21 Aug 2014
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Mentor City Manager Sounds Off on State Budget

Ken Filipiak says that state is seizing local funds to continue state projects

Mentor City Manager Sounds Off on State Budget

Mentor City Manager Kenneth Filipiak said the proposed state budget, which the Senate approved Wednesday, would cost the city about $3 million in funding.

Slightly more than half of that will come from over the next two years. The rest of the lost money is because of the removal of the estate tax and the acceleration of the .

Overall, the lost money represents about 7 percent of the city's general operating revenue, Filipiak said.

He added that, while he understands the governor and legislature's intentions to overcome a $6 billion shortfall, he feels this budget just passes the problems of the state down to the local level.

"We think it's very shortsighted of the legislature and governor's office to essentially raid the local government fund," he said. "It's not a practice of fiscal discipline to seize the money that has gone to local governments for decades as shared revenue."

Moreover, Filipiak said he feels the cuts to local government show an unsettling change in philosophy. Previously, state government perceived money that went to the local government fund as shared revenue with the local municipalities, he said.

"Now, they view it as Columbus' money to give or not give back as they see fit," he said.

Filipiak said he would understand if the budget included across-the-board cuts; but, instead, some programs were untouched or received smaller cuts while the local government fund will be cut in half during the next two years.

"Even if you explain a 10 percent cut to the whole budget, how do you justify a 50 percent cut to the local government fund?

"You're simply taking money out of the local fund to continue state projects," Filipiak said. "It's transferring the problem to local governments."

The city manager also said the state "changed the rules" when it accelerated the CAT reimbursement phaseout. Local governments receive funding from a commercial activity tax – CAT, for short. When the legislature introduced CAT in 2007 to replace personal property tax, they always planned to gradually decrease the percentage of it that goes to local governments over time.

However, the new budget would decrease the reimbursement at a faster rate.

Filipiak said municipalities were fine with the original schedule because it gave them time to wean themselves off of the CAT money. However, the new timetable gives them a previously unanticipated cut to the bottom line.

"We were living within the rules. Then they changed the rules," he said.

Filipiak said the city will deal with the budget cuts through "targeted cuts and business growth."

He said the city's main priorities remain nurturing business growth, maintaining the city's infrastructure and public safety.

Filipiak stressed that the city is "not anticipating large-scale layoffs. Let me make that clear. We've been making our cuts over the last three years."

Most of the city's aforementioned cuts were by attrition – not replacing employees who left or were retired.

Filipiak said the city has a rainy day fund, which will cushion the blow. He added that Mentor has "a reasonable expectation that our revenues will rebound. Our business community is still strong."

Filipiak concluded by saying that he did not dislike Gov. John Kasich or the legislature, but he disagrees with their approach to local government funding.

"I applaud their efforts to practice fiscal discipline but, as it applies to local governments, they missed the mark."

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