Explanation of State Issue 1 (As prepared by the Ohio Ballot Board)

This amendment authorizes the State of Ohio to pay for or assist in paying for capital facilities of local public school districts and state-supported and state-assisted institutions of higher education, including the costs of acquisition, construction, improvement, expansion, planning and equipping facilities, by issuing general obligation bonds or notes.

Those general obligations would be backed by the full faith and credit and revenue and taxing power of the state.

This amendment prohibits the State from issuing any direct obligations, including those referred to above, if such issuance would result in debt service on state direct obligations in a future fiscal year, to be paid from the State general revenue fund or net lottery proceeds, exceeding five per cent of the total estimated revenues of the State for the general revenue fund and from which the particular obligations are to be issued.  The General Assembly, by at least a three-fifths majority vote of each house, may waive the five per cent limitation as to a particular issue or amount of obligations.

This amendment authorizes net state lottery proceeds to be pledged or used for payment of the debt service on the obligations issued by the State for public school facilities, but not on obligations issued for higher education institutions.

The General Assembly must establish the method for computing the amounts required for payment or debt service and may estimate payments of debt service on bonds anticipated by notes.  The amounts required for payment of debt service, as well as other pertinent fiscal matters, as certified by the Governor or Governor's representative, will be conclusive for purposes of the validity of the obligations issued.

Argument for State Issue 1 - Official Opinion

State Issue 1 would permit the State of Ohio to issue general obligation bonds to support the construction, renovation and repair of facilities for Ohio's public schools and state-supported colleges and universities. The ability to issue such bonds for this purpose will result in an overall savings for Ohio taxpayers. General obligation bonds are backed by the full faith and credit of the state and therefore enable the state to secure a lower interest rate.

The Legislative Budget Office has estimated the State Issue 1 could save taxpayers $ 979,000 annually in interest payments for each $1 billion in bonds sold or $14.6 million over the life of 15-year bonds.  For 20-year bonds, the savings is expected to be $ 688,000 annually or $ 13.7 million over the life of the bonds.

State Issue I includes a safeguard to prohibit the State from issuing more debt than may be managed in a fiscally responsible and efficient way. Bonds could only be issued if the annual principal and interest due on all bonds (excluding revenue-backed bonds) will not exceed 5% of the State's estimated general revenue funds and net lottery proceeds. The legislature could increase that percentage if necessary, but only by a 3/5th's vote of both the House of Representatives and the Senate.

Issue 1 will:

• Result in a lower-cost method of borrowing money for construction, renovation and repair of school buildings.
• Save taxpayer dollars, while improving facilities for elementary, secondary and higher education.
• Include a safeguard to responsibly control the amount of debt that can be issued.

Argument Against Issue 1 -   Editorial Opinion
By: Scott A. Pullin

On election day, Ohioans will be asked to vote on State Issue 1. In general terms this amendment authorizes the Ohio General Assembly to issue general obligation bonds to pay for repair and replacement of school buildings.

The proponents maintain that this amendment will help us fix our schools and save money. They promise and cross their hearts that State Issue 1 won't raise taxes.

But don't be fooled. If passed, State Issue 1 could bring about serious fiscal consequences that would negatively impact every Ohioan for years to come.

• State Issue 1 Will Give Politicians An Unlimited Credit Card

State Issue 1 will give the legislature the authority to incur unlimited state debt without even a vote of the people. This simply gives them too much authority. It would be like giving politicians a credit card without a limit. Unfortunately, Ohio taxpayers would be responsible for paying off the balance.

• State Issue 1 Could Lead To Higher State Taxes

Taxpayers are responsible for paying off this state debt in good times and in bad. Unfortunately, during periods of economic downturn and declining tax receipts, Ohio politicians are prone to raise state taxes instead of cutting spending elsewhere.

• State Issue 1 Could Lead To Higher Local Property Taxes

To qualify for this new state money to repair and replace school buildings, Ohio taxpayers must come up with $13 billion in local matching funds. To do this Ohioans could be forced to raise their local property taxes. $13 billion in higher local property taxes equates to over $3,000 for every household in Ohio!

• We Can Provide More Money For Schools By Cutting State Government

State government has grown into an insatiable monster. The most recent state budget topped $40 billion and grew over three times the rate of inflation from the previous one. Ohio taxpayers also pay for such "pork barrel" projects as sports stadiums, bike paths, and opera houses. State government should exhaust every avenue to save money before going billions of dollars into debt. They should explore selling off assets like prisons and the turnpike, hold overall state spending growth to the rate of inflation, and stop funding "pork barrel" and other wasteful projects.

• We Can Provide More Money By Making Schools Efficient

In many cases, local school districts are responsible for letting their schools fall into disrepair. Instead of setting money aside for maintenance they plowed more cash into salaries and benefits. Before going into debt, local school districts should explore contracting out services, consolidating districts, and cutting administrators to save money.

• State Issue 1 Will Crowd Out Other Important Programs

State debt funds many important projects other than school buildings. These include highways, state parks, state historical centers, rail development, and local government projects. By increasing the amount of debt allocated to school facilities, it will reduce the amount of debt available to finance other worthy projects.

• Too Much Money Will Go To Schools That Don't Need It

Ohio's school funding problem is not a statewide one. The problem is concentrated in a small number of school districts, primarily in southeastern Ohio, with very low property values. However, State Issue 1 and the school construction proposal will pour millions into big-city school districts. Districts like Columbus and Cleveland don't have a school funding problem, they have a school management problem.

Over the next few weeks Ohioans will be faced with an onslaught of television commercials in favor of State Issue 1. A close examination of the facts, however, will show that passage of State Issue 1 is not in Ohio's best interest. To find out more about State Issue 1 please call 614-220-4000 or email ohiotax@aol.com.

Scott A. Pullins is Executive Director of National Taxpayers Union of Ohio (NTUO). NTUO is a non-profit, non-partisan association that works to limit state taxes, spending, and regulations.