Local governments irked by Kasich touting Ohio’s robust rainy day fund

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Local governments irked by Kasich touting Ohio’s robust rainy day fund

Ohio Gov. John Kasich is touting his buildup of the state’s $2 billion-plus rainy-day fund in his presidential campaign, and that irks some Hamilton officials and leaders of local governments across Ohio, who say he did it by passing the tax burden down to them.

They’re now forced to seek tax levies, such as the street-resurfacing levy Hamilton is considering putting on the ballot in 2017.

On the other hand, conservative organizations like the Buckeye Institute for Public Policy Solutions, which prefer to see taxes as low as possible, applaud moves this decade by Kasich and state lawmakers to push taxing decisions down to the local level, saying local taxpayers should make decisions about how much their cities, counties, villages and townships spend.

During a recent Hamilton City Council committee meeting where a proposed 2017 street-resurfacing levy was discussed, Vice Mayor Carla Fiehrer and Finance Director Tom Vanderhorst complained about the revenue losses the city has suffered because of elimination of the estate tax (also known as the “death tax”) and the state’s deep cuts to amounts of local government fund and tangible personal property tax that local governments receive.

Hamilton’s budget “is doing respectable,” Vanderhorst told council. “We’re not losing ground, we’re not gaining ground.”

On one hand, income-tax collections were up 8.45 percent last year over 2014, he said. On the other, real estate taxes were down 5.3 percent. Meanwhile, the city received no tangible personal property taxes, down from $231,000 in 201o; and $960,000 in local-government funds, down from nearly $1.8 million in 2011.

Fiehrer said she chafed during the Feb. 25 GOP debate, watching Kasich “sitting on a stage last night, talking about what a great job he’s done in Ohio. Maybe it’s good for you,” she said.

Vanderhorst said the changes have been painful for cities like Hamilton and Springfield, where he used to work. Springfield officials are considering several tax-increase options to balance their budget. With revenue losses, many local governments are facing the same situation, and also may suffer from downgrades in their credit ratings, which can significantly increase their costs of borrowing for capital projects.

Kent Scarrett, executive director of the Ohio Municipal League, said citizens of local governments “don’t know why this is happening — they just see that their services are suffering, their community is broke, when it didn’t used to be broke.”

“It was always kind-of like, ‘We didn’t have much, but we weren’t broke,’” Scarrett said. “Now, they’re broke. And our local leaders are saying, ‘Look at what the state’s doing to us. Look at the partnerships that they’re abandoning, and look at the new challenges that the’re putting on us, for certain taxpayers that want these local obligations lifted from them.’”

Further cuts are coming because of legislation that passed in late 2014 and takes effect this year. Among those impacts are changes to municipal income tax. About 600 municipalities have such taxes, which typically raise 60-70 percent of their general revenue funds.

“You couple those four hits and the stagnated economy, and our communities are continuing to find their financial footing has been compromised by the things that the state has done,” Scarrett said.

On the other hand, Greg Lawson, a policy analyst with the Buckeye Institute, a conservative think tank, applauds the changes, in cases where the taxes disappear, as opposed to merely being consumed by the state, rather than by local governments.

“We prefer to see the state taxes reduced, and if local governments want to do certain things, they should raise it at the local level,” Lawson said. “We think that by shifting it down to the local level, what we’re actually doing is empowering local voters and local residents to make decisions at the local level.”

“Local residents will know whether they want the other fire station, or the other fire truck, or do they like the collective bargaining agreements that the local government has made with various individuals that work there?” Lawson said. “They then make that choice.”

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