House proposes adding $80 million to ease budget pain

4/30/2011

COLUMBUS -- Proposed budget changes made by a House committee try to ease some of the immediate pain of local governments and schools, but most of the promised help would come from future budgets.

"Local government entities are being asked to take a reduction in funding of more than two and one-half times the percentage of the projected budget deficit," Robert Bates, a suburban Columbus assistant fire chief representing the Coalition of Local Governments and Services, told the House Finance and Appropriations Committee on Friday.

"We do not believe that this is fair," he said. "Furthermore, a disproportionate share of the overall reduction needed to balance the budget is being passed along to local government entities."

The committee Thursday proposed a litany of changes to the two-year, $55.5 billion budget unveiled by Gov. John Kasich, which had to start with a mission of closing a $7.7 billion revenue shortfall.

The House proposal would add $80 million over two years to the state basic subsidy pot for K-12 schools and promises that no district would see a cut in direct state aid of more than 20 percent. The plan also dangles $50 million in incentives for local governments to join forces in providing public safety and other services.

But the bulk of the relief, should this version of the budget pass, would come in future budgets.

Mr. Kasich's multiyear proposal to accelerate the rate at which local governments and schools would be weaned off state replacement revenue from the loss of revenue from a pair of now-defunct taxes on businesses and utilities would proceed as planned for the next two years. But it would be suspended beginning in 2014.

Six years after the 2005 tax reform package began to phase out those two taxes, lawmakers are still talking about a long-term plan on how, or even whether, to make local entities whole for the lost revenue.

"When the action was taken in 2005, there were statements made -- and I was one of them -- that the General Assembly didn't have the time to [propose a tax replacement] …," said the committee's chairman, Rep. Ron Amstutz (R., Wooster). "That, in my view, continues to be the case."

Local governments and schools still would have to deal with the loss of one-time federal stimulus that the state is largely not replacing as well as proposed major reductions in local government revenue sharing funds.

The latest version of the bill also calls for the elimination of Ohio's tax on estates valued at about $338,000 or more starting in two years. Eighty percent of that revenue goes to local government coffers.

Rep. Michael Ashford (D., Toledo), a committee member, said he doesn't take comfort in promises that issues such as replacing the lost business tax revenue will be dealt with in the future.

"We have to deal with it now [in the House amendments], rather than say later down the road we'll save it," he said. "That's like saying everything's going to be OK in three years, but we don't know that, and we're taking away everything now. That's exactly what they're doing."

Hearings on the latest version of the bill will continue into next week. The committee is expected to vote Tuesday to send the plan to the House floor, where a final vote is expected Thursday. That will start Senate debate on a spending plan that must reach Mr. Kasich's desk by June 30.

Reps. Randy Gardner (R., Bowling Green) and Barbara Sears (R., Monclova) succeeded in having a provision added to the bill that would open a two-year window for local governments in Wood and Lucas counties to ask voters whether they want to withdraw from participation in the Toledo Area Regional Transit Authority.

"The question is, should elected officials in communities in Wood and Lucas county have the freedom to ask the people they represent whether they want to remain in a permanent contract and a permanent tax structure or seek a different way to provide transportation services," Mr. Gardner said.

He said those without mass transit services also could use the opportunity to opt into TARTA if they want to. The window for such a vote would close with the general election of November, 2013.

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.