BUDGETS AND DIFFERENT FUNDS
Capital Budget: A budget passed in even number years (ie. 2014, 2016) to fund construction projects, primarily using money from bonds (long-term debt).
General Revenue Fund (GRF): The primary budget in Ohio that funds schools, social services, and much more. When people talk about the budget, this is what they are talking about. The proposal will be introduced in February of ‘odd-numbered’ years (2011, 2013, 2015) and passed by June.
Local Government Fund (GRF): 1.66% of the General Revenue Fund is designated for local government. This revenue allows local communities flexibility in meeting current needs. The local government fund was established in the 1930s when the state created a state sales tax as a method to fund essential services while reducing property taxes during the recession.
Main Operating Budget: Passed every two years, (Biennium) and contains the General Revenue Fund.
Mid-Biennium Review (MBR): A budget bill passed one year into the biennium to update expenditures. This is a new procedure first done in 2012. Prior to that, budget corrections bills were passed on an as needed basis.
Public Library Fund (PLF): 1.66% of the General Revenue Fund is designated for libraries throughout Ohio.
Rainy Day Fund:A fund where excess revenue can be placed and held in reserve for emergencies – like the recession in the late 2000’s.
Transportation Budget: The state is responsible for specific roads, and shares responsibility with local communities for others. The state finances these road projects through its own legislation. Federal money, fees, gas tax revenue, and bonds finance the majority of the transportation budget.
TYPES OF TAXES
Excise Tax:Excise taxes are taxes paid when purchases are made on a specific good, such as gasoline and tobacco. Excise taxes are often included in the price of the product.
Income Tax: A tax that is based on a person’s ability to pay by taxing earned income. The state has a progressive income tax, which allows people to pay a lower rate on lower levels of income. Many cities levy a flat income tax as well and about 1/3 of school districts in Ohio levy an income tax.
Property Tax: A tax assessed on the value of your home or property by local school districts, cities, and other local taxing authorities. The formula for assessing property taxes is: Value of home (as determined by County auditor) X .35 = taxable value. Property taxes are assessed as mills or $1 for every $1,000 of home valuation. Therefore 1 mil = $35 for a $100,000 home. The state reduces that amount by 12.5% on older levies, but not new ones. (See Property tax rollback below).
Sales Tax: A tax that is paid on goods purchased. The state levies a sales tax of 5.5%, and counties and local government entities can “piggyas well. Ohio taxes some (but not most) services.
Severance Tax:A tax paid by companies for the right to extract items of value from the soil. (oil, gas, timber, etc.) Ohio’s severance tax on oil and gas drilling is outdated and legislation continues to be debated.
Sin Tax:A term used to describe excise taxes on alcohol and tobacco.
Tax Expenditure (loophole): When the government gives a taxpayer a rebate or reduction in taxes owed. Ohio has nearly $8 billion of tax expenditures, which are not reviewed from year to year.
OTHER TERMS:
Biennium: Ohio and most states pass a 2-year budget. This 2 year period is called a “Biennium”.
Fiscal Year: Ohio’s Fiscal Year runs from July 1st – June 30th. Budgeting is done on this timeline.
Homestead Exemption: A property tax credit granted to senior citizens and the disabled. It is currently only available for low-income individuals.
Municipal Bond: A financial instrument that is sold now for cash to the state and paid off over many years at a low interest rate.
Progressive Tax: A tax that is based on a person’s ability to pay the tax. The primary form of progressive taxation is a progressive income tax, where lower levels of income are taxed at a lower rate. Other features can include credits and refund policies specifically targeted at low and middle-income people.
Property Tax Rollback: A policy implemented in the 1970s to lower property taxes and replace the revenue with the newly formed progressive income tax. This policy was eliminated on new levies beginning in 2014.
Regressive: A tax that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder.
Revenue: Money that comes into the state to invest on public services. Most revenue comes from taxes. Other revenue comes from fees, investments, the federal government, and other places.
