State Spending Amendment Could Have Unintended Consequences

A measure to limit the growth of government spending in Ohio could have unintended consequences on other areas including the use of funds generated by university football and product licensing. The so-called TEL measure – scheduled to go before voters in November – is being criticized for its ambiguous language.

If approved by voters this fall, the TEL – the Tax and Expenditure Limitation – would restrict government spending to either 3 1/2 % or to an inflation-based formula. Gene Pierce, a spokesman for the TEL – and for the Ken Blackwell for Governor Campaign – says the constitutional amendment is needed to get control of state spending.

“State spending increased 71% between 1994 and 2005. It would have been on a rate to double every 13 years and that is simply unsustainable. We’ve got more tax burden on people and businesses and it’s forcing jobs out of the state,” says Pierce.

Pierce says 26 states have some sort of spending limitations on their books and the best elements, he says, were borrowed for the Ohio amendment. But a phrase has critics puzzled. What about money universities generate from football ticket sales, TV rights and merchandise licensing? Will those funds be trapped in accounts that can’t be spent? Will they force the cutting of other unrelated state budgets? Jon Honeck is an analyst at Policy Matters Ohio.

“The issue is for instance would tickets for a Buckeye game be covered. The way I analyze the amendment I would say that ticket sales would be covered under the term “sales” and would be counted as part of state revenue,” says Honeck.

That means that the $90 million currently generated by Buckeye football and spent by the University may be restricted or diverted to other uses. Gene Pierce, the TEL proponent, disagrees.”That does not cover football, tickets, sales, ads; we’ve not talking about Jim Tressel’s salary,” Pierce says.

Ohio State’s Senior Vice President for Business and Finance Bill Shkurti says the University has not taken a position on the TEL. But the bill’s language, he says, is open to interpretation.

“What people intend is one thing, what the language says is another and the proposed language includes, and I quote, “taxes, licenses, permits, fees or sales…”" says Shkurti.

Shkurti says it would be “a real tragedy” if Ohio State could not spend funds the way it does now. And he says there could be ramifications for other areas of the University.

“Let’s say for example that the cancer hospital or the heart hospital develops a new treatment that’s very successful so more patients want to come there. We could theoretically take their money but we couldn’t spend it which wouldn’t be a very smart thing to do. So we could conceivably be in a position of having to turn people away because of the spending limitations even though they and their insurers would want to pay for improved medical care,” he says.

TEL supporter Gene Pierce dismisses that criticism.

“I think that is such a wild goose chase that’s not doing any favor in the public debate over the TEL.”

If it’s approved, critics believe the measure will end up in court challenges. Sam Hendren, WOSU News.

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