Budgets in crisis

The budgets of local governments took massive cuts in the last two years as Ohio worked to repair an $8 billion hole in the budget, and now a proposal is in place to restore some of that money.

The Ohio County Auditors Association and the Ohio County Commissioners Association have submitted a proposal to Ohio legislators to return a portion of those dollars to the townships and villages of Ohio counties so they can provide services to their residents and taxpayers.

Washington County Auditor Bill McFarland was among those who worked on the proposal, which asks for about $400 million in additional funding for local governments.

The state’s rainy day fund is expected to grow to the maximum allowable level of $1.4 billion and beyond to what would be $1.8 bullion, triggering an automatic income tax cut, McFarland said.

The proposal still would allow the rainy day fund to max out, while giving some relief to local entities, he said. The local governments had taken a total 50 percent cut to help plug Ohio’s $8 billion deficit but that full amount is not being sought, McFarland said. Instead, the proposal asks for the amount that exceeds the rainy day fund cap.

New Matamoras Mayor John Schmidt said his village on the eastern edge of Washington County has had to do much more than tighten its belt.

“They put us on our knees,” he said of the state cuts.

“We need the money,” Schmidt said. “We are hurting bad. We are pinching pennies like never before. We are keeping police but cutting everywhere we can possibly cut.”

Schmidt said he and everyone on village council donated their salaries to the village to keep it solvent.

“Before any penny is spent, it goes before council,” Schmidt said. “We are down to pennies. That’s how close it is.”

In 1935, Ohio enacted a 3 percent sales tax at the same time the inside millage on property taxes dropped from 15 to 10

mills, McFarland said. The state then established the Local Government Fund to share funds with local governments to help make up the difference to provide service to their constituents.

“It is a partnership between state and local governments to provide services to the residents of the state of Ohio,” McFarland said.

The downturn in the economy and lower interest rates enacted by the Federal Reserve spawned by the Great Recession that hit the U.S. in December 2007 brought on a reduction in sales and use taxes, real estate transfer fees and investment income. Because of those conditions, the Local Government Fund took a $100 million hit, according to “Funding the Provision of Service to Ohio’s Citizens – The Partnership Between State and Local Governments,” prepared by the County Auditors Association and the County Commissioners Association.

Local governments all seem to share similar stories. Cincinnati is down 159 police officers since 2009. Portsmouth City Police is left with six unfilled positions. Marietta City Schools was cut by 8 percent between 2011 and 2013.

After Republican John Kasich defeated Gov. Ted Strickland, a Democrat, in 2010 and was sworn in as Ohio’s 69th governor in 2011, he was faced with an $8 billion, or a 17 percent, budget hole. He announced his budget plan in March of that year.

Kasich ordered a reduction in funding for libraries and a 50 percent reduction in the Local Government Fund during the 2012-13 budget to plug that hole and balance the budget, which is required by the Ohio Constitution. Kasich has been able to supplement the state’s rainy day fund by almost $2 million, thanks to the economic recovery in many sectors across the state since 2007.

As a result, less money was filtered from the state to local townships and villages. The village and townships have had to reduce services, such as mowing or dust control, or employee hours or whole positions altogether.

Mary Proctor, 74, of 1787 Reese Road, Fleming, said she thinks her Barlow Township trustees are in need of local government funding to help with the cost of mowing and road maintenance and repair.

“They have been fixing holes in the roads,” she said. “That would be bad if they didn’t get that done.”

In 2011, the Associated Press reported Kasich and groups in support of the budget cuts began to encourage villages and townships to share services or to collaborate on projects to reduce the need for revenue wherever possible.

“It’s hard to make them understand in Columbus how we live in southeast Ohio,” said Belpre Township Trustee Asa Boring. “We have cut back on overtime and some of the purchases of equipment we were planning to buy. We had plans to buy and replace a dump truck that was needing repairs beyond what we expected. That was delayed until trustees could see how this budget issue would turn out.”

