No. 5 February 17, 2006

PLEASE CIRCULATE THIS BULLETIN TO YOUR COUNCIL, DEPARTMENT HEADS & STAFF

Franchising Battle Looming.

Though no bill has been introduced yet in Ohio, one of the many controversies that will come up, over the next year or so, is a battle over what is called “Internet Protocol TV.” Many of you may have already received a letter and package on this matter from the Ohio Cable Telecommunication Association (OCTA). This is a battle that is already being fought in several other states, such as Texas, Virginia, Indiana, Missouri and California.

While a perhaps never-ending battle over this issue is beginning to percolate in Washington, the two main players, SBC and Verizon, have been gearing up to fight for their side of the issue in several states. We expect, because of discussions we are having with both sides, that this issue will rear its head in Ohio this year. Because of the complexity of the issue, the mix of parties involved, the nature of election year issues and the legislative session calendar, we think this issue will be debated in our state through 2006 and into 2007.

The primary player on one side in Ohio will be SBC, a company that will argue that in order to safely invest up to $400 million in Ohio in this new broadband video technology, it needs a break from the General Assembly. That break would be to exempt this new technology service from local franchising authority and allow it to enter the market via a statewide franchise. Another important issue in this effort is the question of whether such a statewide franchise would be subject to the possible expense of a mandatory build-out, i.e. would the company selling such a technology have to guarantee, in some way, that it would serve all neighborhoods in each community it serves.

Weighing in on the other side, OCTA will argue, among many issues, that new technology or not, the resulting product is the same thing as cable TV. As such, this new competitor ought to have to come in under the same rules as a cable TV company entering Ohio, through locally-negotiated franchise agreements. That would insure, in OCTA’s view, that their new competitor wouldn’t have an unfair market advantage, would have to provide mandatory service for all neighborhoods, would have to pay equivalent franchise fees and abide by the same right-of-way rules as OCTA members.

Obviously, the idea of removing one company from the local franchise requirement will raise concerns and many questions for the League and many of its members. We will stay engaged and keep you informed on this issue as it develops. However, it is important to note that this issue has played out in a variety of ways in the many states where this issue is much farther along. Like most technology regulation issues, this legislative challenge will be a multi-faceted and complex discussion. Some of the issues in this discussion will be more important for some of our members than for others. Some of the bills developed in other states do a better job of addressing municipal issues than others do.

We begin this discussion extremely wary and with many questions. We will discuss those concerns with both sides for now. When a bill is finally drafted, we will be much more definitive on this matter.

Local Government Fund Group Meets.

The second meeting of the Local Government and Library Revenue Distribution Task Force met on Wednesday of this week. As reported earlier, this group is to design and recommend to the General Assembly a new formula for all local government funds to be considered during the next state budget.

This second meeting centered on a presentation by the Ohio Department of Taxation on the history and substance of the Library and Local Government Support Fund. The meeting was relatively brief and included the Tax Department’s report and a few questions from the Task Force members.

Feedback on the TEL.

As we hear from our members on what they are hearing about the Tax Expenditure Limitation proposal, initiated by Secretary of State Ken Blackwell and scheduled for the statewide ballot in November, we thought we should respond to that member input.

From Northeast Ohio, we are hearing that supporters of the TEL are assuring local officials that the limits that the TEL would put in place only affect a local government’s General or Operating Fund. From the language of the amendment, this is pure malarkey!

Nowhere in the amendment for either state or local government limitations does the phrase “General Fund” or “Operating Fund” appear. Rather, a local expenditure means the “sum of all expenditures,” except state and federal monies, refunds, grants, donations and bequests and some temporary emergency expenditures. For the state, the amendment defines expenditures as anything that is the result of “taxes, licenses, permits, fees or sales.” For the state, only federal monies, refunds and temporary emergency expenditures are exempt.

Now, unless, we can somehow get the Supreme Court to define the payment of water and sewer bills as a donation, everytime sewer and water rates go up by more than the expenditure cap your General Fund spending must go down. Thus, if your cap for expenditure growth in one year is $1 million and, in that same year, you must raise your utility spending by $2 million, your General Fund Budget must be reduced by $1 million to stay within the cap. Or you can go to the voters and ask them to increase your cap or declare the utility fees a tax and approve those fees as taxes.

Of course, the small problem with that is that the TEL says, at the ballot box, a majority of all registered voters of the municipality or other local government must approve the change. That, of course, means you lose, as explained in an earlier Bulletin. 10,000 voters registered. 4000-0 vote for it. You lose because you didn’t achieve the 5001 voter support you needed.

This cap on all funds would also put a damper on low-interest loans from the state and federal government. Take an Issue 2 loan for a large capital improvement and your community’s debt payments go up as you pay off the loan. That increased expenditure also counts against your cap, even though the influx of state loan money doesn’t.

But, what the heck! All you have to do, to stay under the cap, is close down your senior citizens programs, so you can replace the bridge that will now safely transport your kids to the school, which can no longer pass a new tax levy given the new “majority” definition, to fix the crumbling roof where your senior citizen programs used to be housed. You stay under the cap, your kids don’t drown and the senior citizens of your community are home, safe and sound.

The full text of the TEL is up on our web site, with a small commentary, for your reading pleasure. We will reconfigure the web site sometime next week, so that we will have a separate TEL section on our Home Page, where we will add additional information as it becomes available. Last week, the OML Board voted unanimously to oppose the TEL.

You may have seen news coverage of a new Brookings Institution report on First Suburbs, those suburbs developed shortly before and shortly after World War II, and their unique problems. If you would like more information on this report or would like to read the entire report, log on at www.brook.edu for more information.

The Eminent Domain Task Force created by SB 167 held its first meeting this Thursday in Columbus. Co-chairs are Senator Tim Grendell and Representative Bill Seitz. Municipalities are represented by Margaret Cannon, Director of Law, City of Shaker Heights. Please check OML’s website for the complete listing of Task Force members and their affiliations. Between now and the end of March the Task Force will be meeting every other Thursday at 1:00 p.m. in Columbus (March 2, 16 & 30). There will also be scheduled regional hearings throughout that period where persons may offer comments on the subject.

The focus of the Task Force will be eminent domain and its role in economic development as a result of the U.S. Supreme Court decision in Kelo v City of New London (2005), 125 S. Ct. 2655. The Task Force will be making recommendations to the General Assembly later this year.

House Criminal Justice, (Chr. Latta, 466-8104), McKinley Rm. (121), 2:30 p.m.

HB 347 CONCEAL-CARRY REVISIONS (Aslanides) To revise the laws regarding licenses to carry a concealed handgun and the authority to carry a concealed handgun under such a license; to limit journalist access to information regarding persons who have such a license and who assert reasonable cause to fear a criminal attack; to provide exemptions from certain carrying of firearms-related offenses for persons in compliance with the Ohio Peace Officer Training Commission's firearms requalification program; to specifically provide a self-defense affirmative defense to discharge of a firearm while in or on a vessel or motor vehicle-related offenses; to clarify when a firearm is loaded for purposes of offenses relating to possession of a loaded firearm while in or on a vessel or motor vehicle and carrying concealed weapons; to provide that the sealing or expungement of a conviction or delinquent child record is an affirmative defense to falsification based on the failure to report the record on an application for a concealed handgun license; and to identify, as a general law and matter of statewide concern, the right of any person, except as provided in the Revised Code, to own, possess, purchase, otherwise acquire, transport, carry, sell, or otherwise transfer a firearm, firearm component, or ammunition. (5th Hearing-Substitute)