Category Archives: taxes

Dayton Development Coalition Scam May Be Coming To An end

Posted on December 20, 2010 by | Leave a comment

By John Mitchel

RE: “Officials to review coalition’s funding”, Dayton Daily News, December 18, 2010: For years
our public servants have been writing blank checks to the Dayton Development Coalition on the
pretense that they and they alone are responsible for “saving” jobs at Wright Patterson. Rarely, if ever
do the Coalition or the politicians give credit to Wright Patt leadership or the folks that actually do the
work that has established Wright Patterson as a national treasure.

Instead they heap credit on themselves and the Coalition’s President and CEO who was paid $285,000
in 2005 — that’s about double what the Governor of Ohio earns and more than the Vice-president of the
United States. And don’t believe the lie that those exorbitant salaries and bonuses are not funded with
taxpayer dollars. You see, a basic principal of finance and economics teaches us that money is “fungible,”
or is universally exchangeable between two obligations, in this case between public corruption and national
defense or local infrastructure. Unfortunately the corrupt politicians and their insider sycophants at the
Coalition are the big winners here.

However it looks as though enough is enough and at least some elected officials are demanding transparency
at the Coalition and elsewhere. It’s time to clean out the barn and shutting down the Dayton Development
Coalition would be a good place to start.

Other commentary and analysis by John Mitchel may read at www.reformcongress.com.

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Why Ending Bush Tax Cuts Of Americans Making Over $250,000 Is Not A Good Idea

Posted on December 5, 2010 by | 1 comment

If the Democrat economic plan were not primarily beneficial to government coffers, I would be for it.
I serious doubt the economy will benefit greatly by merely maintaining the Bush tax cuts for the middle. Those with incomes over $250,000 may benefit more, but they also have more disposable income to spend. Spending helps maintain GDP. More importantly, it maintains tax revenues. Therefore, I have to agree with the Republicans. Raising taxes on anyone during a prolonged economic recession is not a good idea. Because the high-income group has more disposable income to spend, they are key to keeping a modicum of economic stability.

Democrats are doing a very poor job of making themselves look good. They are showing Americans that their agendas are more important than the common good.

Someone is bound to respond: Well, duh!

However, when looking at taxation and economic growth in the long-term, I think Americans with taxable incomes over $250,000 should pay considerable higher taxes.

How could that be good?

First, it’s contiguous with founding idea of economic liberty. Thomas Jefferson is representative of a large numbers early Americans who believed the rich should pay for government services to the poor. They believed it was immoral for rich Americans to have much while poor Americans lacked. Thomas Jefferson was no welfare socialists either. Like many others, he opposed low paying wage labor because it was a form of slavery.

Second, the rich paying for welfare to the poor should inspire them to change the political economy engendering poverty and welfare. Jefferson seemed to think making the rich pay to help the poor would motivate the wealthy to devise programs to ensure the poor actually gained skills by which to earn high incomes in order to live independent of rich charity or tax funded government services. I suspect Jefferson would have favored living wage standards as opposed to minimum wages.

Lastly, it seems unjust for the working poor and the middle class to pay for problems created by the wealthy and societal institutions. The Courts didn’t have to encourage the working poor to adopt socialism in order establish economic rights against big manufacturing firms. The Courts could have forced Congress to deal with the issue of low wage slavery. Against the ready argument that freedom of contract and market value would be violated, the Courts and other authorities could have applied Adam Smith’s capitalistic view that large manufacturing corporations were quasi-government institutions requiring regulation, i.e., regulation to prevent low wage slavery. It was the founding generation, those like Jefferson, who thought it unjust to tax all Americans (including the working poor and middle class) to cover the problems of the poor.

Remember, Jefferson wrote “all men were created equal,” which appears not to mean equal opportunity to pay taxes for welfare.

Besides all of that, the stock markets have not declined to 1990 levels, which indicate a somewhat healthy economy still exists–that is if a political economy can be regarded as such. It is healthy because those making over $250,000, like the Democrat and Republican politicians on Capitol Hill, are working to keep their stock portfolios profitable.

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FED’s $600 Billion Quantative Easing Tax, Is it Necessary?

