Where Does the Money Come From?

By:  Michael J. Hostler, OPBA Attorney

We all know the famous line from the movie Jerry Maguire: “Show Me the Money”.  In negotiations, the OPBA utilizes public records requests to get the basic financial status of the opposition.  A large amount of money comes from the State as “local Government Funds”. However, since Governor Kasich and his cronies have taken office, the reductions to Ohio’s Local Government Funds and, more importantly, the threats of further cuts in this program have created a nightmare.

The Governor’s budget, coupled with the initiation of the SB5 debacle, has resulted in the State bullying local governments with reductions to their share of the State’s sales tax receipts.  The Local Government Funds, hereafter referred to as the LGF was established in 1934 (the height of the Great Depression) as a part of the State’s new sales tax law.  Local Governments need money and they need it now.  Of the monies collected the first year, 40% was returned to the Local Governments.  The other 60% went to the local schools.

Needless to say, most local officials were not in favor of a new tax, but a new income stream was desperately needed.  The new sales tax was the answer for providing that much needed income, so the tax became law.  In a nut shell, the local government collects the sales tax from vendors.  They send the money to the State, which in turn returns the monies to local governments based on population and need.  There is, (or was), a formula in place for how the monies are to be distributed to the local Governments.

Subsequently, the Local Government Revenue Assistance Fund (“LGRAF”) and the Library and Local Government Support Fund (“LLGSF”) was created to distribute even more funds back to Local Governments.  The LGF and the LGRAF are used by counties, townships, cities and villages for current operating expenses like police and fire.  Additionally, the sources of these funds have expanded to include a specified amount of the personal income tax, use tax, corporation franchise tax and the public utility excise tax.

Every day, we hear comparisons of our current economy to the Great Depression.  So, I ask the Governor why he would take legislation, which was created to help local governments in an economic downturn, flip it on its head, and take money away from local governments in what has been purported to be the worst economic climate since the Great Depression?

I further ask why local officials are just sitting on their rights to a portion of the sales tax, instead of attacking the current regime in Columbus.  I’m not contending that there is a legal forum to settle this dilemma, but the General Assembly foolishly made changes to the allocation schedule of LGF’s.  This legislation is temporary and is effective for 2011 through 2013.  In July of 2013 the “percentage of revenue” goes back into effect.  However, what do we do until the formula is put back into effect?

The answer is simple.  There should be a public outcry, channeled towards the Governor, (not the Unions) by both the citizens and the local governments.  As stated before, the local governments collect the sales tax money, send it to Columbus, and then Columbus sends a portion of those dollars back to the municipalities that collected the funds as well as other government jurisdictions. You can call the money a commission, collection fee, bonus, or whatever you wish, just be sure to call it ours and not the State’s.

Call your elected officials and demand the General Assembly amend the wrong they have committed.  We live in our towns, our cities, and our counties by choice.  Keep Columbus out of our pockets.