COLUMBUS -- Gov. John Kasich has boasted that the budget he unveiled last week does not raise state taxes, but local government and school officials charge that billions in proposed cuts set them up to take the fall to do what the governor won't.
Local governments would lose half a billion dollars from cuts in revenue-sharing in the next two-year budget. That is on top of expiration of one-time federal stimulus dollars built into the current budget for schools.
The Kasich budget also proposes accelerated phase-out of state payments aimed at keeping local budgets whole from the state's 2005 business tax reforms. Local libraries, some of which also have their own local tax levies, would be cut 5 percent.
The proposed budget would push costs for more prison inmates and other services down to the community level. It remains to be seen if increased state funding for those programs will cover costs. Other human service programs also would suffer cuts.
"What he's actually doing is forcing the service mandates down to the townships, cities, and counties, who will have the very difficult choice of cutting services to the point that they're not effective or finding the revenue," said Pete Gerken, a Democrat who is president of the Lucas County board of commissioners. "Third, it may possibly be part of the plan of the administration to starve local governments to see how much they can collaborate together."
Mr. Gerken's comments were more pointed toward tax increases the day the governor unveiled his budget: "He doesn't want to raise taxes; neither do I. It seems like he's trying to tilt the table to force us."
But with an anti-tax mood sweeping the country, it seems unlikely local politicians will try that route. Miami-Dade County Mayor Carlos Alvarez was recalled last week after outrage over a local property tax increase. It was used, in part, to provide pay raises to unionized city employees.
Mr. Kasich has argued that local governments have to be concerned about their own economic competitiveness, a factor in local decisions to ask voters to raise property taxes. "Let me just say to local governments, you raise taxes, you've got a chance of driving out jobs," the Republican governor said last week during his televised town hall meeting to sell his budget to Ohioans. "Folks, government is not going to solve our problems here," Mr. Kasich said. "We need to create an environment of job growth and risk-taking. Do I like to have to do this? No. But I kind of can't figure out why revenue sharing was ended by the federal government, which by the way has us $14 trillion in the hole, and why we weren't able to end revenue sharing here. Politics."
Although there is an increase in direct state subsidy aid for schools, the loss of federal stimulus dollars and the stepped-up phase-out of the state's commitment to compensate for the loss from the 2005 business-tax reforms mean the state's 613 districts will receive $3.1 billion less under the Kasich budget.
"While school districts had been preparing for a reduction in state aid, the realities of the proposal are alarming," Barbara Shaner, executive director of the Ohio Association of School Business Officials, said. "Districts will be forced to shift a bigger burden for funding their education programs to local taxpayers, while the public is being told that state funding for education is increasing," she said. "Even though Gov. Kasich says stimulus funds should not have been used for operations, many districts were forced to do so to avoid drastic cuts in programming and staff."
The state has yet to release a district-by-district breakdown on how each school district would fare after state funds are funneled through a formula that, among other things, sends a greater share of support to poorer schools. Toledo Public Schools was already expecting a projected $37.7 million budget deficit next year before the budget proposal was announced.
In talking to lawmakers last week, Mr. Kasich's budget director, Tim Keen, conceded there probably will be local tax levies as a result of the budget.
"To me, it's not a definite state of affairs that districts must go to the ballot and pass levies," he said. "Perhaps districts should look at their operations and look at their costs. Perhaps they should avail themselves of some of the tools that the General Assembly is in the process of providing them and are contained in this budget bill to contain their costs."
The tools that the administration contends will help schools and local governments to ease the pain of budget cuts include:
● Senate Bill 5, the controversial measure expected to pass the General Assembly that would prohibit strikes by public employees, restrict what they can negotiate, force employees to pay at least 15 percent of their health-care insurance, and prohibit governments from paying part of employees' share of their pension contributions.
● A provision in the bill requiring employees to pay 2 percent more of their wages toward their pensions while making a corresponding reduction in the government employer's share, a move Mr. Keen estimated could save $1.1 billion.
● A bill, sponsored by Rep. Randy Gardner (R., Bowling Green) and now on Mr. Kasich's desk, that would eliminate unfunded mandates such as all-day kindergarten on school districts enacted two years ago as part of former Democratic Gov. Ted Strickland's "evidence-based model" of K-12 education.
● An option for local governments and schools to pool the risk of all of their employees under one statewide health insurance program, something Mr. Kasich referred to as the "Wal-Mart approach."
● The easing of barriers to local governments and schools' sharing the cost of such things as vehicle maintenance, printing, revenue collection, and other functions.
● A reduction in the obligation for governments and schools to publish legal notices in local newspapers by creating a single statewide Web site where they could publish meeting notices and make other announcements. They would still have to publish a smaller notice in the newspaper directing readers to the Web site.
The state's library fund is supposed to send 2.2 percent of what it collects in general fund taxes, but that has been routinely set aside in recent years. The Toledo-Lucas County Public Library receives some support from a property tax levy, but Executive Director Clyde Scoles said it's too soon to know whether the state cuts would cause it to ask for more.
"We won't know until we see the [bill] language and numbers," he said. "Our current levy doesn't expire until [the end of] 2012. We've reduced hours and staff by 27 percent at a time when libraries are being used more and more." He noted the library has also suffered as a result of reduced property valuations, which affect what it collects from the levy.
"Of course, this is going to lead to local tax increases," said freshman Rep. Michael Ashford (D., Toledo), a member of the House Finance and Appropriations Committee holding hearings on the budget proposal.
"Unfortunately, it will weigh on local governments to force them to downsize and get rid of their public safety forces, which is exactly what's happening. Cities depend on state support to keep public safety at a maximum."
A former city councilman, he said public safety accounts for roughly 70 percent of the city's budget. When asked if he would support a tax increase to make up for cuts in the Local Government Fund, he said it's too soon to say, given that the budget process is just beginning.
But what may be even harder for local politicians, especially local Democratic officeholders, to agree to is what Governor Kasich is hoping to hand them -- the ability through Senate Bill 5 to rewrite contracts with public employee unions to save taxpayers millions and prevent the need for local tax increases.
Mr. Gerken, the local county commissioner, is also a former United Auto Workers official, and he told Ohio House members last week he didn't need the help they were offering.
A final budget must be on Mr. Kasich's desk before the next fiscal year begins on July 1.
Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.
First Published March 21, 2011, 4:33 a.m.
