In testimony before the state of Ohio’s Senate Finance Committee, State Auditor Dave Yost outlines his proposal for providing local governments additional tools for cutting costs and increasing efficiency. Find an excerpt from his testimony below and a link to his full testimony after the excerpt.
Excerpt from Yost testimony, May 16, 2011:
LOCAL GOVERNMENT STABILIZATION TOOLKIT
This is a time for finding new ways of doing public business.
Ohio needs to offer tools to local governments that will help with the hard choices ahead. That’s why I’ve been working on an initiative, called the “Local Government Stabilization Toolkit.” The Toolkit is designed to break down barriers for local government leaders looking for ways to achieve more sustainable futures.
The first part of this initiative gives local governments more tools to voluntarily join together. The current process for merging local governments is complex and cumbersome. Communities that would like to merge are hindered from doing so by the amount of time required to establish the required mini-constitutional convention and create a new government out of whole cloth. Also, certain mergers are not even permitted under current law.
My proposal addresses these issues three ways. First, it allows two or more neighboring townships to voluntarily join force as a single, lower-cost government. Subject to the people’s right of referendum, boards of township trustees could kick-start this process by a 2/3 vote. Trustees could also place the question on the ballot, or a joinder could be initiated by the people.
Second, two or more neighboring counties would be able to merge under this proposal. County joinders would begin by initiative petitions and, as required by the Constitution, would be done by a vote of the people in the counties proposing to merge.
Finally, I propose to streamline the process for mergers between townships and municipalities, including the ability of villages to merge into a neighboring township.
All of these processes are voluntary and initiated at the local level. Most importantly, local governments would be able to pick their own partners, and leaders would have flexibility to decide what works best for their community. To ease the process, a backup set of statutory default provisions would govern any major issue the two governments do not agree upon. Initially, I proposed allowing 60 days for local government leaders to negotiate a merger agreement, but in response to suggestions from key stakeholders have changed this to 120 days. This window helps prevent the process from being hijacked by overzealous politicians.
You may ask – how likely is it that local governments will take advantage of these opportunities? As I’ve traveled this great state, I’ve talked with local government leaders who would like to have these options. Also, recently my office conducted an informal survey of nine townships and 15 villages. Of the people surveyed in these townships, 58% were open to the idea of merging with another local government; 55% in the villages. If the merger results in cost savings or tax reductions, this number goes up to 75% for townships, 74% for villages.
The reality is there are local governments that are struggling to make ends meet.
- One county is only open four days a week due to budgetary constraints. Plus, some people requesting copies of public records have been told to bring their own paper.
- There’s a village in Northwest Ohio currently in fiscal emergency, with deficit fund balances increasing each year. Other than a clean-up and leaf pick-up day, the village’s general fund doesn’t pay for any public services.
- Another local government – a township – has been in fiscal emergency for over 8.5 years with no fiscal improvement. Our understanding is they don’t want to merge with the neighboring village because they want to remain a township.
Ohio also needs to strengthen its early warning system and repair process for local governments in fiscal distress. These laws have been on the books since the 1970s, with very few updates. Unfortunately, it appears they were not designed to address the multitude and vast differences of Ohio’s governments.
We did a much better job when putting together laws to provide earlier intervention for school districts in fiscal distress. Therefore, I encourage adding similar proposals to the laws governing local governments in these conditions.
Financial problems are harder to fix the longer they go undetected and unaddressed. Like we have for schools, we should have a “fiscal caution” designation for local governments struggling to make ends meet. My office would develop guidelines for indentifying “fiscal practices and budgetary conditions” that, if not corrected, could lead to fiscal watch or emergency. These entities could then receive assistance from the Auditor’s office.
Today an entity can languish in fiscal watch forever. There is no law requiring the local government to do anything to get back to fiscal health. To address this issue, we propose requiring these entities to adopt a financial recovery plan. If they fail to do so, the entity could be declared in fiscal emergency unless granted an extension for good cause shown.
Currently, our system also allows a fiscal emergency to continue with few consequences when a local government refuses to take action. Part of this is due to a convoluted oversight process, so the Auditor of State would serve as the sole financial supervisor for small villages and townships with populations fewer than 1,000. In reality, this is what we do now since commissions often only meet once every two or three months.
This proposal would impound state funding, except benefit assistance, if a fiscal emergency entity fails to adopt and substantially adhere to an approved financial recovery plan. As a last resort, a court could also order dissolution of small entities (population of less than 5,000) when the entity has been in fiscal emergency for three years and its financial recovery plan and fiscal forecast do not demonstrate an ability to remedy its condition within five years.
Finally, the last part of my proposal is to cut through red tape and give local governments more flexibility to share services. I support the proposal in House Bill 153 to give universal authorization for sharing services to all local governments. In addition, Ohio law should specifically allow small villages and townships to contract with the county auditor to act as the village or township’s fiscal officer.
Also, working with the Ohio Township Association, I support simplifying record-keeping for township trustees and fiscal officers by allowing these officials to provide pay documentation for audit purposes via certification rather than a time log.
