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As Ohio’s Local Governments Face Austerity

Posted by on May 21, 2012
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Townships and other municipalities throughout Ohio are the fiscal “canary in the cage.”  Budget cuts at the state level trickled down to municipalities, affecting every community in conjunction with the impending elimination of the Ohio Estate Tax.  Both of these occurrences are necessary and overdue, yet local officials in townships and villages are feeling the pain first and unlike state or federal government, everyone in the community knows these folks on a personal level, producing instant feedback and accountability.  Local government compensation is generally lower than state workers, although both are higher than the private sector which has cut 14.4% between 2000 and 2009. Over the same period, local government had only cut 3.9 %,  Instant austerity may cause this gap to narrow in 2012 and 2013. A recent case study of sudden economic hardship is Sycamore Township, a community in Hamilton County, Ohio (full disclosure: the place I call home).  This township operates on a general fund budget of $7.3 million dollars while police and fire operate on a separate budget of $6.27 million.  Elimination of Ohio’s Estate Tax (averaging $3 million per year) and a 66% reduction in local government funds over the last four years will combine with lower property tax revenues to create the perfect fiscal storm for this community.  Repeat this scenario hundreds of times throughout the state for a real-time snapshot of the coming tug-of-war between taxpayers, public sector unions and embattled officials.  Sycamore Township Trustees had a sheriff’s deputy on hand as cuts to fire and safety staffing were announced at a heated public meeting.  27 full-time firefighters were cut to 13, and 70 part-time firefighters were let go. To the township’s credit, they are not placing a levy on the ballot at this time, but many townships across the state will consider this option. We’re tempted to lament the harsh austerity imposed on local government, yet private sector taxpayers (who pay all the bills) are suffering a great deal more than public employees.  Economists will argue that cuts cannot replace growth as a means to funding local governments, but until Ohio offers policies that reignite or attract private sector businesses, staffing cuts are the only viable tool in the box.  Ohio public sector unions will cry foul early and often as every township and county reduce staffing of safety services and school districts cut teachers and education budgets.  The rubber has met the road.  Homeowners will not vote for more taxes on homes mortgaged near or beyond the appraised value and tax levies will find scant support from families struggling to provide food and shelter.  Ohioans may soon hear the plea for new local revenue via fees and/or taxes from their trustees, council members and commissioners.  The burden of proof will fall on each community to prove that they have been exemplary stewards of tax dollars and officials will find skeptical taxpayers and crowded meetings in every municipality.  If there’s a positive to be found, citizens are suddenly taking an interest in the activities of their local government. This chartprovided by the BLS shows that the Public Sector pay continues to outpace that of private sector taxpayers who carry the burden for both.  As of 2011, compensation for state and local employees is $1 Trillion.   There is little doubt that the real class division in American society is between government employees at every level and their private sector benefactors who struggle to support generous wages and benefits for those working in public sector unions in county, state and federal government.
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