Instead of waging another frontal attack on public union workers, a bill that tries to take another bite of the SB 5 apple awaits Senate approval in the waning days of a lame duck legislature. Voters had their chance to change Ohio’s direction, and they didn’t, so now they’re powerless onlookers to bills looking to cross the finish line in time between the end of one legislature and the start of a new one. HB 5, co-sponsored by GOP Reps. Grossman and Henne, defines statewide standards for taxable income and eliminates local income taxes on certain sources of income. The bill is scheduled for an Ohio Senate vote this week.
When John Kasich ran for governor in 2010, he didn’t mention one word about the drastic anti-collective bargaining bill he would get behind 110 percent, that was eventually ruled null and void by Ohio voters by a 2-1 margin in the fall of 2011. You don’t have to be a political genius to know that had citizen Kasich made SB 5 a declared part of him campaign for governor, instead of winning a narrow election by just over 77-thousand votes, he would have lost by a half million votes to Ted Strickland, the incumbent Democratic governor at the time, who suffered through the Great Recession and brought Ohio roaring back on the road to recovery.
Even luckier for Gov. Kasich this reelection year, all the people who signed petitions to bring Senate Bill 5 to a statewide vote and worked to trounce it at the polls, conveniently fell asleep this year. With the lowest voter turnout since the 1940s, Gov. Kasich and other Republicans running for reelection parlayed a sleepy, discouraged electorate who stayed home in lieu of exercising their American right to vote into big wins. Let sleeping dogs lie, it’s said, and so it was in 2014 that the barking dogs that broke SB 5 three years ago never awoke.
Columbus City Council President Andy Ginther wrote a glowing letter in the Columbus newspaper recently, recalling the capital city’s “climb out of the shadows” and into the national spotlight. Mayor Michael B. Coleman announced last week that he won’t seek reelection, prompting Ginther to recall that Coleman, even during recessionary times, made the tough decisions to balance budgets. “And, when forced to choose between laying off police and firefighters or raising the income tax, Coleman helped convince the community that paying a little more now would secure a better future,” said Ginther, another mayorial possibility. Should HB 5 become law this year, Columbus’ next mayor, and maybe it will be Ginther, won’t have the same options to raise income taxes as Coleman did, a move the Columbus newspaper and the corporate power brokers it speaks for all endorsed. GOP ideologue leaders behind bills like HB 5 would rather those service providers, with their high wages and gold-plated retirement benefits, take the hit.
According to testimony offered last week by Kettering City Manager Mark Schwieterman, a conservative estimate of how much revenue could be lost from implementing just one provision in HB 5 is about $225,000 per year. “Very simply put, that’s two police officers,” Schwieterman said before the Senate Ways and Means Committee, as reported by the Dayton Daily News. After full implementation of the bill, he said, Kettering anticipates a hit to the budget of $400,000 to $900,000 per year. “This represents more carving away at municipalities’ abilities to provide services to its citizens,” Schwieterman told DDN staff writer Katherine Wright. City officials from Xenia told state legislators via letter that city projects will suffer a $400,000 revenue loss annually if the measure is passed. The city of Oakwood and Springboro also weighed-in with their own annual revenue shortfalls from HB 5, $300,000 and $850,000 respectively.
Unfortunately for Ohio, proponents of the bill, who backed SB 5 as one way to radically clip the wings of public unions and the traditionally Democratic candidates they fund at election time, want another bite of the apple. Anti-union leaders who continue to believe that income tax reform will stimulate economic growth and increase revenue, despite ample evidence that disproves their theory, have the ear of Gov. Kasich and GOP legislators. City officials who see things differently say the measure will hamper cities’ efforts for economic growth.
In an in-depth look at the bill that attempts to understand the cumulative financial impact of HB 5 in the context of the last four years of funding cuts to local communities, one progressive policy research group based in Columbus argues the bill will result in a substantial reduction in resources for hundreds of Ohio communities that levy an income tax, and could lead to further budget consequences such as service cuts and tax increases. Innovation Ohio’s report noted that, when combined with the significant loss of revenue that municipalities are already facing as a result of policy changes enacted by Governor Kasich and the legislature over the past four years, the potential impact to Ohio communities is staggering.
“We estimate the statewide impact to communities from House Bill 5 if it passes at over $82 million per year. When considered along with the cuts to municipalities already enacted over the past four years, we found that Ohio cities and villages will be coping with nearly half a billion dollars less in their annual budgets to provide services,” IO said in its Nov. 20th report. Meanwhile, for some Ohio communities, the reduction in resources exceeds 20-percent of their annual budgets, and will be difficult to absorb without tax increases or major cuts in services. “As legislators prepare to consider proposals to reduce the state income tax in Governor Kasich’s next two-year budget, the impact of past cuts to cities and the resulting reality of income tax increases at the local level must be considered,” the report said.
Reducing Ohio’s income tax rate to zero is the expressed desire of Gov. Kasich, who made that clear from the first days of his campaign four years ago. He’s pushed to reduce them at every opportunity, and with his invention of mid-biennial budget reviews, that train comes around quicker than it used to. Expect more of it. Jobs and growth is the cover story, but the back story is very much aimed at reducing the size and political impact of public unions and the candidates they lend support to, which appears to be mostly Democrats. Messing with revenue sources forces conflicts with service providers, and those service providers, their wages and “gold plated” retirement benefits will be asked to take the hit for the good of the community.
Double whammy, starve Democrats in future elections by forcing municipalities to experience big revenue losses, then eat their own to balance budgets by rolling back pay and benefits to their unionized workers. And if the rich get even richer in the process, as we know they do when rates go down, perfect.
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