First Posted: 3/29/2015
LIMA — In what has been described as an effort to make Ohio’s corporate tax system more competitive with other states, the Ohio House of Representatives approved the elimination of the tangible personal property tax in 2005, giving municipalities, townships and service agencies reducing reimbursements to mitigate the revenue that the tax would have provided.
When Gov. John Kasich took office, he began to accelerate the reduction of the reimbursements to combat the state’s budget shortfall during the 2008 recession.
While the recession may be over, the reductions have continued, to the point where the state’s current biennial budget bill, known as House Bill 64, calls for a 48 percent reduction in 2016 and an additional 39 percent reduction in 2017. The bill is being debated in the House.
During a roundtable discussion held March 23 at The Lima News, township trustees, service agency and municipal representatives gathered to discuss the possible implications of these reductions should they take effect in their current form.
Lima Mayor David Berger expressed frustration with how changes in the tax system have been implemented in Columbus.
“There is a certain dishonesty in the way that the legislature has been going about this for a number of years now, along with the governor,” he said. “There’s a certain amount of hocus pocus going on here that is not being forthright and certainly isn’t about strengthening local communities.”
Greg Lawson of the Buckeye Institute, a state policy think-tank, argued that reductions in taxes are necessary to ensure that Ohio has a competitive edge when trying to attract business.
“Looking at the big picture, if we want a state that is going to grow and create jobs, we have to be competitve,” he said. “We need to think about the economy. If we grow the economy, we can help the local governments, over time, grow as well.”
Local government funding dropped 66 percent from 2005 to 2014. Local entities received $3.3 million in 2005 from the local government fund, the TPP, the inheritance tax and other assistance, with that total reduced to $1.1 million in 2014.
Berger said that the city of Lima, Allen County and other local government entities have managed to take steps to offset the losses in tax revenue, but these efforts are becoming more difficult.
“The county hasn’t had any kind of wage increase for its workers for six, going on seven years,” he said. “The city of Lima shrank from 530 to 370 workers. So we did things in order to manage and so did many other places in Ohio. We’re managing to continue to provide services for the long term.”
Wapakoneta Mayor Rodney Metz expressed similar frustrations with the state’s current tax policy, noting that despite these shortfalls, they are still working to provide services to the public.
“We’ve lost a tremendous amount of local government funds, but we still try to do what we can,” he said. “We have one of the lowest income tax millages in the area. We do our best to try to survive. But the money keeps going to Columbus and we’re not seeing any benefit.”
