PROTECTING Local Government Funds, PROTECTING Our Communities

Ohio Libraries, Winter 2005

Ohio's state government will spend the first six months of 2005 focused primarily on developing the state's 2006 2007 biennium budget and tax reform. This year's budget debate promises to be particularly challenging because the state budget expenditures have grown 8% in the past biennium and continue to grow. Medicaid accounts for 40% of that growth. The state is facing an estimated $3.8 billion "structural deficit" caused by this increase in expenditures and the elimination of the temporary sales tax and other one-time sources of revenue. A "structural deficit " as defined by the Ohio General Assembly, is the difference between anticipated revenue and expenditures necessary to finance existing services. The Governor and other government leaders are looking at various ways to reduce this "structural deficit" including widespread budget cuts, tax reform, and amendments to Ohio's constitution, all of which could have a significant and possible harmful impact on Ohio's local government funds.

Local Government Coalition

Local governments are joining together to protect our community resources from any further erosion of the funds that support local government services. This coalition includes: county commissioners, mayors, city councils, public libraries, and park districts. Representatives from each member of the coalition are working together to research the impact of cuts to the local government funds and meet with decision-makers across Ohio to restore funding.

Understanding Local Governments

The three local government funds are a strong partnership between state and local government to provide essential services to Ohio's citizens. The Library and Local Government Support Fund (LLGSF) benefits Ohio's libraries. The Local Government Fund (LGF) and the Legal Government Revenue Assistance Fund (LGRAF) provide revenue to counties, townships, municipalities, villages, and park districts. State allocations to these funds help reduce the local government's reliance on local property taxes. Historically they were established to partially replace revenue lost as a result of tax reform actions by the General Assembly. These funds provide a revenue-sharing mechanism by which all local governments and libraries share in the cumulative wealth of the state.

The LLGSF was established in 1985 to replace revenue that libraries lost when the Ohio General Assembly repealed the inefficient and regressive intangible property tax in 1986. The LLGSF is distributed among all of the state's 88 counties based on a formula that was developed by the Public Library Finance and Support Committee to balance the distribution of funds to support the public libraries in each county.

The LGF was established in 1934 after the state enacted its first sales tax to "support local government activities." In 1935, the LGF received approximately 40% of the sales tax, thus beginning the "revenue sharing" principle for local government funds. Additional revenue sources were added to the LGF in 1947 (state-collected intangibles tax revenue) and in 1972 (income tax and a portion of the corporate franchise tax). Later the public utility excise tax was included in the base to provide for greater reliability, and the kilowatt hour tax was included in the base to replace revenue lost as a result of electric deregulation. The LGF is distributed on the basis of population and municipal property tax values.

The LGRAF was established in 1989 to provide additional support for local governments and to modify the way this state assistance was distributed among counties. The LGRAF is distributed solely on a population or per capita basis. In counties, townships, and municipalities, the local government funds provide essential funding for police, sheriffs, fire, EMS, and other vital services.

Under current permanent law, and prior to actions by the Ohio General Assembly and the governor in "freezing" and cutting the local government funds, the following percentages of the state's major taxes are shared with the three local government funds as follows:

Local Government Coalition Strategy

The local government coalition has developed a strategy to educate the public and the Ohio General Assembly about the importance of protecting the community services that are made possible through the library and local government funds. The strategy includes:

* Joint lobbying efforts by the collective associations;

* County and/or community-wide meetings with local government officials and their state legislators to explain the impact the past three years of budget cuts have had on local governments;

* A media campaign that focuses on editorial boards and government reporters;

* Individual association grassroots campaign efforts;

* A possible collaborative local government rally at the Statehouse; and

* Collaborative research on the impact of tax reform proposals.

The Public Library's Role

All coalition members have been involved in various aspects of the strategy. The County Commissioners' Association of Ohio coordinated the local meetings that have taken place and continue to take place across the state involving local government officials, legislators, and representatives from each of the coalition members. It is the OLC's charge to work with public libraries on a media campaign to demonstrate, through local and statewide media, the negative impact that funding cuts will have on library and local government funds.