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Archive | May, 2016

“After The Storm: Investigating Ohio’s Recover from the Great Recession and its Impact on Local Capital Investment”

OSU GlennThe following is an Executive Summary of a Spring 2016 Masters Thesis from the The Ohio State University John Glenn College of Public Affairs entitled “After the Storm: Investigating Ohio’s Recovery from the Great Recession and its Impact on Local Capital Investment”.  

You may read the report in its entirety here.  

Executive Summary

The Great Recession of 2008 and 2009 hit both state and local governments in Ohio hard in terms of decreased revenue from income, sales, and property taxes. Facing its own budget crisis, the state government significantly cut the state’s primary revenue sharing program, the Local Government Fund. These cuts amounted to a 50 percent reduction from 2001 to 2013, adding to existing strain on local government budgets. This project seeks to further understand impacts of the Local Government Fund cuts on local government through analysis of quantitative budget data from 2007-2013.

Revenue-sharing programs from state to local government fall under the study of fiscal federalism, the vertical structure of government financing. Over the past decade, researchers of fiscal federalism have seen movement towards decentralization, with revenue-sharing cut in order to increase the reliance of local governments on funding collected from within their own jurisdictions. When local governments are faced with cuts to revenue sharing, they are forced to make hard decisions about raising local taxes versus cutting spending, known as cutback management.

In Ohio, local governments have grappled with these cuts to revenue sharing in multiple ways. A survey conducted in 2013 began to shed some light on the responses of local government leaders to the policy changes. On the revenue side, local governments have raised charges for service and other fees in addition to raising property and income taxes where possible. The most frequent expenditure changes were cuts to capital spending. Conversations with local government leaders across the state solidified and clarified the impact of these cuts on capital investment.

The two primary research questions under investigation are 1) How did local government revenues change as a result of cuts to the Local Government Fund? and 2) How did these changes to revenue impact local governments’ ability to invest in capital projects? Analysis has been conducted on budget data from 250 cities measuring total revenues and expenditures, key revenue sources, and capital outlays from 2007-2013. These data were collected from the Ohio Auditor of State and Department of Taxation. Key demographic variables from the United State Census Bureau are also included to capture differences between municipalities.

Descriptive analysis was used to answer the first research question. Overall, cities have seen decreasing property tax revenues and increasing income tax revenues since the recovery began in 2009. These increased income tax revenues have been due in part to increasing municipal income tax rates, with a statewide average rate increase of 0.48 percentage points. Capital outlays have declined since the Great Recession and through changes to the Local Government Fund, with a 22 percent decrease in the statewide average from 2007 to 2013.

Regression analysis was used to examine whether certain years or changes to revenue sources had a significant impact on capital outlays. It was expected that capital outlays would have a positive relationship to Local Government Fund revenues and a negative relationship in the years after the cuts took place. The model found that capital outlays were indeed significantly lower in the years after the Local Government Fund was reduced. These results offer tentative confirmation that cuts to the Local Government Fund have led to declining capital investment in cities across Ohio. Ohio’s local government leaders may use this information as well as their own experiences to begin lobbying state legislators for a dedicated capital improvement fund for local governments. Due to limitations to the data and to the model, further research should be pursued to confirm and expand upon these findings.

Administration Proposes Capital Improvement Plan To Finance Meeting Tuesday May 31

Village Government consists of an elected Council and Mayor. This is the 2016 Council.

The Village Council Finance Committee is meeting as a Committee of the Whole on Tuesday, May 31 at 7:00 pm to discuss the Village’s capital needs and how these needs might be financed. The capital needs budget can be reviewed in its entirety here. The format will be an open meeting with public participation and an open question and answer session. There is a lot to cover and to consider. Accordingly a follow up meeting may be required. Also, some residents may want to discuss this proposal and will be unable to attend Tuesday’s meeting.

The capital maintenance and improvement budget is organized into three sections:

1. The first section sets forth specifically what we believe the village’s capital needs are by specific project and the year we propose doing the project. The far right hand column explains why we believe the project needs to be done. The projects are grouped by area. For example, all the road programs are grouped together, as is stormwater management etc.

