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Library Funding
2006-2007 State of Ohio Budget
Governor Taft signed the Fiscal Year 2006 - 2007 biennium budget (HB 66) into law on June 30. Below is a summary of the items in the budget that have direct impact on public libraries.
- The Library and Local Government Support Fund (LLGSF) is frozen at 2004 levels through the end of the biennium (June 2007). The budget language "freezes" the allocation to the LLGSF month-by-month – each month will get the same amount of money received for that month 2004. However, the bill includes language similar to previous budgets that allows to Ohio Department of Taxation to check to see if the LLGSF formulary distribution would have provided less money. Each June, the ODT will review the previous 12-month distribution and make a “correction” in the July distribution.
For more information, please refer to the Ohio Department of Taxation memo.
[Note: The budget bill includes language that not only freezes the amount of money placed in each of the three local government funds, it also freezes the amount allotted to each of political subdivisions that receive money from two of the local government funds. However, THIS DOES NOT APPLY TO THE LLGSF. County funding formulas will continue to be used to fund libraries on the local level.]
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A number of tax reform measures were included in the budget bill, including a reduction of the personal income tax – the basis for the LLGSF – of 21% over the next five years. The first reduction will be 4.2% in 2005. However, the increase in income tax revenues since the beginning of 2005 should offset the tax rate cut and the LLGSF “freeze” dollars should not be affected. Beginning in July 2006, the personal income tax rate will be reduced another 4.2% for a total of 8.4%. Although revenue projections by the Office of Budget and Management indicate continued growth, it is possible that this reduction could reduce total income tax revenue to below the “freeze” distribution and trigger a correction in July 2007. We will monitor this closely.
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The Ohio General Assembly has formed a committee to review the source of funding for the LLGSF and the other two funds that provide money to local governments. This new committee, made up of 10 legislators and a representative from each of the five associations that represent the local government fund recipients, is to make its recommendations to the General Assembly by June 2006 and will sunset in December 2006. This is of particular importance to public libraries since their statutory formula is based on 5.7% of the personal income tax, and the tax reform section of the budget provides a 21% cut to the personal income tax by 2008.
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The budget includes an additional $100,000 to the OPLIN line item. This money is established to provide for some reimbursement to local public libraries for the costs associated with providing filtered Internet access. This language does not require filtered Internet access.
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The budget language permits public libraries to charge fees for non-print materials. OLC and the Department of Taxation will work on any sales tax implications triggered by these fees.
[Note: The OLC had requested that the Governor veto the language that permits public libraries to charge fees for non-print services. The Governor did NOT veto that section.]
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The budget bill eliminates the tangible personal property tax but provides funds to hold harmless local governments and public libraries from the impact of this change on local levies through 2018.
Questions should be directed to Lynda Murray, lmurray@olc.org or (614) 416-2258.
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