Published Online: September 22, 2009

Ohio Slots Ruling Casts Pall Over K-12 Funding

Ohio officials are weighing their next move after the Ohio Supreme Court dealt a huge blow to Gov. Ted Strickland, the legislature, and public school advocates by ruling that the legalization of slot-like machines at horse-racing tracks is subject to a statewide referendum.

The ruling yesterday zapped—at least temporarily—about $850 million from the state’s fiscal 2010-2011 two-year budget, money that was to pay for K-12 education.

When the legislature approved the state budget in July, it plugged a deficit by cutting $2 billion from its spending plan and by adding projected revenue from new video-lottery terminals, similar to slot machines, that were set to appear later this year at the state’s seven horse-racing tracks.

But state residents, who organized under LetOhioVote.org, filed a petition with the secretary of state’s office asking that the issue be put to voters in a statewide vote. After the secretary of state rejected the petition, the group took the case to the state Supreme Court.

Now left with a potential budget gap, Ohio policymakers are in a pickle.

Gov. Strickland, a Democrat, said his office needs to review the ruling before determining his next steps.

“We decided to pursue legislative authorization of video-lottery terminals to help fill a state budget gap caused by the national recession without increasing taxes on working people or businesses during these economically challenging times,” he said in a statement.

The ruling comes at a particularly bad time for the governor, who is trying to overhaul the state’s school funding system based on a formula that officials say directs money to where it’s needed most.

At issue in the court case was whether the legalization of video-lottery terminals fit into a narrow exception in the law for referenda—an exception that allows the legislature to pass laws related to appropriating state funds without facing a potential voter veto through a statewide ballot.

The 6-1 ruling, which declared the video-lottery terminals are subject to the referendum process, made clear that the majority of justices knew how much money was at stake.

“We are not unmindful of the effect our decision may have on the state budget,” Justice Terrence O’Donnell wrote for the majority. However, he said, “our own constitutional duty is to ensure compliance with the requirements of the Ohio Constitution irrespective of their effect on the state’s current financial conditions.”

Justice Paul E. Pfeifer, the lone dissenter, disagreed. The video-lottery terminals are “no mere legislative add-on, snuck into a mammoth bill,” he said. “Instead, the legislation is at the very heart of the budget bill, at the very heart of how Ohio is going to pay for its spending over the next two years.”

Meanwhile, LetOhioVote.org said it has resubmitted its petition, with more than 3,000 signatures, to the secretary of state’s office to place the issue on the November 2010 ballot.

Vol. 05, Issue 29

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