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State cuts cost local governments millions

Springfield has lost 50 percent of state aid since 2009.

A Springfield News-Sun survey of more than 20 localities found they expect to lose more than $28 million this year compared to what they received in 2009 because of cuts in state aid and the phasing out of three taxes.

As a result, Springfield has cut 32 positions in recent years; Trotwood has furloughed workers; Troy cut back of street resurfacing; and Kettering delayed capital improvement projects, dipping into its reserves to fund the projects it deems a priority.

State leaders say the reduction of the Local Government Fund, the phasing out of the Tangible Personal Property Tax and the Utility Consumption Tax, and the elimination this year of the Estate Tax all were necessary to balance the state budget and to make Ohio “more business friendly” to spur economic development to create more jobs.

“I don’t mind helping the state balance it’s budget, but don’t put it all on our backs,” said Mark Beckdahl, Springfield finance director. In 2009, the city received $3,826,930 from the Local Government Fund and the three taxes. This year, the city budgeted $1,915,929, a 50 percent decrease.

Howard Fleeter, a former Ohio State University professor of public policy and economist who has tracked the state’s funding of localities and school districts for nearly three decades, gave credit to the governor’s administration for taking steps to balance the budget.

“The Kasich Administration deserves credit for getting the state budget into structural balance,” Fleeter said. “But there can be a spirited debate as to how they went about it.”

That debate centers on a difference in tax philosophies. On one side are those who believe the state does not have a role in funding local government. On the other are those who believe that local taxpayers send plenty of money to Columbus and some of it should come back to the localities, according to Fleeter.

“It’s understandable that the state needed to stabilize its finances. Still that doesn’t help the localities,” Fleeter said.

Tightening the belt

To make up for the lost revenues, local governments have for the most part followed a similar path: freeze hiring, push back maintenance, postpone capital improvements and reduce the work force through attrition.

Springfield has cut its workforce from 602 in 2008 to 570 this year.

“What we have done is not fill positions when they became open. We’ve just trimmed expenses to the bone,” said Beckdahl.

To do so, the city has postponed maintenance — powerwashing and sealing City Hall is one example — and halted using city money to pave neighborhood streets, relying solely on what grants are available, “We use other people’s money,” Beckdahl said.

While the city has maintained its service levels, officials know the deferred maintenance costs are mounting. “If you don’t keep up with them, they will catch up with you,” Beckdahl said.

The effect in Beavercreek has been substantial — — a 70 percent reduction from what it received in 2009 to what it budgeted this year — a loss of nearly $1.6 million.

The city, which has no income tax, relies on state funding to run its administration and parks and recreation department. Property taxes fund the city’s streets, its police department and fire protection from the Beavercreek Twp. Fire Department.

“The impact of these reductions to Beavercreek that has relied on state aid is significant,” City Manager Mike Cornell said. The city has reduce its work force from 152 full-time equivalents in 2007 to 129 this year. The city’s five-year plan for infrastructure needs is $10 million. Those plans are on hold as the council seeks a 1-mill renewal of an existing street levy, fearing voters would reject any tax increase this year.

“The city’s (employee) unions have been very good with working with city management to identify cost efficencies,” Cornell said.

Dayton’s 2013 general fund budget is about the same as its 2007 budget, according to Stanley Earley, assistant city manager.

During the span of a decade, the city has cut its payroll from 2,000 to 1,200 employees. There have been small budget reductions such elimination of paper paychecks and a switch to voice-over-internet phone systems, as well as bigger changes like a renegotiated streetlight contract that should save millions, and the sale of unused city buildings.

Troy has cut or left vacant about 10 percent of its positions, cut back on winter plowing and salting, and gotten agreements with employees on a single health care program, according to Patrick Titterington, director of public service and safety.

“It’s getting more and more challenging, and it shows most starkly in capital projects,” he said. The city needs $600,000 annually to keep up with road work. With dwindling revenues, the city approved a $10 per vehicle permissive tax that will raise $200,000 to $250,000 annually for city streets.

Tighten and Tax

Xenia was forced to lay off six police officers, six firefighters, close a fire station, eliminate the parks and recreation department, did away with administrative and clerical positions, and halt street resurfacing.

Just as the recession hit the state budget, so too did it lay waste to Xenia’s.

“We had over 400 of our residents out of work when GM closed. Another 600 lost their jobs when DHL closed down in Wilmington,” City Manager Jim Percival said. “It had a pretty dramatic effect on our revenues.”

The state cuts didn’t help.

Rather than see city services cut any further, “our citizens stepped up in 2010 an passed a half-percent income tax increase,” Percival said. Half of the increase went to the fire department to rehired the police and firefighters, and re-opened the fire station. The other half went to streets and capital improvement.

“We kept our word and now we have a robust street resurfacing program,” Percival said.

For Oakwood, the biggest hit was the loss of the estate tax. From 2009 through 2012, the averaged over $1.1 million annually. Historically, the city was averaging between $2 million and $3 million annually, according to City Manager Norbert Klopsch, a big hit to a $12 million operating budget.

“We spent most of last year talking with our citizens, and what we heard is they loved Oakwood as it was. They told us to become more efficient rather than cut any services,” he said.

In May, voters approved an additional 3.75 mill property tax, the first millage increase since 1992, according to the city manager.

Making choices

Kettering has reduced its general fund spending for the past decade. The loss of the estate tax, however, “hurt us the most,” City Manager Mark W. Schwieterman said. The city has been attacking its capital needs, “everything that involves orange barrels,” using the estate tax, he said.

Now some of those projects will be delayed with the loss of the estate tax. “Some service levels may change to provide for vital capital improvements. We’re managing that right now,” he said.

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