The two-year budget proposal released this month by Ohio Gov. John Kasich relies heavily on a trifecta of local government funding cuts to plug the state’s $8 billion budget hole.
Although the nearly $2 billion in cuts for local government allocations, personal property tax loss reimbursements and public utility tax loss reimbursements could mean layoffs, decreased services and no new fire truck for the Athens Fire Department, county officials say they could have been worse.
Kasich handed down a 75 percent cut in direct local government allocations for fiscal year 2012, which begins July 1. Ohio’s municipalities will receive just $167 million next year after receiving a combined $665 million in fiscal year 2011.
In fiscal year 2013, local government allocations will increase to about $390 million, about a 50 percent cut from the 2011 funding level.
Major county cuts in 2012
County officials said they estimate Athens will lose about $278,000 in state money next year.
“If the (state) budget stays in its current form, we’re going to have a really tight budget next year,” said Jill Thompson, Athens County auditor.
Unlike the state, Athens County runs on a calendar-year budget, meaning the Kasich budget proposal affects the current year’s budget.
County officials sliced more than $300,000 from this year’s budget in preparation for the Kasich cuts, anticipating a loss of about 75 percent of state funding next year as well as during the second half of this year. Because Kasich’s proposal only includes a 50 percent cut next year, the cut wasn’t nearly as deep as the county expected.
The county received more than $1 million in local government funds in 2010, but planned on getting just $658,000 this year. If the Kasich budget proposal passes, the county will receive between $921,000 and $986,000 this year, according to the auditor’s office.
In addition to a drop in local government allocation money, the county also will lose about $54,000 in tax reimbursements from the state this year.
In 2010, the county received about $20,000 in public utility tax loss reimbursements, but anticipates getting only $10,000 this year. Likewise, the county planned on receiving about $83,000 in personal property tax loss reimbursements this year, but now projects it will only receive $39,000.
The county will not receive any money from public utility or personal property tax loss reimbursements in 2012.
More than 40 county department heads and elected officials crammed into the County Commissioner’s conference room last week for an informational meeting about how the Kasich cuts will affect the remainder of the year.
“For 2011, we don’t really contemplate any major changes because we planned well,” said Alan Ferguson, financial reporter in the auditor’s office. “It’s in 2012 that we’ll really be hurting.”
While county officials estimate Athens will receive about 95 percent of 2010 funding levels this year, they plan on receiving only 33 percent of that funding in 2012.
Thompson said county department heads will continue to meet and explore budget cut possibilities, but real details and budget planning won’t occur until Kasich releases the actual language of his budget proposal.
“We’re waiting on the words to go with the numbers,” Thompson said.
City unsure of budget’s benefits
Local government cuts could force the city of Athens to eliminate positions and abandon plans to purchase a new ladder truck for the fire department.
This year, the city has a $31.2 million budget with an $11.7 million general fund — comprised of tax money and about $800,000 in state funding.
Under the Kasich budget cuts, money in the general fund will be sliced 25 percent next year and 50 percent the following year.
City officials said those cuts will most likely mean cutting some of Athens’ 165 employees, whose salaries make up 80 percent of the general fund.
“By the end of the last year of the budget we will have lost half of our local government funding,” said Athens City Councilwoman Nancy Bain, D-3rd Ward and co-chair of council’s finance and personnel committee.
“We’re talking about a lot of money,” she added.
The city eliminated four unfilled positions this year in order to save about $200,000, and Bain said she would not be surprised if more personnel cuts occur next year.
The city could save some money if the controversial state Senate Bill 5, used by Kasich to save $1.3 billion, is implemented, Bain said.
The bill, which opponents argue would strip public worker unions of the right to collectively bargain, would also require public employees to pay 20 percent of their health care premiums — a 5 percent increase.
Premium increases would save local governments about $132.2 million in health care costs, according to estimates released by the Ohio Office of Collective Bargaining.
But Bain said she believes there likely will be a voter referendum regarding the bill and she could see the matter eventually going to court.
“We’d end up having to deal with all of the liabilities and not receiving any of the benefits if it gets tied up in court,” she said.
Neither Athens Mayor Paul Wiehl, who opposed the bill, nor State Sen. Jimmy Stewart (R-20th), who voted in favor of the bill, returned calls for comment.
City officials also are keeping an eye on Kasich’s proposed funding levels for higher education.
The city won’t know for sure how much money it is losing until Ohio University has finished its budget planning for next year. As the county’s largest employer, OU could implement a mandatory furlough in order to fill a projected $19.7 million budget hole.
If it does implement a furlough policy, Bain said the city will lose a substantial amount of income tax revenue.
“In Athens it’s a double-edged sword because of Ohio University,” Bain said. “We’re being hit with a double whammy.”
Even though higher education cuts were much less than many universities had feared, OU officials said they will still implement early retirement and buyout programs next year.
OU has not announced whether it will use a furlough policy.
“The state budget process has just begun,” said OU President Roderick McDavis in an email to university students and employees. “And there are many aspects of the proposed budget that require study and research to understand the potential implications for our students, faculty and staff.”
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