I spent much of 2005 and 2006 helping to organize opposition to the Tax and Expenditure Limitation (TEL) amendment proposals because I believed it represented such a significant threat to Ohio’s economy and our education and health care systems. Earlier this year the Ohio General Assembly adopted, and Governor Taft signed, Ohio Substitute Senate Bill 321, which created a state appropriation limitation (SAL) for state general revenue fund (GRF) budgets beginning in state fiscal year 2008. I have finally written a brief analysis of the legislation and you can find it on the Community Solutions website.

Here are a summary of the basic findings:

It’s difficult to predict the long-term impact of the SAL because it can be changed by a simple majority vote and because the Ohio Legislative Services Commission has described the amendment as not enforceable.

The SAL covers only a fraction of the public spending that would have been covered by the TEL amendment.

Under the SAL, GRF spending increases will be limited to approximately $1.2 billion for state fiscal years 2008-2009.

Education makes up the largest share of GRF spending in the state – approximately 48%.

The SAL gives the Governor new power and will result in some changes in the state budget process.

Even if the SAL remains in place, public spending proponents can easily circumvent it, as demonstrated by Secretary of State Ken Blackwell’s proposal to create and spend a multi-billion dollar JOBS fund completely outside of the GRF and therefore not limited by SAL spending limitations.

The original TEL amendment would have been a disaster for the State of Ohio. It was an economy killer, it would have devastated our education system from pre-school to higher education and it would have shut down much of our healthcare system in the state. While the SAL was much preferable to a TEL amendment I remain opposed, because at its core it retains a flawed formula and there is no guarantee that the formula will ever be changed or corrected. I remain concerned that the amendment will result in reductions in education, health care and other social services and that the burden for paying for these services will be shifted to the local governments with the result being increased property and other taxes and fees.

In a few weeks, after we have elected a new Governor, the state budget process will begin again. I will be watching to see how the SAL impacts that process. I welcome your comments.

# posted by John Corlett @ 8:56 AM