You wouldn’t know it by reading headlines like “Starving Cities,” but local government employment is actually on an upswing in Ohio. In fact, according to the latest job numbers released by the Ohio Department of Job and Family Services, Ohio saw a 10,900 worker increase in local government workers in June. That compares to 8,400 private sector jobs lost over the same time. Since June of 2014, the net gain to local government employment has been 7,200. That is actually 10% of the nearly 72,000 total non-farm jobs added over the last year. This reality, rather than political rhetoric, validates the decision that Governor Kasich and the General Assembly previously made to dramatically reduce revenue sharing between Columbus and local governments.
Reductions to the Local Government Fund, known as the LGF, back in the Fiscal Year 2012-2013 budget was significant. At the time the Administration argued that local governments needed to stop looking to Columbus for more revenue, especially as the Administration was looking to balance a systemically unbalanced budget that had been left by former Governor Strickland.
This author subsequently wrote a report, Revenue Sharing Reform: On the Road to Ohio’s Recovery, last September that showed that most municipalities and counties were not suffering fiscal apocalypses as a result of the LGF reductions. In fact, the report showed that many municipalities and counties were seeing increased revenues from local tax sources such as the municipal income and local option county sales taxes.
Despite the numbers, the steady drumbeat of doom and gloom from many local officials continued unabated with many newspaper editorials joining in the dirge-like chorus.
Unfortunately, for those doomsayers, these latest job numbers really hammer home just how over the top those criticisms have been. While it is certainly true that local levies and local tax increases have taken place in different jurisdictions, it has not been such a massive wave as commonly presumed. Additionally, as The Buckeye Institute has long maintained, local spending decisions should be left to local taxpayers. Local taxpayers are best positioned to spend their own local resources for the level of services demanded. There is no need for Columbus to redistribute Cincinnati tax dollars to Cleveland projects.
These latest numbers should raise questions about the fact that Ohio still spends nearly $400 million each year on LGF redistributions to local governments. Imagine how much more tax reform could be achieved if that was entirely eliminated or more narrowly focused on governmental entities that do not have the local tax capacity that municipalities and counties have, such as townships.
The Buckeye Institute continues to maintain that the LGF should be eliminated and those dollars shifted into across the board state income tax cuts. This will give local taxpayers more money in their pockets rather than sending them to Columbus. They can then decide what they really want—locally. As for the fear of laid off workers and terrible services; 10,900 new June local government jobs put those to rest.