Ohio Budget Preview: Impacts to Local Governments


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The State shares a significant portion of the revenue it collects from taxes, the federal government and fees with units of local government. One mechanism for revenue sharing is the Local Government Fund, through which counties and municipalities receive a set percentage of the collections from the State’s General Revenue Fund. As a result, payments to local governments rise and fall in tandem with overall revenue collection. In the strongest signal yet that the Ohio legislature intends to break this promise and disproportionately cut funds to local government by ignoring the statutory percentage share, Speaker Batchelder recently told a group of local officials to expect significant cuts in the upcoming budget.

Causing further uncertainty to local governments is the lack of a permanent requirement in law for the State to reimburse them for lost revenue from the now-repealed tangible personal property tax, which was eliminated as part of 2005 tax reforms. The past two budgets included temporary measures to provide these reimbursements, but given the budget deficit forecast for 2012-2013, the legislature are likely to refuse to provide reimbursement in this budget.

The state library fund, which also receives a statutory percentage of general revenue had its funding cut during the last biennium, and is very likely to see its share of revenue even further reduced.

As a way to appeal local governments about the impending cuts, legislators have promised to undertake collective bargaining reform, promising labor contract savings in exchange for cuts in state funding. School districts have also been warned to expect large cuts in education funding, but state leaders appear to be ready to give them a number of concessions in return, such as an increase in the number of calamity days, reduced accountability, elimination of all day kindergarten and other requirements.

Other issues affecting local governments that may be debated in the context of the state budget include:

  • Rollback of collective bargaining laws for public employees, eliminate binding arbitration for police & firefighters, prohibiting the use of seniority when conducting layoffs, prohibiting local government from picking up an employee’s personal pension contribution, allowing the hiring of replacement workers during strikes and requiring public employees to pick up at least 20 percent of the cost of health insurance
  • An end to, or limits on double-dipping, the practice of allowing a public sector worker to retire, collect a pension and be rehired into the same or similar position, collecting a salary.
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