Communities across the state are seeing evidence of Ohio’s rebounding economy, which produces the added benefit of more revenue for our local governments. You can see this in news headlines that report “revenues up, expenses down,” and “elimination” of local deficits.
This growing trend is reason to celebrate, given the tight budgets that local governments have faced in the wake of the recent recession. It also reminds us of the powerful, positive impact a thriving state economy can have at the local level.
Ohio’s $7.7 billion budget imbalance early in 2011 was resolved without raising taxes. Since then, Gov. John Kasich and I have worked with state lawmakers to enact reforms that will help Ohio’s economy expand and achieve meaningful, long-lasting economic growth.
Efforts to bring about fiscal stability required decisive action to see that state government tightened its belt, cut government bureaucracy, and — among many other cost savings — reduced state tax-dollar subsidies to local governments.
Some local officials might see this drop in state support as leaving their glass half-empty. But here are five facts that explain why the glass is more than half-full:
● Of every dollar collected in state taxes, state government returns 85 cents to Ohio’s schools, communities, counties, public libraries, and other local agencies — generally with few if any restrictions.
The state keeps just 15 cents of each tax dollar to meet its own needs: operating state parks, prisons, public colleges and universities, and mental health programs, and providing environmental protection and dozens of other essential services.
● Local governments and school districts are set to receive about $14 billion in each year of the new two-year state budget. Despite news media’s focus on the Local Government Fund, that subsidy will amount to $342.7 million next year — just 2.7 percent of total state payments to local communities.
● The cut in the Local Government Fund was a far better alternative than the consequences that communities and their residents would have seen if the state’s budget shortfall had not been addressed.
● When Ohio faced an unprecedented budget imbalance, state government didn’t ask local officials to do anything that it wasn’t doing itself: making the tough fiscal decisions needed to manage its dollars wisely during a worldwide economic crisis.
The Kasich administration made significant cost-saving reforms in key budget areas — including a reduction of state bureaucracy by about 9 percent — without hindering the delivery of services to Ohioans. Even as we found cost savings in many state programs, we maintained critical funding for Ohioans with mental illnesses and developmental disabilities.
These actions made it possible to balance the state budget without raising taxes, which would have hit every Ohio citizen, while sparing local communities from more drastic subsidy cuts.
● Economic growth is the best way to help communities. This is Governor Kasich’s plan, and it’s working.
A stronger statewide economy is spurring growth in local income-tax and sales-tax revenue. This, in turn, is providing more resources for vital services across the state, without the need for a wide-scale increase in new levies.
In many communities, local tax revenues that help fund schools and local government are well above the levels of just a few years ago. That’s proof that a growing economy is the best way to provide the resources that government needs.
Like every family and business in Ohio, our state and local governments have faced tough times in recent years. By having the courage to make tough choices, the wisdom to manage our finances effectively, and the foresight to make government work smarter, Ohio is getting back on track.
We’re seeing the benefit of these efforts in Ohio’s improved credit outlook, improving employment situation, and rising tax revenue across much of our state. We’ve got more work to do, but if we hold steady with policies that are clearly working, we can see this success continue to produce the good results that Ohioans need and deserve.
Mary Taylor is lieutenant governor of Ohio.