Ohio Municipal League
175 South Third Street
Suite 510
Columbus, Ohio 43215

614-221-4349 Office
614-221-4390 Fax

email:
Legislative Inquiries
John Mahoney
General Inquiries
info@omunileague.org

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OML E- BULLETIN
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Local Government Fund Cuts Still Under Consideration.

The Senate Finance and Financial Institutions Committee met twice this week to hear testimony about HB 405, the budget adjustment plan to meet the state's estimated $1.5 billion biennial deficit. The committee heard from a number of groups opposed either to provisions put in that plan by the House or from groups, like the League, which are fighting to fend off proposed cuts to local government funds. The League's testimony opposing 6-10% cuts in local government funds is posted on our website at www.omunileague.org.

Witnesses representing Ohio's Libraries and the County Commissioners' Association of Ohio also testified against those proposed cuts.

We are deeply concerned that without a great deal of communication from members like you, the cuts to local government funds will be included in the version of the HB 405 that is presented to the full Senate. We know and appreciate the fact that many members have communicated with their legislators so far, but more grass-roots support is needed if we are to be successful in this effort. We deeply appreciate both Governor Taft and the House not including drastic cuts in local government funds in their plans for fixing the state budget, but the drive to fund the deficit by creating deficits and/or reductions in essential services at the local level is very strong in the Senate.

Many of the letters we have received from our members make it clear that such cuts in state local government funds will reduce the ability of our cities and villages to fund their safety services. That is hardly something the state of Ohio can afford right now. Additionally, the cost of many essential municipal expenditures, from road salt to health care coverage, are rising rapidly. All of this happening, while cities and villages are experiencing a tremendous slow down in revenues. That revenue reduction comes not only from the economy, but from the estate tax reduction plan put in place by the state last year. To add to all this with a significant reduction in the local government funds will cause severe problems for many of our cities and villages.

Please, call your Senator today and urge them not to support any reductions in state aid to local governments and libraries. The deficit can be funded in other ways. Both the Governors' plan and the House plan prove that, plus there are many other ideas floating around that could accomplish that goal without local government cuts. Filling the deficit with reductions in local safety and other services, across all local governments, is not a good idea for Ohio.

The Senate plan for filling the budget deficit is scheduled to be voted on by the Committee and the full Senate next week.

DROP Plan Up for Hearing; Possible Vote.

The Deferred Retirement Option Plan (SB 134), proposed by the Ohio Police and Fire Retirement Fund, is scheduled for a hearing and possible vote in the Senate Ways and Means Committee next week. Under provisions of the bill, a police officer or firefighter in the Fund would have the option at retirement age (48 with 25 years service) to extend his or her service by 4-8 years under an optional retirement benefit. That benefit would essentially provide an incentive for an officer or firefighter to extend their service, despite years of testimony that said police and fire need earlier retirement because of that service. The incentive would provide those extending their service for at least four years to retire with their pension for 25 years service, plus a cash lump sum that would be accumulated from contributions, plus interest, during their extended service. During the years an officer or firefighter are on the DROP, the pension contribution made by his or her employer do not change.

The League has expressed concerns in the past that the DROP program may have a negative effect on the Fund that will result in a push to increase the employer contribution rate to pay for it. The program's neutral actuarial forecast is based on 86% participation by all officers and firefighters reaching 48 years and 25 years of service. We think that is high. Additionally, we have had concerns about putting an incentive on the table that would encourage officers and firefighters in all cases to stay beyond eligible retirement age. Which is it? We ought to encourage safety forces to retire early because of the stress of the job? Or we ought to encourage them to stay, as DROP does?

This bill is currently on a fast track. If you have concerns about this bill, please, contact your member of the Senate as soon as possible. A floor vote out of the Senate is very possible next week.

Committee Schedule.