June 30, 2016

Partly sunny

Analysis: Cities, schools in crossfire on state budget

The common belief is that if Ohio’s cities and villages, counties and school districts are healthy, the overall financial picture is healthy.

As with anything in politics, the picture of Ohio’s financial health at the local level is either grim or rosy depending whose camp you’re in. For the local governments themselves, the question is answered day by day.

Hit by a national recession and significant state budget cuts, communities and schools have laid off staff, cut vital services, closed parks and senior centers, raised fees on garbage collection and school sports, eliminated field trips, and even held bake sales to make ends meet.

Around the state this year, there are glimmers of improvement. A few have seen projected deficits disappear and dozens of local governments are predicting a rosier outlook as income-tax and sales-tax collections rise.

“They’re struggling, but I don’t think they feel they’re going under,” said Sue Cave, executive director of the Ohio Municipal League that represents towns, villages and cities. “There was a feeling there for a while that things couldn’t get any worse.”

Ohio’s local government fund — the highest-profile pot of state discretionary money for locals — has been cut in the past two operating budgets, falling from $641 million a year in 2010 to $343 million this year.

In that same time, Ohio’s estate tax has been eliminated and tax replacement dollars to local governments have fallen from $557 million to $152 million, according to figures from the Ohio Office of Budget and Management. School districts’ share of state tax collections — a figure different than state education funding — dropped from $1.1 billion in 2010 to $510 million this year.

“What they’re seeing is their state aid crumbling and no relief on the horizon,” said Wendy Patton of Policy Matters Ohio, which has detailed local government and school cuts by Gov. John Kasich and his fellow Republicans in the state Legislature.

The Kasich administration is focused on positive developments in communities across the state: a projected budget shortfall evaporating in Canton, record-breaking sales tax revenue in Mercer County, a rare tax cut being doled out by the Springboro Schools near Cincinnati.

Randy Cole, a policy analyst at the state budget office, said there are two ways of viewing Ohio’s local fiscal outlook.

“Critics are focusing on a small subset of the state support they get and saying that has devastated local communities, and yet we say our focus has been on growing Ohio’s economy, and when you look at their entire budget picture, a lot of their local budgets are growing just like the state’s budget is growing,” he said. Dozens of local governments are seeing tax revenue increases, among them Avon, Bellefontaine and Massillon, and Butler, Ross and Van Wert counties.

Cole classifies more than 40 separate line items in Ohio’s state budget that deliver direct benefit to local governments or schools and that 85 percent of state budget spending is passed back to governments, schools and other local entities that deliver services in Ohio communities. Taken as a whole, those funding sources have increased from $13.7 billion in 2010 to a projected $14.2 billion in 2015, state figures show.

They include social services for the poor and elderly, courts and law enforcement, farmers’ markets, child care programs, recycling grants, and road and infrastructure upkeep.

Such earmarked local funds, which must be spent for certain purposes, have expanded exponentially, as local government agencies have grown from four in the year 1900 to 6,550 agencies today, he said.