Playing off the recent bankruptcy filing by the city of Detroit, Dave Yost, the state auditor, and state Rep. Lou Terhar this week called for new fiscal restrictions on local governments. The Republican pair held a press conference to back the Fiscal Responsibility in Government Act, legislation that Terhar, of Cincinnati, is drafting.
The measure is ill-advised, representing a further erosion of the home rule authority of local governments by a party that touts the importance of keeping government close to the people. There is more irony in the timing. Majority Republicans have cut local government funds in half. Now, they want to impose tighter budget rules.
The Terhar proposal would hold local governments to the same rules that apply to the state, banning deficit spending and imposing new restrictions on debt and debt service. It would force Cincinnati’s pension system — the only municipal system not affiliated with the state — to follow the same actuarial rules as state pension systems.
In terms of their operating budgets, local governments already are acting responsibly under current law, which requires passing a budget based on anticipated tax revenues. The Ohio Municipal League and Yost’s office report that no local governments in the state are in bankruptcy. The league is not aware of any Ohio municipality that is running a deficit.
Cincinnati does have a big pension problem, the system carrying unfunded liabilities of more than $860 million. But that’s an issue best resolved by the city’s elected representatives, its mayor and council members, not by the state stepping so deeply into local matters. The state auditor already has much authority to look at the books.
The bottom line is that Yost, Terhar and the bill’s 13 co-sponsors (all Republicans) are showboating, more than anything. They are using Detroit’s long slide into bankruptcy to suggest the need for action here, setting the stage for an unnecessary intrusion into the affairs of local governments, which, though hard hit by state budget cuts, have been managed responsibly in the main.