Plan could block funds for college football

Columbus- Thanks to the passion of Buckeye fans, Ohio State sports pay for themselves without the help of tuition or tax dollars.

But a November ballot proposal to curb government spending could trap millions of dollars that flow to the university from ticket and merchandise sales, TV rights and bowl proceeds in bank accounts that can't be spent.

A growing number of fiscal experts also believe the same could be the case for an array of government-tied programs that operate like businesses. Think public hospitals, university bookstores, the lottery.

"There's no escape," said Jon Honeck, a research analyst for Policy Matters Ohio. "There's no enterprise status in the TEL [Tax and Expenditure Limitation]. Outside of full-scale privatization, there's not much of a way around it."

Secretary of State Ken Blackwell has championed the so-called TEL as a way to rein in what he sees as unchecked government spending and cut people's taxes.

If approved by voters, it would restrict Ohio's state spending to 3.5 percent growth a year, or the combined rates of inflation and population growth, whichever is higher.

David Langdon, the Cincinnati lawyer who helped write the proposal, acknowledged the TEL's impact on Ohio State's athletic revenue was not specifically considered when the language was drafted.

He said, however, that he does not believe use of the money is an "expenditure," in the technical budgetary sense, and therefore it wouldn't be restricted.

"We would suggest that that's a poor interpretation," Langdon said after researching the matter for several days. "To just go to Webster's dictionary and pull out the definition of 'expenditure' would be the wrong approach."

Matt Filipic, vice president for business and fiscal affairs at Wright State University, said the potential problem lies in the proposal's broad definition of state revenue.

It includes not only tax collections but also fee, license and "sales" income.

He said it may be up to the courts to decide whether "sales" include patient care at university hospitals, copyrights on intellectual property and, yes, college football tickets.

The money could potentially come in, Filipic said, and then be restricted from going out. And eventually it could even be collected in a "sweep" of state accounts laid out in the proposal and sent to Ohio taxpayers - though it did not come from taxes.

"That's probably unlikely, but I'd like to tell people like my president and my board that it's impossible, and I can't do that based on the wording," Filipic said.

The language has already been approved for the fall ballot.

Bill Shkurti, a former state budget director and now senior vice president for business and finance at Ohio State, said the proposal's wording leaves open many questions - including how bond proceeds, hospital revenues and athletic profits would be handled.

He said revenue from Ohio State football is pumped back into the university's self-sustaining athletics program - the wealthiest in the nation - to help support football, basketball and a host of less-profitable offerings, including women's sports.

The football Buckeyes' success in recent years - including winning the 2002-03 national championship - has also boosted sales of trademarked Buckeye goods, school rings and license plates by millions, Shkurti said.

All that money is reinvested in sports, university libraries, student affairs and college scholarships.

"A bowl bid gets our logo and trademark out nationally, and the university gets a return on that," Shkurti said. "When people buy OSU memorabilia, they choose to do that, and we have a very good trademark and licensing program to return that money to the university. It would be a tragedy if this amendment derailed that."

In Colorado, a chief model in drafting Ohio's TEL, entities that get less than 10 percent of their income from state taxes were exempted from a state revenue cap known as the Taxpayer Bill of Rights, or TABOR.

Robert Moore, vice president for budget at the University of Colorado, said leaving such entities out was seen as the best way to encourage government to depend less on taxes.

"The question that was asked was, is it a tax, or was the name or power of the government used to impose this?" he said. "It didn't try to go after earned revenue."

Henry Sobanet, who directs Colorado Gov. Bill Owens' Office of State Planning and Budgeting, added that Colorado imposes a revenue limit - and that a spending limit could function differently.

"If it's an expenditure cap, it would make a difference," he said. "Without reading your law, say you had a really big game at a school and higher concessions and sales of the mascot, slogans and all those things. You'd just have money pile up in the bank."

Langdon again disagreed. He said that the TEL is aimed at reining in the Ohio General Assembly's spending and that it has "no control whatsoever over how Ohio State spends the proceeds from football tickets."

He said abiding by a strict definition of state expenditures will suffice to protect the money from being controlled by TEL restrictions.

Honeck reads the ballot language differently. He believes that if Buckeye - or Bearcat or Flashes - football grows, something else in the state budget will have to shrink accordingly. Think prisons and roads, social services, public schools.

"The four-year universities are not going to have a separate spending cap just for the institution. They'll count under the state cap," Honeck said. "If the Buckeyes have a big year and those revenues go up, that could start to squeeze the general funds of the state."

State Sen. Jeff Jacobson, a Dayton-area Republican and former Senate Finance Committee member, said he doubts state lawmakers would cut social programs in favor of college football.

"Either this means state programs get cut or Ohio State's football team goes down the drain," he said. "I'm not sure why Secretary Blackwell would want to defend either of those outcomes. Both are losing propositions with the voters."

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