In neighboring Decatur Township, the budget takes an even harder hit without the businesses and industry in Belpre Township.

“We got about $32,000 the first year I took office,” Fiscal Officer Tracey Joseph said. “This year, we are expected to get $18,000 to $19,000.”

“Any cut the state makes hurts us,” Joseph said. “We decided not to do dust control last summer. We felt like our budget didn’t allow us to do dust control. We spend $26,000 per year on dust control.”

In Barlow Township, increasing real estate tax collections have helped even out the cuts, said fiscal officer Jack Marks, but there is still a need for more funding.

“Most of our budget is used to repair roads,” he said. “With the rising cost of material and labor we are struggling to keep the roads in good condition.”

The goal of the proposal is to have state revenue earmarked for local governments fluctuate by a standard percentage as state revenue fluctuates. The proposal also calls for a minimum of 33 percent difference in the Local Government Fund.

“Let them share in the good times and the pain,” McFarland said.

Ohio Rep. Debbie Phillips, D-Albany, said she offered an amendment in House committee to stem the continuation of the deep cuts from the previous budget.

In April, Phillips voted against a state budget bill which she said puts more of a burden to supply services on local governments while giving tax breaks to the wealthiest Ohioans.

“If enough people speak out against this, it should be achievable,” Phillips said, urging residents to talk to their state senators about the issue.

Phillips said the measure should be voted out of the Senate this week.

Not everyone in the legislature is on board with the proposal.

Ohio Rep. Andy Thompson, R-Marietta, said he can appreciate that local governments need more money and that the legislature is in an assessment mode.

“We are waiting to see how the revenue forecast looks and what the senate proposes,” Thompson said. “Our financial situation is kind of tenuous. We’re being crunched with Medicare and President Barack Obama’s health care. It’s difficult to be able to commit to local government whatever they feel they lost.”

Rob Nichols, a spokesman for Gov. Kasich’s office, said the Local Government Fund is just one sliver of things the states does to subsidize the $1.4 billion per year. He said the reduction this year is $200 million, or just 1 percent

“People are always quick to jump on the Local Government Fund,” he said. “The reduction this year is $200 million, just 1 percent. It would be hard pressed if local governments couldn’t wring out 1 percent in the deficit.”

Nichols said the Kasich administration always has been about job creation and that 147,000 private sector have been created. Local governments are getting a increase in local revenue because of the jobs created, he said.

“The state in 2011 gave 14 local governments $1.7 million, appreciably more than what was missing from the rainy day fund,” Nichols said. “Get people working. Get people paying taxes.”

What frustrates officials in support of this Local Government Fund proposal is how some state leaders think it is easy to compare using the state general fund to local or county funds, said McFarland.

“To throw all those other funds in there that have specific purpose without discretion for their use, that’s not the issue,” McFarland said. “It’s not about the whole great big enchilada. I can’t the county sewer fund and pave a road. I can’t take MR/DD fund to pave a road. I can’t take the County Home levy and pave a road.”

A recent Ohio County Auditors Association study of state funding by county was based on figures from 86 of the 88 counties in Ohio compiled by the Delaware County auditor. The study found that if tangible personal property reimbursement and public utilities personal property reimbursement only were added to the county general fund, funding dropped 57.1 percent when added to the local government fund reduction.

McFarland said he considers that to be more than an insignificant reduction.

Becky Minder, 46, has worked at the New Matamoras branch of the Washington County Public Library, 100 Merchant St., for eight years and lives just outside town in Grandview Township.

Minder said she thinks the proposal to return more money to townships and villages needs to be looked at and approved.

“They need more at the local level,” she said.

Of particular concern was making sure the area stays safe and the streets clean, Minder said.

Not too far away, in Salem Township, trustees have had to deal with about $25,000 in cuts in money coming from the state.

If the funds were restored, Fiscal Officer Marcella Fleming could start paying for chip and seal for the roads and dust control.

“For the past several years, our township could only offer dust control,” Fleming said. “This year, it was offered to our township residents with the cost being put upon the people.”