CLEVELAND — As Congress prepares to take up the fourth phase of a stimulus plan the call is going out from Republicans and Democrats alike that it must include a lifeline for state and local governments hit hard by the loss of revenue.
Local governments are funded by taxes and fees, property taxes on average being the biggest one. Some however differ relying more heavily on sales taxes to keep the municipal lights on and even smaller percent nationwide rely on income taxes to do it. This piece of the pie, that would be Ohio.
“I’m told that 90% of the cities around the country cannot use income taxes but Ohio can and they do,” said U.S. Senator Rob Portman (R-OH).
Not only do they use but heavily rely on it and when people aren't working they're not generating income and in turn income taxes.
Consider this, Cleveland gets 66% of its general revenue from income taxes, Toledo close to the same at 67.6%, while Columbus gets even more at 76%.
That's why the state capital rank number one in a recent study by the Brookings Institution looking at cities most likely to feel quicker the financial impacts of the crisis. In fact four of the top five cities on the list are from Ohio with Cincinnati second followed by Toledo and Cleveland in the fourth and fifth spots.
“What I'm hearing from our local governments all around the state,” Portman said. “They're having real trouble being able to fund their basic responsibilities, the most basic of all being public safety."
Akron Mayor Dan Horrigan says they're looking at a 20-to-35% drop in revenues this year alone. In the economic collapse of 2009 they reduced staffing levels by 60%, some of which was added back but not much.
That's why he and local leaders along with senators Portman and Sherrod Brown are calling on Washington to include in Phase IV of the Cares Act money to keep local governments afloat.
Brown told News 5 that Senate Minority Leader Chuck Schumer told him that Senate Majority Leader Mitch McConnell promised him that funding for state and local government will be in the next phase.