fund (BRF) is created
for State of Ohio funding
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not required by local governments
Requires annual transfers of funds
collected that could not be spent
any unencumbered money in the
General Fund
 10% of any unencumbered money in
other funds
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Budget Reserve Fund
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Any time the Budget Reserve Fund
exceeds 10% of total expenditures for
the previous year the excess money
must be refunded on a pro rata basis to
all individuals who paid Ohio income tax
in the preceding calendar year.
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Sales, tax, business, or other taxes and
usage fees do not share in the refunds.
New Local
Government Fund
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Currently state funding for local
governments and libraries through the
local government funds equals about
6.9% of state budget (but expect
debate about this)
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Cities and villages
Townships
Counties
Libraries
New Local
Government Fund
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TEL earmarks 5% of state
expenditures to counties. Funds must
be shared by:
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Cities and villages
Townships
Counties
Libraries
School districts
Transit authorities
MRDD and mental
health boards
 Alcohol
and drug
addiction services board
 Soil and water
conservation districts
 Park districts
 Sewer districts
 Children services boards
 Health boards and districts
 Sanitary districts
Source: State of Ohio Budget Highlights, Fiscal Years 2006 and 2007
New Local
Government Fund
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No guarantee of library specific funding
Legislature must decide who gets to decide
on how funds are distributed
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County Commissions?
County Budget Commissions?
Doesn’t replace LLGSF or the other two
local government funds
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But will there be any money left to fund
them?
Other Provisions
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“…the provisions of this section shall be liberally
construed for the purpose of effectuating the purposes
thereof.”
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Supremacy clause, trumping any conflicting provision of
the Constitution.
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Self-executing as opposed to waiting for implementing
legislation.
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Requires General Assembly to repeal any laws that
conflict.
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Gives standing to taxpayers to sue political subdivisions
and/or state to force compliance with TABOR.
The Impact of TEL
 The
“Double Whammy” for local
governments and libraries
The trickle-down of state cuts to the
local level
 The restrictions on local funding
decisions
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The Impact of TEL
 Fiscal
Management Issues:
 Capital
investments must fit
within limits
• New circulation system or bookmobile?
 End of year spending up
• Motivation to spend it now!
to limit
 Timing
of override elections?
 Maintaining multiple accounts:
• Exempt and non-exempt revenues
• Exempt and non-exempt expenditures
30 State Tax and
Expenditure Limits
Source: National Conference of State Legislatures, 2005.
Colorado’s
Experience
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Funding for higher education dropped by an inflation
adjusted 38%. State Ranking for funding of public schools
fell to 50th in the country.
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The percentage of low-income children lacking health
insurance in Colorado rose from 15% in 1991-92 to 27% in
2002-03. During the same period, the national proportion
of low-income children lacking health insurance fell from
21% to 19%.
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Reflecting funding cuts, Colorado’s ranking on access to
adequate prenatal care dropped from 23rd in 1992 to 48th
in 2002. Colorado’s ranking for on-time vaccination of
children fell from 20th in 1995 to 50th in 2003.
Colorado’s
Experience
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The percentage of Coloradoans with no health insurance rose
from 12.7% in 1992 to 15.6% in 2001, dropping its ranking from
24th to 36th.
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In 2000-01, Colorado ranked 49th in current expenditures per
$1,000 of personal income for public K-12 schools. K-12
education spending per pupil in Colorado fell by more than $300
compared to the national average from 1992 to 2000.
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Colorado’s ranking for average teacher pay compared to
private-sector earnings fell from 30th in 1992 to 50th in 2001.
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Colorado’s ranking for expenditures on higher education relative
to personal income dropped from 35th in 1992 to 48th in 2004.
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Colorado has no bond rating.
Colorado TABOR:
Bad for Business
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“What the public didn't realize was that [TABOR] would
contain the strictest tax and spending limitation of any
state in the country, and long-term would hobble us
economically.” — Tom Clark, Executive Vice President,
Metro Denver Economic Development Corporation
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“The [TABOR] formula . . . has an insidious effect where
it shrinks government every year, year after year after
year after year; it’s never small enough.” — Brad Young,
former Colorado state representative (R) and Chair of the
Joint Budget Committee
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“…no business would survive if it were run like the
TABOR faithful say…” — Neil Westergaard, Editor of the
Denver Business Journal
Tax Lawyers Employment
(TLE) Amendment
Litigation Topics for the Ohio Supreme Court
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Define what is meant by elector?
Define what are encumbered and non-general
revenue funds?
What is an unfunded mandate?
Can a new part of the constitution have precedence
over an existing one?
Are schools eligible for the new local government
fund?
How do library boards get elected or on the ballot?
Legal claims by local governments against the state
Suits by taxpayers against local governments
What We Must Do?
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Treat this like a levy campaign
Employ grass roots techniques
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Speakers bureaus
Phone banks
Yard signs
Literature distribution
Personally contribute to supporting
organizations to buy television time
Thank legislators/leaders who publicly
oppose TEL/TABOR.
Grassroots Campaign
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Communicate with people one-on-one
Organize local block-by-block informational
“knock and talks”
Speak to organizations to which you belong
Letters to the editor – especially smaller papers
Check in with all of your local government
officials
Send letters and e-mail to friends
More Information on
TEL/TABOR
Citizens for Tax Reform
http://www.repealthetax.com
Bricker and Eckler, LLP
http://www.bricker.com
Ohio Library Council
http://www.olc.org
Policy Matters Ohio
http://policymattersohio.org
Coalition for Ohio’s Future
http://www.ohiosfuture.org
Center on Budget and Policy Priorities
http//www.cbpp.org