Local government cuts affected all communities

January 31, 2013
   
 
The state took local government aid to balance its own budget, leaving local governments with budget problems that have intensified each year. No community went unscathed. The Kasich administration suggested local shortfalls would be averted by elimination of collective bargaining rights, privatization, merging of local governments and collaboration of services, and new casino tax revenues. This has not come to pass. Senate Bill 5, passed by the 129th General Assembly in 2010 to eliminate the rights of public workers to bargain collectively, was decisively defeated in a referendum. Some collaboration efforts are being studied with state funding from a new grant program, and some local privatization efforts have moved forward. Casino tax revenues are nowhere near robust enough to replace what has been lost.

Ohio is a home rule state where many services, including some delivered by state government elsewhere, are provided by local government. Revenue sharing in Ohio has supported local government while allowing for diversity in local public finance. House Bill 153 reduced revenue sharing by reclaiming tax reimbursements promised for local taxes eliminated in earlier state legislation and by cutting the local government fund in half. These cuts totaled $1.086 billion dollars when compared with the two-year, prior biennium.[18]

Communities in 2013 will get 60.5 percent less from the state then they got in 2010, the last year of full funding before the current budget took effect. (See Table 1.)

Local health and human services levies are big losers

An under-reported aspect of cuts to local government was the toll it took on local health and human service levies.  Under Ohio’s hybrid system of state-local financing, some critical functions, like some of the Medicaid match required for some services to the developmentally disabled, are funded at the local level through property tax levies.  The loss of tax reimbursements took an estimated $210 million from local levies for children, seniors, public health and mental health/developmental disabilities (Table 2).  It was generally touted that health and human services were not cut as badly in the current state budget as areas like K-12 education, but the cuts were deeper when the impact of local government cuts is considered.

Local governments struggle with budget shortfalls

Local governments are pursuing a variety of strategies to fill emerging budget shortfalls. Privatization is one way to get short-term cash (although with long-term risk): The city of Cincinnati, facing a budget shortfall of $39 million, is considering privatized parking over the protests of some neighborhoods.[19] Ohio State University sold its parking functions to a private contractor. A team at the Cincinnati Enquirer recently looked at the budget strategies of local governments in Southwest Ohio and found slashed services and new local fees and levies.[20] Similar scenarios can be found everywhere in the state. Policy Matters Ohio collected news accounts and spoke to local officials in every county of the state in the summer of 2012. County factsheets about the impact of the state budget on quality of life issues in communities – public safety, emergency services, roads, mental health, and other services – can be found here: www.policymattersohio.org/county-budgets-nov2012

Three of four casinos slated for Ohio are open and the final one is expected to open in March 2013. Some of the taxes generated from the casinos go to local governments. Last fall, Policy Matters Ohio compared loss from state budget cuts to local governments with anticipated revenues (Table 3). The gains are nowhere near the losses, and based on experience since then, the gains could well be less than projected earlier.

From dimmed streetlights in Mansfield and Mingo Junction to closed recreation centers, curtailed senior services, laid-off school crossing guards, delayed garbage collection and furloughed police and firefighters, current state budget cuts have hurt quality of life and property values in communities across the state. Adequate, fair and sustainable state tax revenues are needed for restoration. At the minimum, no more cuts should be imposed.

Other sections:
Executive summary
Introduction
Budget baseline
Privatization
K-12 education
Higher education
Health and human services
Workforce and training
Tax policy
Summary and recommendations

 


[18] Patton, Wendy, “Intensifying Impact: State budget cuts deepen pain for communities,” November 2012, Policy Matters Ohio at www.policymattersohio.org/county-budgets-nov2012.

[19] “Clifton: Private parking is bad for business,” CityBeat, 12/7/2012 at http://bit.ly/VtNCZZ.

[20] Coolidge, Sharon et.al., “Ohio budget cuts reaching deeper into local governments pockets,” January 16, 2012, The Cincinnati Enquirer, Cincinnati.com at http://news.cincinnati.com/article/20130116/NEWS010801/130116001/.

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