Clarification appended.
Ohio Gov. John Kasich has cut billions in taxes to businesses and individuals. But according to local officials, Kasich has made significant cuts to the state’s Local Government Fund to cities and villages.
“I've noticed since I've been on council the amount of grants and other funds that are supposed to be coming in from the state to the cities has decreased quite a bit,” Athens City Councilman and Chair of the Finance and Personnel Committee Jeff Risner, D-2nd Ward, said. “We're down to practically nothing at this point.”
Kasich has cut more than $5 billion in taxes since taking office, according to the Ohio Development Services website. That includes eliminating the estate tax and cutting the state income tax by more than 16 percent.
Risner said the state didn’t try to find a different source of revenue after the cuts in taxes.
“They cut taxes for businesses thinking that's going to bring more business to Ohio, and it hasn't,” Risner said. “And, at the same time, they didn't bother to raise revenue in some other way. They could have taxed the oil and gas industry like they do in Texas, but they decided not to do that. There was a shortfall in the budget, not enough money coming in and more money going out. They had to start cutting somewhere — so they decided to start cutting out all the local government funds.”
Jim Lynch, a spokesman for the Ohio Governor’s Office, said that the Local Government Fund, or LGF, had been cut “significantly,” but he said municipalities still receive a large amount of money from the state.
“The LGF represents a small percent of the total support local governments receive from the state budget and, for most of those governments, a significantly smaller part of their total revenue stream,” Lynch said in an email.
Lynch said most of the state government's budget goes to supporting local programs and communities.
“About 86 cents of every dollar in the state budget is directed to schools, local governments, university and programs that serve Ohioans in their communities,” Lynch said in an email.
According to a fact sheet from the Ohio Office of Budget and Management, the state provides 30 percent of local and school government revenue per year. Two percent of that state funding is made up by the LGF.
Those tax cuts and cuts to local government funds have heavily cost Ohio municipalities, according to a report by Policy Matters Ohio, a nonprofit, nonpartisan research institute.
“In 2017, counties, municipalities and townships will be working with $1.176 billion less than in 2010, adjusted for inflation, as a result of changes in state policy, although needs in many communities remain higher than before the recession,” the report reads.
Athens hasn’t been without cuts of state money. Athens City Auditor Kathy Hecht said Athens lost $576,885 in local government funds from 2006 to 2016. Hecht said the loss of income can lead to local tax increases.
“It affects our revenue for vital services,” Hecht said in an email. “They are creating a cycle of reducing the revenue we get from the state, then we have to increase our income tax rate and now they are also trying to take some of that revenue.”
The state is also trying to centralize the collection of the municipalities’ business income tax and impose a “service fee” on municipalities for the tax collection, according to a previous Post report.
“If you don't have money, you can't do home rule,” Councilwoman Chris Fahl, D-4th Ward, said.
In the Ohio Constitution, municipalities are given the ability of “home rule,” or the right to govern themselves and make laws even if they conflict with state laws. According to the previous Post report, local officials say the state has been cutting back on home rule for years.
Athens City Council members passed an ordinance earlier this month allowing the mayor to join a coalition of municipalities suing the state over the centralized business income tax collection.
“This is another power grab by Columbus,” Fahl said of the income tax collection during the meeting. “They have tried doing this several times.”
The city has been successful in suing the state before, Patterson said. Earlier this year, Athens joined several other municipalities in suing the state over a communication law, according to a previous Post report.
“They said all this money will be able to go back to the communities and local governments where it is being generated, and they've been taking that money more and more,” Fahl said.
Clarification: This article has been updated to clarify where cuts were made and to add information from Jim Lynch, a spokesman for the Ohio Governor’s Office, about the cuts.
