Guest Post: Perrysburg does not need to assess for street lights and trees

Sara Weisenburger was appointed to fill a vacancy on the Perrysburg council in May. Her term expires at the end of the year, but she is running to retain her seat and will be on the ballot in November. I think she raises some extremely valid points in this guest post and am happy to share it with you.

Why is Running the Government Like a Business So Tricky?

I’m a conservative. I own a small business and I budget conservatively. I run my household the same way and the result is at the end of the year, my revenue exceeds my expenses. Doesn’t it make sense that the government should function the same way? I’m finding it’s not that easy.

I have an accounting degree; I was an independent auditor of governmental entities; I know my way around financial statements. I’m not going to pretend I’m an expert though. I was recently appointed to Council in the City of Perrysburg and even before I was appointed, I was delving into the City’s financial statements.

One could get nit-picky and find faults in the way the City of Perrysburg has been run over the past decade, but by-and-large, the administration (with proper oversight from the mayor and council) have done a good job of stewarding the citizens’ tax dollars. If the administration in Perrysburg could be cloned and sent to the Statehouse and to Washington, this country would be in a far better position.

What have they done right? They’ve been running the City like a business. They’ve under budgeted revenue and over-budgeted expenses so that at the end of the year, there is consistently an increase in net assets.

What have they done wrong? They’ve been running the City like a business. In the normal course of a business cycle, it makes sense to have a plan to weather the storm during a bad year (which they did), plan for big projects for the future (the City implemented a new refuse collection system with a short-term loan), increase net assets (which is happening) and save a small sliver of pie each year so that we have a solid reserve fund balance (which they are working on).

So why is that such a problem? The problem is the local governmental entity is permitted to save some of the pie in a nice little container, which will help to plan for bad times and big projects, but because of ORC 4117 and a myriad of other State and Federal rules, the local entity is not permitted to put a tight-sealed lid on that container.

In 2009, the citizens of Perrysburg experienced their worst year in this recession. People were losing jobs, taking huge pay cuts and losing their homes. Businesses were losing revenue and many succumbed to the economy and had to shut their doors. Perrysburg wasn’t isolated. Income tax collections were down 17% and investment earnings were down 80%. The City had an overall decline in revenue of 13% available to operate city services (that’s $4.6 million).

What else was happening in 2009? - union contract negotiations. Through a number of meetings, tax dollars spent, fact finders and arbitrators, every union managed to negotiate a raise for 2009, 2010 and wage reopeners in 2011 (which some subsequently also went to fact finding). The City’s position was that the union employees have been and continue to be fairly compensated, economic times were bad, the future was unknown, so they were offering little in increased compensation. The unions had varying responses but it boiled down to the fact that there was a large enough piece of pie that they should be given some of that pie regardless of its intended future use. Because of the flaws in ORC 4117, the taxpayers lost the battle and there were raises across the board.

I’m not making note of this because I have an issue with the unions. They operated fairly within the confines of the State laws. The conciliators and fact finders clearly stated (although I find it insulting) that because of Perrysburg’s affluence, the citizens must pony up the cash for these raises. So why do I really mention this? Over the past nine years, the hardworking citizens of Perrysburg have gotten up every morning, gone to work and paid their taxes. The administration in Perrysburg has been such a good steward of those tax dollars that net assets have increased 423%. Through a combination of increased revenue, eliminating general fund debt, managing the growth of government and increasing assets without incurring debt, they’ve baked a pie so large, that there is no way the State will allow the City to put a lid on it. Success will be punished.

So what do we do about it? Lower taxes, lower taxes and then lower taxes. The City almost needs to stop being run like a business; it needs to be run closer to break-even. It is no longer safe to continue amassing funds because the City isn’t permitted to properly protect them for future use.

The current system is designed to reward failure and punish success. Councils have two options, neither of which are great choices and both have their risks.

Option one – collect a little more in taxes to properly prepare for future projects and unknown economic times BUT even if that is done properly, those reserves cannot be properly protected.

