Fiscal crisis in government demands creative thinking
While the economic adversity being experienced by Mahoning, Trumbull and Columbiana county governments is forcing commissioners to take drastic steps to bring expenditures in line with revenues, it also provides an opportunity for outside-the-box thinking that taxpayers demand.
The demand has been conveyed through the rejection of sales tax issues and the growing anti-tax movement in each county. Private sector workers who have been forced to accept a freeze in their wages and have had to bear a larger burden of health care costs, and retirees whose pensions are no longer secure and who have to choose between life-sustaining prescription medicine and food are in no mood to support government's spending ways.
Indeed, the grousing by taxpayers is being heard all over Ohio, which is why Secretary of State J. Kenneth Blackwell is leading the charge for a constitutional amendment to make it more difficult for lawmakers to increase state spending. The initiative would limit spending growth to the rate of inflation plus the percentage of population change unless it's approved by a three-fifths vote of the Legislature and a majority of Ohioans at the ballot box.
In addition, local governments also would not be able to increase spending beyond inflation plus population growth without approval of local voters.
Whether the constitutional amendment has merit, or whether it is simply a ploy by Blackwell to focus attention on his bid for governor in 2006 is a topic for the future.
What is not in question, however, is the fact that the secretary of state has tapped into the populace's displeasure over what is going on in government at all levels.
Mahoning, Trumbull and Columbiana counties are poster children for such voter backlash.
The rejection in November of a half-percent sales tax that would have been on the books permanently will mean a $14 million a year loss of revenue to the general fund. As a result, commissioners David Ludt, Anthony Traficanti and John McNally IV have asked the heads of general fund departments to use 1999 as a benchmark for their funding requests for this year. They've gone back to 1999 because that was the year the county had between $34 million and $37 million to spend. The revenue projection for this year is between $34 million and $35 million.
Budget hearings are set to begin Wednesday and will end Feb. 2.
We support Ludt, Traficanti and McNally in urging taxpayers to attend. It is important for residents to know how their money is being spent and what mandated and non-mandated services are being provided.
In 2004, the county spent $54 million for general fund operations, which was fed by the 0.5 percent sales tax that expired in December and was not renewed by the voters, and another half-percent tax that will be in effect through 2007.
Officials have forecast a $32 million general fund, while $37 million is needed to keep spending at the current pace. In addition, county officeholders and department heads have submitted budget requests totaling $40 million.
The county operates on only a half-percent sales tax as a result of voters rejecting the second half-percent in 2003. Most counties in the state operate with taxes amounting to three-fourths or 1 percent.
Last summer, Commissioner James Tsagaris had toyed with the idea of placing a tax issue on the November ballot, but he and his colleagues at the time, Joseph Angelo and Daniel Polivka, decided not to because of the ongoing federal investigation of government corruption. Since then, Angelo has been replaced by Atty. Paul Heltzel.
Today, Tsagaris, Polivka and Heltzel are confronted with the daunting task of operating government with a lot less money. They have been urged by county Auditor David Hines and his chief deputy, Adrian Biviano, to take action sooner rather than later to address the problem of spending surpassing revenue.
Commissioners Jim Hoppel, Sean Logan and Gary Williams have imposed a 20 percent cut in the salary accounts of all agencies and have targeted cuts in other accounts. That means layoffs or four-day work weeks.
The cuts were triggered by revenue projections showing a $1 million decline from the $18.7 million spending in 2004.
Last November, Hopple, Logan and Williams decided to test voter sentiment by placing a 1 percent continuous sales tax on the ballot. It was rejected. They plan to go back to the voters in May, but are well aware that they have a lot of persuading to do.
It is clear that all the commissioners recognize the need to be proactive in dealing with the financial woes of their governments. They also seem aware of the fact that a significant number of taxpayers have a negative view of the public sector.
Thus, the challenge to think outside the box to change hearts and minds.
We urge the nine commissioners to meet to discuss cost-cutting measures through economies of scale initiatives. For example, a central purchasing system would enable the counties to negotiate lower prices, while uniform health insurance coverage would result in lower premiums.
The commissioners could seek the assistance of an independent entity, such as the Regional Chamber, in identifying areas where cooperation is possible.
We are aware that the word regionalization is a red flag for government employees bent on preserving their jobs, but the status quo is untenable.