Cut through the emotion and consider the facts about Issue 2

By James D. Gottfried, CPA, Chair, The Ohio Society of CPAs

Whether you are for it or against it, nobody can deny that State Issue 2 has raised plenty of emotion.

Unfortunately, as is often the case with hotly debated topics, some of the concern felt by voters has been generated by misinformation about just what Issue 2 will do. I encourage all Ohioans – especially  members of OSCPA – to look objectively at what the act really says and does, and weigh the impact on all citizens before voting.

Why is OSCPA taking a position?

The OSCPA Executive Board could have shied away from the issue, but we felt it was important to continue to be an impartial voice of fiscal reason among state leaders. As CPAs, we are committed to protecting the public interest, not just the interests of our profession. As CPAs, we understand the importance of operating efficiently and the need to adjust to meet fiscal realities.

A lengthy process was followed in considering the issue. OSCPA’s Governmental Affairs Advisory Council carefully considered both sides of Issue 2, and made recommendations of support to the Executive Board. The Executive Board then spent a considerable amount of time debating the issue. In the end, the Board voiced overwhelming support that formally endorsing a “YES” vote on Issue 2 was the right thing to do.

Why is OSCPA encouraging a YES vote?

We all know that Ohio is struggling economically. A byproduct is that most taxpayers are not willing to support tax increases. Over 80% of levies failed this year. At the same time, state and local government and school districts, most of which already have made cuts, are facing rising costs. Where school districts are concerned, a five year projection shows that personnel costs on average will make up 96% of district expenses by 2015 – up from the current 85%. That will leave 4% for buses, textbooks, utilities and everything else. You don’t need to be a CPA to know that the status quo is unsustainable. Something has to give. Issue 2 will provide state and local leaders with much needed flexibility to control administrative costs. Some have characterized Issue 2 as union busting and as a criticism of our highly valued teachers and first responders. Issue 2 is neither. This measure isn’t a value call, it is simple math; voters aren’t willing to support tax increase after tax increase, meaning government leaders can’t cover rising expenses.

These changes are not an attempt to break up the unions or put firemen and policemen in danger. These changes are an attempt to untie the hands of government officials so they can be more responsive to the budgetary issues they are facing now and in the future. These budgetary issues are real and cannot be ignored or put off. They will be dealt with one way or another. A Yes vote does not end all collective bargaining rights for government employees or reduce public safety. However, if Issue 2 is voted down, the only viable option for many jurisdictions will be to cut even more crucial jobs and services – including emergency service personnel.

Health care premiums are a huge cost to all employers, including state and local governments. So are retirement benefits. In 1983, it was common for health insurance to be a free fringe benefit, and for many of us to have a pension to look forward to. Today, it isn’t unusual for a private-sector worker to pay for 30% of their premium cost, and most pension plans have switched to 401(k) plans. If upheld, Issue 2 will help government control expenses by ensuring that employees pay a reasonable share of both benefits.

The savings to the public sector can be significant: in Youngstown City Schools, such a health insurance mandate would save the district $1.5 million a year. In the City of Columbus, the pension contribution mandate would save $41 million a year. Those are real dollars that can help save jobs.

Just as important is that Issue 2 would allow government leaders to better control costs by removing from union negotiations operational subjects such as where employees will be located, hours of operation, whether services can be shared with other jurisdictions, and whether some services, such as janitorial and maintenance, can be outsourced, to name a few. It also will allow them to more aggressively shop around for potentially better yet less expensive health insurance, just as the private sector regularly does. Doing so would give each municipality and school district the flexibility to respond better to market conditions and local needs.

This is an important issue, with a lot of emotional appeals being thrown around. I urge you to rise above the rhetoric and consider the realities we are facing. Support Issue 2 on Nov. 8. If you have any questions or concerns, let us know at cpavoice@ohio-cpa.com.

For more information, visit OSCPA’s Issue 2 page.