The Downside of Budgeting by Constitutional Amendment
Ohioans will be asked to vote on Issue One this November, a Constitutional amendment allowing the State of Ohio to borrow hundreds of millions of dollars to buy land and clean up abandoned, contaminated land in inner-city areas. The measure was overwhelmingly approved by the Ohio General Assembly last summer. Nevertheless, the issue raises several disturbing questions about fiscal policy in Ohio.
Support for Issue One has come from almost every quarter of the Ohio special interest landscape, from the Audubon Society to the Ohio Chamber of Commerce to the Ohio Farm Bureau. The benefits, supporters say, are numerous: the bond money will finance new bikeways and trails, environmental clean up, preserve wetlands, and curb urban sprawl.
But if Issue One is such a good thing, why hasn’t the General Assembly approved funding for the same programs before? The Ohio Constitution does not prohibit the state from creating and funding programs to clean up abandoned, contaminated factory sites (or brownfields). The state created the Voluntary Action Program in 1994 to clean up brownfields. The Constitution also doesn’t prohibit the State from buying land to preserve it as open space. In fact, the state received its first donated agricultural easement under this law in January 2000.
Although Issue One permanently increase the state’s borrowing authority to pay for these new programs, the state has more than enough money to fund these programs already. Ohio taxes—already among the nation’s most burdensome—have generated more than $3.7 billion in surplus revenues since 1996. In fact, in every year since 1996, the state could have funded the entire $400 million Issue One package just from the surpluses generated in those years. Even if the amount of the surplus reserved for education were excluded, more than $3 billion would have been available for programs such as farmland preservation and brownfield development.
Earmarking just 10% of surplus revenues to open space and brownfield development would have made $370 million available over the past four years. Dedicated funds for these programs ranged from $60 million in 1999 to more than $100 million in 1998.
The State doesn’t have to borrow a dime.
The legislature, however, chose not to fund these programs. Instead, it decided to engage in what amounts to budgeting by constitutional amendment. Establishing a permanent revenue source in the Constitution virtually guarantees these programs will be funded in perpetuity, whether they are needed or not. Once debt service is included, the amount taxpayers are obligated to pay increases even more.
Moreover, even supporters admit that the land conservation portion of the bill will do little or nothing to protect farmland on a large scale. At most, the program could protect about 1 percent of the state’s open space. The program will protect only selected parcels of land, creating additional questions about who will benefit from the program and who will be excluded.
While brownfield restoration has important benefits, the amount spent to remediate these sites through Issue One amounts to a small program in the arsenal of spending programs the State already administers. Indeed, the number of brownfield sites is limited, and, under current law, polluters pay for site clean-up. Yet, Issue One does not provide for a sunset provision once brownfield sites are cleaned up. Indeed, the language is sufficiently vague that new uses could be found for the money.
Ohio citizens should carefully consider the consequences of budgeting by constitutional amendment. While land conservation and brownfield redevelopment are noble goals, the mechanism for achieving these goals may well jeopardize fiscal accountability. Issue One asks for a permanent change to the Ohio Constitution that effectively places programs off limits to the scrutiny of the biannual budget process with few clear benefits.
Samuel R. Staley, Ph.D. is a senior fellow at the Buckeye Institute and director of Urban and Land Use Policy at Reason Foundation in Los Angeles. An Ohio native and resident, he is co-author of the forthcoming book Mobility First: A New Vision for Transportation in a Globally Competitive Twenty-first Century (Rowman & Littlefield) and co-author of The Road More Traveled: Why the Congestion Crisis Matters More Than You Think, and What We Can Do About It (Rowman & Littlefield, 2006).
