Ohio townships freeload on the backs of Ohio’s cities.
That’s the claim made by The University of Toledo Urban Affairs Center, which recently recommended Ohio force townships to take more responsibility for delivering services. That could mean a change in state law to allow townships to enact a sales or income tax.
The study, entitled A State of Inequity in Ohio, concludes that the nine townships in Montgomery County received some $14 million in services paid for by the county, the state and residents of the county’s 16 cities including Dayton.
A similar 2002 study found that residents of townships in Lucas County, such as Jerusalem, also received about $14 million in subsidized services.
The question becomes one of fairness, according to the study. Under Ohio law, municipalities are responsible for road maintenance on state highways within its jurisdiction, but the state maintains its highways passing through Ohio’s townships. Consequently, an Oregon resident who, through his income tax, pays to plow and maintain Route 2 within the city limits also pays through his state income tax to maintain the township portion of the road.
The study also contends all county residents pay for certain engineering, criminal justice and legal services through state and county taxes, but city and village residents must pay again through local income or property taxes to receive the same services.
When townships were sparsely-populated, this inequity was not a concern. But, today, many of Ohio’s townships are the state’s most affluent addresses. The factors driving urban flight to the townships are varied, but avoiding a local income tax is one.
“It may be admirable for a community to seek to keep tax rates and expenses low,” the study states. “It is, however, unjustifiable to maintain those lower tax rates only because their services are subsidized by taxpayers in neighboring communities…They (townships) are competing with an unfair advantage because they are subsidized by the residents of the very cities with whom they are competing.”
While legislation has not been introduced to shift more responsibility to townships, it could happen, given the poor economy and declining tax revenue. Jerusalem Township felt this pressure in 2009 when Lucas County commissioners wanted it to pay for sheriff patrols. The cost would have been $347,000, or 20 percent of the township’s $1.7 million budget. The township went to the residents to raise the money, but voters rejected a levy by a two to one margin.
Too much government
Governor John Kasich, in response to an $8 billion budget deficit when he took office, cut funding to local government and schools. He has said Ohio has too much government--1,340 townships--and too many school districts--613. It is expected he will again decrease state aid to local governments to encourage consolidation or shared services.
“As the amount of revenue available to meet local service needs continues to shrink, people are forced to examine their practices to meet service needs in new and innovative ways,” said Michael Beazley, Oregon city administrator and one of the study’s authors. “At the same time, the state is telling local governments, `You have to find ways to either consolidate or share local services, or we’re going to make you.’”
This movement to consolidate into regional governments is not new and it has been suggested by some that townships should be eliminated. Proponents say that would result in savings through economy of scale, but opponents claim local control and quality of service would be sacrificed.
Beazley expects this controversial issue will soon be debated in Columbus. So does Matt Szollosi, state representative and assistant minority leader. Szollosi states, “Township trustees across the state are facing dramatic fiscal challenges. I would not be supportive of any change in state law that would allow townships to implement an income or sales tax without a vote of the people. However, I would consider carefully a proposal that allows trustees the ability to make the request of their residents.”
Szollosi doesn’t foresee forced consolidation. He thinks the state will offer incentives to encourage shared services and regional governments. A state report addressing that—Beyond Boundaries: A Shared Services Plan for Ohio Schools and Governments—is due out this month.
As expected, The Ohio Township Association responded to the study. It questions whether population should be used for deciding which political subdivisions contribute more to the state sales and income tax. “This “methodology” ignores the obvious role that socio-economic status plays in sales taxes,” the statement reads. “Wealthier people have more disposable income, buy more things, and sometimes buy expensive things. This impacts the amount of sales tax generated from a given community, but the report ignores income level as a factor in sales tax generation. Suggesting that areas with 80 percent of the population generate 80 percent of the sales tax revenue is seriously flawed.”
Melanie Bowen, Lake Township trustee, said some large townships, like Lake, function like a municipality with their own police force. However, they are hamstrung by Ohio law in that they cannot levy an income tax, like a municipality, or a sales tax, like a county.
Bowen also said if you address the perceived unfairness of who bears the cost for road maintenance and sheriff patrols, you need to look at other inequities. Lake Township, for instance, provides police, fire and rescue services to the second busiest interchange on the Ohio Turnpike, but the fuel tax collected is distributed to all 88 counties.
Bigger is not always better. While big may lower the cost of services, the savings to the taxpayer needs to be weighed against the higher quality of service usually delivered by those who live closest to those receiving the service.