COLUMBUS, Ohio (WTVN) -- Local governments would have to balance their budgets like the state of Ohio under a bill being introduced at the Ohio Statehouse.
"Currently there is something in statute that says that municipalities are required to have a budget that is balanced based on anticipated tax income. That's not the same as a balanced budget," said Rep. Lou Terhar, a Republican from Hamilton County.
His bill, called the Financial Responsibility in Government Act, would require local governments like townships, counties, and municipalities to balance their budgets, maintain actuarially funded municipal pension plans, and comply with the state’s constitutional obligation. Terhar's bill would not allow deficit spending.
“The bankruptcy of Stockton, California and more recent filing in Detroit serve as reminders that we should not leave Ohio’s political subdivisions open to this type of potential financial crisis in the future. Municipal bankruptcies hurt not only the city, but also negatively affect the economic health of the region. State resources would be stretched thin due to new unemployment claims, added health care costs and a whole host of social services. We in the General Assembly have an obligation to protect our constituents,” said Terhar.
The bill has the backing of Auditor of State Dave Yost. He says 32 local governments are either in fiscal watch, caution, or emergency.
"There's a bunch of governments in Ohio that are one tough recession away from not being able to make ends meet," he said.
Yost pointed to Cincinnati as one example of a municipality with some looming budget issues. Terhar believes the current unfunded amount in Cincinnati's pension for 2014 is over $800 million.
"Pretty soon that's real money," Terhar said.
Yost says the city needs to get a handle on the issue and do it quickly. He's concerned about plans to use some proceeds from privatizing parking in the city to fund one-time operating expenses.
"That's exactly the wrong thing to do from a budget standpoint," he said.
But situations like Cincinnati's are the exception and not the rule for most of the state's local governments.
"The vast majority of folks in Ohio are doing what they're supposed to do. What we don't need is those who don't do what they're supposed to do continuing to do it," Terhar said.
The bill will be formally introduced during the General Assembly’s fall session.