Option two – collect just enough taxes to break even BUT that will require loans for future projects and going into the red during poor economic times. Because the rules of the game do not allow a municipality to operate like a business, we have to stop trying to run it like a business. Neither option is good, it’s a no win situation and I will never pretend to have all the answers but what I do know is that allowing taxpayers to keep their own dollars is always best practice.

At the September 17th City Council meeting, the Council will have an opportunity to make a small but significant difference. The City assesses property owners for street trees and for street lights, both expenditures I would argue are important to our community and should continue.

However we do not need to be assessed for those two programs and are better funded through general fund revenues. The City managed to weather the $4.6 million drop in revenue in 2009, I have full faith they can weather a $270,000 drop in revenue in 2014. Besides, the citizens deserve a piece of their own pie.

GOP budget raises Ohio sales tax, goes after Internet purchases

There's a lot to like in the Republican budget for the state of Ohio - but there are some disturbing items as well: a sales tax hike and Internet taxes.

The first thing you should know is that Ohio's income went up last year. The Dayton Daily News reported in April:

The Buckeye State experienced big increases in sales taxes, personal income taxes, hospital-related taxes and corporation licenses in fiscal year 2012, the Dayton Daily News found.

Ohio’s tax receipts grew by $905.9 million in fiscal year 2012, which ended last June 30, compared to the previous fiscal year, according to an analysis of 2012 Census of Governments data released Thursday.

A new income source came from one-time licensing fees of $50 million paid by two of Ohio’s new casinos.

The state got $100 million in fees from the opening of casinos in Cleveland and Toledo in May 2012. While that’s a one-time occurrence for each casino, the state will add another $100 million in the current fiscal year for the casino in Columbus, which opened Oct. 8, 2012, and one in Cincinnati, which opened in February.

Ohio tax receipts increased by 3.6 percent in the last fiscal year.

The GOP budget fact sheet, provided by Gongwer Ohio, is titled: "Putting More Money Back in Ohioans' Pockets" and says:

"The House & Senate Majority Caucuses have said from day one that we need to shift towards a consumption-based tax structure and away from our current income tax structure, which penalizes success. Additionally, we have said from day one that you want to ensure that we are not playing a "shell game" where $1 of taxes are cut, but raised by $1 elsewhere."

They are proposing a 50% small business tax cut on the first $250,000 in net business income and a 10% income tax cut, which is a on the personal income tax rate over the next three years.

But there are tax increases in the plan:

* In the future, the Homestead Tax Exemption will be means tested and only apply to seniors earning less than $30,000. It applies to all seniors now. They will grandfather in anyone currently getting the exemption.

* The state has been subsidizing property taxes from local levies - at a rate of 12.5%. That will end for any new levies. The rationale is that with a lower income tax rate, property owners won't need the state subsidy.

* Gambling losses will no longer be deductible. You'll pay taxes on gambling gains, but won't be able to deduct losses.

* All cigarettes will be taxed at the same rate, which will be a bit lower than what is paid on regular cigarettes.

* If you purchase a magazine at the newsstand or grocery store, you pay sales tax on it. This tax will now be applied to magazines purchased through a subscription.

But the big one is the sales tax, which is increased from 5.5% to 5.75%.

Additionally, in a move they describe as "streamlining" and part of "modernizing our overall tax structure," Ohio will become a full member of a multi-state compact in order to expand the collection of sales taxes due from catalog and Internet purchases.

Another bullet item says they will be "equalizing sale of digital goods with their already taxed hard copy counterparts."

Since the actual language is not yet written, this could mean a number of things but the general consensus is that they are going to require the sales tax on Internet purchases.

All these plans to raise taxes are supposed to be offset by the decrease in income tax. But that assumes that the additional sales you end up paying is actually less than the cut in the income taxes. That may be true for some, but not for others. The good news for purchasers is that you don't *have* to continue purchasing things like magazines and clothes and cigarettes, etc... so you can see an overall reduction in the taxes paid.

I guess I'm just not convinced this will give Ohioans "more buying power and help create jobs."