2. The second section details projected budget cuts we are pursuing by changing some of the village operations. For example, moving to a new healthcare plan when our current contract expires, or implementing a comprehensive parking plan. The negative numbers in each year’s columns unfortunately reflect the remaining unmet revenue needs. This unmet need can only be resolved by declining to address some of the specific projects listed above or by a tax increase. See the Financial Review Committee’s report for their conclusions on the village potential to fill the funding short falls with savings from operations and also for their conclusions on the Village’s deferral of capital projects over the last few years

3. The third section details the Administration’s proposal to increase revenue and in it, we are proposing that council authorize the village to put an income tax increases on the November 2016 ballot for the voters to decide. With the reduction and elimination of both state aid and the estate tax, the choice is simple and stark, raise additional revenue or decide what does not get done; hence why we listed specific projects and assigned proposed dates to them. In the Administration’s view, it is up to the residents to decide what kind of town they want. The proposed tax increase will allow the village to fund its capital expenditures and restore prudent balances in the capital improvement fund. This will allow us to reestablish the minimum capital fund balance identified by the financial review committee on page 6 of their report.

The Administration is proposing an income tax increase and not a property tax increase as it does not affect those residents living on a fixed income. In addition, part of the increased tax will be borne by visitors to the village. The income tax only taxes wages and business income, NOT retirement or passive income. The increase we are proposing to Council is 0.35%, a little over a third of a percent and will take our rate from the current 1.5% to 1.85, which is still less than many other communities. The tax credit received by resident living in the village and working in another taxing municipality remains UNCHANGED at 75%. This credit is still much greater than many other communities. RITA has estimated that for the majority of our residents who live in the village and work in another taxing municipality, the proposed tax increase will cost them $43.75 per $50,000, which is less than a dollar a week. For an individual both living and working in the village or living in the village and working in a non-taxing township such as Bainbridge, the prosed tax increase will cost them $175.00 per $50,000 of taxable income. This proposed increase will raise $750,000 of additional revenue and in our judgement, adequately financing the village capital needs. My memo to council which more fully explaining out proposal can be seen here.

I’ve spent the last few months evaluating our current financial situation, creating a detailed list of specific capital projects and assigning proposed dates to them. It is up to the residents to decide what kind of town they want. As I said in the beginning, there is a lot here to think about, question and understand.

I hope you can join us next Tuesday to start this process.
Mayor Bill Tomko

Chagrin Falls Police Department Staffing Changes

Police photo

We are having several changes in status for officers on our police force.

Officer Michael Baldwin is going from full time status to part time status. Officer Baldwin has devoted his entire life to public service. He served in the Ohio National Guard completing a tour of duty in Iraq and upon his return was assigned to the Chagrin Falls Armory where he met our Police Chief James Brosius and expressed a desire to become a police officer. Local veterans groups and The Chagrin Valley Rotary Club were able to assist him with a scholarship to attend the University of Akron Police Academy, where he graduated first in his class. He was hired by the Chagrin Police Department upon his graduation and has been serving our community for over 10 years.

Officer Baldwin is resigning his full time position and going to part time status in order to follow a lifelong dream to serve the public by becoming a minister. He has accepted a position as Outreach Director at Graham Road Baptist Church in Akron, and can no longer meet the requirements of full time police officer. He will go to part time status and continue to serve Chagrin Falls as his time permits and our needs arise. I hope you will join me in wishing Officer Baldwin every success in his new calling as he continues to serve the public in a different way.

Officer Corbets is currently a part time Chagrin Falls police officer and will be going to full time status to replace office Baldwin. Officer Corbets is a 2009 graduate of Solon High School and is currently a full time officer in Glenwillow. Officer Corbets resides in Solon. He attended the University of Akron and is a graduate of the police academy. I hope you will join with me in welcoming Officer Corbets as a full time Chagrin Falls police officer.

There is no change in the total number of police offices as these changes involve change of status only.

All Invited! Arbor Day Ceremony

Vincent Street Arboretum before work begins. The Village of Chagrin Falls would like to invite the community to the annual Arbor Day Ceremony on Saturday, May 14th at 10:00 a.m. at the Vincent Street Arboretum, located on the North side of Vincent Street just east of Bell Street.

Arbor Day is an international event held to commemorate the importance of trees in our communities.

This event will feature an informative program from the Chagrin Falls Shade Tree Commission on proper tree care and mulching techniques, and the viewing of improvements made to the Ben KingArboretum. Participants can assist Boy Scout Troop 241 with enlarging the mulch rings around the arboretum trees, placing mulch around them, and general cleanup of the woods line in preparation for the creation of a wildflower meadow.Ben King Memorial stone at Vincent Street Arboretum

Information will also be provided on the programs and services that the Shade Tree Commission offers to the community. All residents and interested persons are welcome to attend. Refreshments will be served.