Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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BILL: |
DATE: |
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STATUS: |
SPONSOR: |
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LOCAL IMPACT
STATEMENT REQUIRED: |
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CONTENTS: |
To authorize counties, municipal corporations, or townships to
issue public obligations for conservation and revitalization purposes |
·
No
direct fiscal effect on the state.
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LOCAL
GOVERNMENT |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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Counties, Municipalities,
and Townships |
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Revenues |
Potential gain from bond
proceeds |
Potential gain from bond
proceeds |
Potential gain from bond
proceeds |
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Expenditures |
Potential increase in debt
service costs |
Potential increase in debt
service costs |
Potential increase in debt
service costs |
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Potential minimal increase
in election costs |
Potential minimal increase
in election costs |
Potential minimal increase
in election costs |
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Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.
·
New debt authorization. The bill
authorizes counties, municipal corporations, or townships to issue bonds to
provide, or assist in providing, grants, loans, loan guarantees, or contributions
for conservation and revitalization purposes.
Current law limits the debt that these political subdivisions may issue
according to a formula based on taxable property value.
·
Debt service. The amount
of annual debt service will depend on the interest rate and maturity date of
the bonds. Assuming a maturity period of 15 years and an interest rate of 4%, the
cost of paying off the bonds over 15 years is about $.09 per year for each
dollar borrowed.
·
Election and ballot advertising costs. If subdivisions opt to submit new bond programs for voter
approval, counties would incur minimal costs for putting these issues on the
ballot. There would also be minimal
ballot advertising costs.
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New bond authorization for political subdivisions
The bill authorizes
counties, municipal corporations, or townships to issue bonds to provide, or
assist in providing, grants, loans, loan guarantees, or contributions for
conservation and revitalization purposes similar to initiatives administered by
the state under the four-year, $400 million Clean Ohio Program. The funds available under that program are
almost fully committed. Under this
bill, if voter approved, an eligible
political subdivision would have the authority to enact ordinances providing
for the issuance of general obligation bonds that would support grant and loan
programs geared toward urban revitalization, preserving green space, and
creating recreational space.
Cost of debt
The
cost of the general obligation bonds issued would depend on the interest rate
that will be paid on the bonds and the number of years over which they are paid
off. Assuming a maturity period of 15
years and an interest rate of 4%, the cost of paying off the bonds over 15
years is about $.09 per year for each dollar borrowed.
Limits
on net indebtedness
Current
law, unchanged by the bill, limits the amount that political subdivisions may
issue based upon the percentage of taxable property value. Municipal corporations and home-rule
townships can issue up to 10.5% if the debt is voter approved, or up to 5.5% if
the debt is not voter approved.
Nonhome-rule townships can issue up to 5% of voter-approved debt. Counties may issue between 3% and $6 million
plus 2.5% of the taxable value greater than $300 million if the debt is voter
approved, but only up to 1% if the debt is not voter approved. This means that counties, municipalities, or
townships would have to design grant, loan, and loan guarantee programs that fit
these limits, and would have to choose, for example, whether to fund multiple
projects at smaller amounts, or fewer projects at larger amounts.
Election
costs
Counties
would experience a minimal increase in election costs for putting a county,
municipal, or township bond issue on the ballot as well as a minimal increase
in costs for the required issue advertisements. Generally, political subdivisions are required to advertise
ballot issues for two consecutive weeks in a newspaper of general circulation
and, if applicable, on the political subdivision's web site.
LSC fiscal staff: Terry Steele, Budget Analyst