Posted on November 22, 2010 by | Leave a comment

Charles Plosser, CEO of Philadelphia’s Federal Reserve, addressed an audience at Cato Institute on the topic of employing monetary policy to prevent asset bubbles, which caused the current recession. He told the audience that using monetary policy to adjust interest rates in order to compensate for asset price gaps (bubbles) was not a good idea. One example given was raising rate on mortgages to restrict rising housing prices. Two reasons for being against employing broad-based monetary policy for individual asset markets like housing were: (1) The risk of wrecking havoc in other parts of the economy is too great, and (2) no precise measure of asset-movement exists by which to form sound rule-based monetary policy. (Read his Cato speech titled “Bubble, Bubble, Toil and Trouble: A Dangerous Brew for Monetary Policy.)

John Mauldin, CEO of Millenium Wave Advisers, came to a similar conclusion about Fed Chairman Ben Bernanke’s decision to inflate the economy through the latest $600 billion quantitative easing. Bernake’s reason was to prevent deflation, which means core inflation rate as measured by the Consumer Price Index (CPI) dropped below 1 percent. Core inflation is all consumer goods except food and energy. Mauldin claims core inflation is actually about 1.5% not 0.6% when housing costs are removed.

There seems to be two reasons Mauldin measures inflation without housing costs: (1) Historically, the Bernanke should have used monetary policy to lower an increasingly high inflation rate back in 2005 that was caused by the housing price bubble. (2) More important is the fact that over the past few years housing cost is growing at near zero percent (see the chart below).

If Puru Saxena, CEO of Hong Kong based Puru Saxena Wealth Management, is right, Bernake’s quantitative easing will not revive the U.S. economy. Just like the previous two stimulus bailouts, quantitative easings never do. (Read his article titled “Band-Aid Solutions”

What Bernanke’s cash infusion will do is devalue the dollar. This will causing food, energy, and everything else to rise, which will act as a tax on disposable income. Less disposable means fewer sales. As Mauldin also pointed out, food and energy costs already are high for those with lower income. These people will suffer the most as a result of the Fed’s easy quantitative induced inflation.

There are some creative ideas that could solve the housing price problem. For example, Fannie Mae, Freddie Mac, and FHA could rent their growing stock of foreclosed houses, which would keep some people in their homes. Banks also could lend to investors (landlords) to buy cheap housing if they promise to rent them out. Read Maudlin’s article “O Deflation, Where is Thy Sting?” to learn more.

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Rep. Austria on Bush Tax Cuts

Posted on November 16, 2010 by | Leave a comment

Now that the dust from the recent election has settled, the real work begins. Before the newly elected Congress is sworn in on January 3rd, the lame duck Congress still has important work to do on issues ranging from extending the expiring tax cuts to addressing cuts to Medicare reimbursement payments to physicians.

We must address the expiring Bush tax cuts. If Congress does not extend these tax cuts, it will equate to a $3.8 trillion tax increase that will affect all taxpayers, from families to farmers to small business owners. The indecision surrounding this issue is causing uncertainty for those who are seeking assurance in these difficult economic times. All the temporary tax cuts need to be extended, including those affecting the estate tax, capital gains tax and dividends tax so as to spur confidence and encourage local entrepreneurs to invest in their businesses, creating long-term, sustainable jobs.

The potential cut in Medicare reimbursements to doctors is another issue that will likely be considered in the lame duck session. Unfortunately, a permanent fix to the physician fee schedule was not included in the health care reform law and instead a temporary extension is in place, which is set to expire at the end of this month. These short-term extensions have only increased uncertainty for physicians, forcing many of them to close their practices or severely limit the number of Medicare patients they see. Reform is necessary to establish a fair and equitable physician fee schedule for Medicare providers and patients.

Above all, we must ensure that these proposals are cost-effective, and are paid for by funds within the existing federal budget, rather than borrowing money and running up more debt. With the new Congress coming in, we have an opportunity to work together to address these challenges head-on, and focus our efforts on helping the job creators in the private sector generate long-term, sustainable jobs that will turn our economy around.

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Why Deficit Reduction Is Necessary and Need Not Hurt the Poor

Posted on November 15, 2010 by | Leave a comment

By Isabel V. Sawhill, Brookings Senior Fellow, Economic Studies

We need to reduce our long-term deficits. We cannot forever spend more than we collect in taxes. And if we continue on our current path we risk another economic crisis that is likely to produce even more unemployment than we have now.

To be sure, we should not cut the deficit right now—that would be very bad for the economy. We should combine stimulus now with legislative initiatives that gradually rein in spending and raise taxes once the economy has recovered.

But if we continue to ignore the huge accumulation of debt in our future, or assume it can be addressed without cutting domestic spending, it is the least advantaged who are likely to suffer the most.
Why do I say this?

