Monday, May 03, 1999
Levies allow extra money
County can keep interest earned
BY DAN KLEPAL and ANNE MICHAUD
Cincinnati Enquirer
Voting for a special tax levy to help children or senior citizens in Hamilton County also means padding the county's general revenue fund.
Approving a half-penny sales tax increase to build two sports stadiums also equals a huge boost to the county coffers.
Saying OK to a special tax for emergency communications. . you get the idea.
Under state law, the interest earned on special tax levies goes into county government coffers for whatever commissioners want.
Last year, the Hamilton County general fund took in more than $5 million interest from special levies and the sales tax increase.
The half-penny stadium sales tax approved in 1996 yielded a $983,000 windfall.
Eight special levies to help the mentally retarded, two hospitals, children, seniors and law enforcement generated $4.36 million for county commissioners to spend on other things.
Tim Mara, a local lawyer who opposed the sales tax and formed Citizens for Choice in Taxation, said Ohio law is a form of bait-and-switch.
“I think it's a breach of faith with the voters, who assume the money is going for the stated purpose,” Mr. Mara said. “It really creates a slush fund, where there are no strings attached to the money. So the interest from these
taxes could be used for a purpose the voters don't even want or anticipate.”
It's the way the system has worked for decades.
Larry Long, executive director of the County Commissioners Association of Ohio, said most of the state's 88 counties can't get by without interest income.
“In most counties, it is the third- or fourth-largest source of unrestricted revenue,” Mr. Long said. “If that goes away, it would necessitate tax increases by those counties.”
Critics say the system gives county commissioners a stake in the passage of special taxes. Since the commissioners decide when to place special levies on the ballot, they can be careful not to have more than one special levy up for vote at a time.
Commissioners “can only hit voters up for so much at one time, so they're very careful about how to schedule them,” Mr. Mara said.
On Tuesday, they have scheduled Issue 3. It's a four-year special tax that would raise $63.7 million for a new countywide emergency communication system.
Most of the tax dollars generated by Issue 3 won't be spent until the third and fourth year of the tax, when the hardware and software to run the system is ready to be installed, said Greg Wenz, operations director for the Hamilton County Communications Center.
That means millions in tax dollars will sit around earning interest for the first two years, if the levy passes.
Although all three county commissioners have been vocal advocates for Issue 3, they say it has nothing to do with interest income.
They say the communication system is in desperate need of an upgrade and there is no other way to pay for a new system.
Tom Neyer, president of the commission, said there are legitimate reasons for interest income to go into county coffers.
“Services provided by special levy beneficiaries place something of a burden on the county's general operation,” he said. “It's not an extraordinary burden, but the interest proceeds aren't extraordinary either.”
Commissioner Bob Bedinghaus said interest income is a way the Ohio General Assembly has decided to fund pay for county government. He called criticism of the system a “straw horse.”
County commissioners seem to favor higher taxes more often than not, said Ed Rothenberg of Hyde Park.
Mr. Rothenberg, who founded Homeowners' Against Larger Taxes, said interest income should benefit the particular cause the tax money was meant to support.
“Then perhaps they wouldn't ask us for more later on,” Mr. Rothenberg said. “It's laughable to think that (Hamilton County) commissioners call themselves conservative Republicans because all they want to do is raise taxes.”
Hamilton County Administrator David Krings agreed that the Ohio law funneling interest income into the general fund is not the best way of doing business.
“It costs money to have all these ballots for special levies,” Mr. Krings said. “I would rather have the elected board choose what to levy and for what purpose. If I was king of the world, it would be different.”
Special levies
Here's a look at the eight special levies in Hamilton County last year. A ninth levy, for general operations, is a permanent tax for the county's general fund and is not included. A 10th levy, for the Cincinnati Zoo, passed last year and takes effect this year.
The millage rate determines how much tax money is collected. One mill equals one dollar for every $1,000 in assessed property value.
• Museum center (0.18 mills): A 22-year tax approved in 1986 to renovate Union Terminal into a museum center. The millage rate varies slightly from year to year, depending on the amount necessary to retire maturing principal and interest.
• Mental retardation (2.73 mills): A five-year levy approved in 1994 for care and training of mentally retarded individuals.
• Mental health (1.99 mills): A three-year levy passed in 1998 for administration and mental health services.
• Children's services (2.77 mills): A five-year levy approved in 1997 to pay for social services for children.
• Senior services (1.02 mills): A five-year levy approved in 1997 to benefit the Council on Aging.
• University Hospital (4.73 mills): A five-year levy passed in 1997. Proceeds are distributed to University Hospital Inc. and Children's Hospital Medical Center Inc.
• Drake Hospital (1.76 mills): A five-year levy passed in 1994, with the hospital receiving all the proceeds except for about $2 million, which went for other county health and hospitalization services.
• CLEAR (0.54 mills): A five-year levy approved in 1998 to pay for a computerized crime tracking system for county law enforcement agencies.
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