Triple whammy

The new state budget helps pay for tax cuts for the rich by slashing aid to local governments for vital services


The pernicious effects of the new state budget will afflict a wide range of Ohioans. Middle-income, working-class, and poor families will watch tax cuts largely benefit the state’s richest residents. Women will lose some reproductive freedoms, and potentially find their health threatened, because of harsh new state restrictions on abortion rights.

Public school districts will get less state aid than they received four years ago, as demands for classroom services grow. Hundreds of thousands of working-poor Ohio households can’t get health insurance coverage from the state Medicaid program, because Republican state lawmakers would rather advertise their extreme opposition to Obamacare.

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Now add to that list of budget losers local governments that are enduring massive cuts in state revenue sharing, even as other policies in the new budget will make it more difficult for them to win property-tax levies.

The new budget starts to eliminate a state subsidy of as much as 12.5 percent of Ohioans’ local property tax bills. Phasing out that tax rollback, enacted in the 1970s, will raise the local cost of new or replacement levies sought by communities and school districts, starting this year. Tax renewals are not affected.

Ohio Senate President Keith Faber (R., Celina) says the tax shift creates “truth in taxation.” He responds to criticism that millages will become harder to pass: “Are you for property tax levies? I’m not.”

Do he and his Statehouse GOP colleagues favor paying for essential local services? Not as long as they can balance their own budget, and cut taxes, by continuing to stiff local governments and schools on state aid.

The budget limits new eligibility for the homestead property tax exemption to elderly and disabled homeowners who make less than $30,000 a year. That stingy standard also is likely to generate greater voter resistance to local levies.

Putting more pressure on levies to pay for local services is bad enough, as property values in much of Ohio recover slowly, if at all, from the Great Recession. But the liberal advocacy group Policy Matters Ohio identifies two other areas in which the new state budget initiates or maintains policies that hurt local and county governments.

Policy Matters notes that the new two-year budget reduces state aid to local governments by $95 million from the previous budget, and by fully $1 billion from the budget before that. These cuts are largely the result of huge slashes made by the legislature and Gov. John Kasich in the Local Government Fund, which the state created in the 1930s.

The new budget also maintains the elimination of Ohio’s estate tax, a policy that mostly benefits the state’s wealthiest heirs. The estate tax provided $625 million in revenue for local governments in the last budget before it disappeared at the start of this year.

Policy Matters calculates that overall, local governments will get $1.5 billion less in state support than they did from the final budget of former governor Ted Strickland’s administration; Mr. Strickland left office at the end of 2010.

Revenues from Ohio’s four new casinos, including Toledo’s, won’t come close to making up that loss. Neither will savings from such things as local governments’ sharing of services.

The potential effects of the loss of state aid, in Toledo and elsewhere, include reductions in the numbers of police officers, firefighters, and other emergency responders, fewer programs for young people and senior citizens, and worse local services. These cutbacks will threaten property values and harm families.

It’s hard to see how any of this will strengthen Ohio’s economy. When they campaign for re-election next year, Governor Kasich and state lawmakers might explain the benefits of their repudiation of commitments to local governments that go back decades.