Former lawmaker proposes aid plan for smaller counties

1/3/2018

COLUMBUS — A Republican former state representative and local government advocate on Wednesday proposed a way to supplement aid to counties whose state support has declined in recent years while demand for their services has increased.

Gene Krebs, a former county commissioner currently running for a Dayton-area state Senate seat, proposed creation of a state-fueled equalization fund totaling $110 million over two years to attempt to fill the gaps primarily for smaller, rural counties struggling with stagnant local tax bases.

The idea is to supplement, rather than replace, the Local Government Fund, a formula-driven fund through which the state shares part of its tax collections. The fund was slashed by half in Gov. John Kasich’s first budget and, while it has seen growth since then, has yet to fully recover.

“Economic development and tax revenue is mistakenly believed by many to be like soft butter spread on warm toast. It is evenly distributed,” Mr. Krebs said. “In reality, it is more like cold butter on Wonder bread and is very lumpy. This is an effort to get a little butter on every spot of Ohio.”

The money could be spent only to fight Ohio’s opiate-addiction epidemic, economic development efforts, and for general county purposes. No more than half of a county’s share could be spent for any one of these three purposes. The program would be designed to last 10 years in hope that small rural towns in those counties would see economic growth during that time and less demand on local social services.

Like the state’s school-funding formula, the idea is to help supplement aid to counties that can’t generate the same kind of revenue as their more urban and suburban counterparts.

Mr. Krebs said counties are increasingly dependent on local piggyback sales-tax revenue, making rural counties more vulnerable as major shopping occurs at outlet malls in larger areas beyond their borders. He pointed to LGF cuts in 2011 and 2012 and losses of revenue from the state’s repeals of the estate tax and other business taxes.

Currently, counties and public transit authorities that levy local sales taxes are facing new losses as a result of the federal government nixing the state’s sales tax on managed-care providers doing business with Medicaid.

The state recently replaced that tax with a fee on all managed-care services, including those not affiliated with Medicaid, a move that fixed the state’s revenue problem. Lawmakers have appropriated partial replacement revenue for local governments for two years but have offered no long-term fix.

At the same time, Ohio has relied more heavily on counties and other local governments to address the opiate crisis and other social issues.

“It’s my goal that this proposal will be used as a forum for candidates for the Senate, candidates for the House, and gubernatorial candidates to debate and think about how we deal with our local governments,” said Larry Long, former executive director of the County Commissioners Association of Ohio.

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