First, if we have another economic crisis that produces high rates of unemployment for an extended period, social programs will do no more than temporarily reduce the harm inflicted on the least advantaged. The safety net is no substitute for a job and a growing economy. Deficits matter because, in the longer term, they undermine the economy’s ability to produce the jobs that are especially critical to moving people out of poverty and into the middle class.

Second, many progressives believe that we can solve our fiscal problems by cutting defense and raising taxes. Although I believe they are right to fight for both of these solutions, I do not think they will be sufficient. As I have argued in more detail elsewhere (see my debate with Greg Anrig in the September issue of Democracy: A Journal of Ideas), the numbers simply don’t add up unless taxes are raised across the board to unprecedented levels—and not just for the wealthy. This level of taxation is not only politically unfeasible but unfair to the many middle and working class families who are currently struggling and whose incomes were stagnating even before the recent downturn.

Third, any effort to protect Social Security and Medicare from future spending reductions – as many advocates are now arguing – will simply put more pressure on programs that serve the disadvantaged and their children. The rapid growth of spending on entitlements has already forced the Obama Administration to propose a freeze in non-security domestic spending.

In California, Governor Schwarzenegger has proposed an elimination of the state’s welfare-to-work program as well as most child care assistance for low-income families, a harbinger of what may happen at the national level as the budget squeeze plays out over the next decade or two. This should give pause to those who argue that we can’t touch health or retirement benefits for those over about age 55, since they won’t have time to adjust to the changes. There’s no such “adjustment time” permitted for single moms with a low-wage job who are suddenly forced to spend one third of their income on child care.

Those who care about protecting the less advantaged need to be willing to find savings in the largest and fastest growing portion of the federal budget—the big three entitlement programs: Social Security, Medicare, and Medicaid. In 2010, 71 percent of all revenues are devoted to just these three programs.
What kinds of changes should advocates for the poor support?

First, they should support reforms that leave the core commitments behind Social Security and Medicare intact and ensure that no one is left bereft of access to basic health care and a decent income in old age.

Second, they should support reforms that gradually trim benefits for the more affluent over time while protecting those at the bottom.

Third, they should support reforms that recognize that not all spending on health care improves health. Specifically, we need to move toward reimbursement rates for providers that are tied to evidence of effectiveness. The goal should be to improve health, not just access to health care. Thanks to the recent health care bill, health care itself is now nearly universal. But some estimates suggest that as much as a third of all health care spending does not improve health—an estimate that is further reinforced by the good health outcomes achieved in other advanced countries that spend far less than the U.S. on health care.

But the answer for those who care about low-income Americans is not to ignore deficit reduction. It’s to pursue sensible deficit reduction in a way that protects poor people now and ensures a more prosperous future for everyone.

This article was originally published by Brookings on October 18, 2010 at www.brookings.edu/opinions/2010/1018_deficit_reduction_sawhill.aspx

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Real World Employment News

Posted on November 8, 2010 by | Leave a comment

Last week, mainstream news outlets gleefully reported a booming growth of 151,000 new jobs. Even the liberal Economic Policy Institute (EPI) joined in the celebration of accelerated job growth. The EPI was also pleasantly surprised by the modest level of state and local government jobs. The real party pooper was the announcement that the national rate of unemployment remained at 9.6 percent. In a more sober moment, the EPI said it will take years before we will see pre-recession levels of employment growth. Bummer….

Unfortunately, the above employment numbers are not real. According to the Dr. Lacy Hunt of Hosington Investment Management, the broader measure of household employment fell by 330,000. While 151,000 more people where included in payroll statistics, 330,000 more working people living in households became unemployed. Using Dr. Lacy’s figures, the total number of newly unemployed was 171,000 in October.

Dr. Lacy also explained why the unemployment rate remained the same. The reason was 254,000 members of the unemployed dropped off the statistical charts. They are no longer getting unemployment checks. They are no longer hoping for a decent job or any job. They no long looking for work. They are dropouts. As of October, the civilian labor force participation rate fell to a record low 64.5 percent. This means 35.5 percent of working age people were not employed. One can only wonder about how the paternal godfathers and mothers on Capitol Hill will attempt to save those dropouts–a new entitlement program maybe?

To make matters worse, the number of full-time workers who lost jobs was 124,000 increasing the total number of full-time job losses over the past 5 months to 1.1 million. This reduces the level of full-time employment to those in 1999. An economy cannot generate income growth by continuing to substitute part-time work for full-time employment, according to Dr. Lacy.

The Feds recent infusion of $600 billion new dollars will further erode the household incomes with which to purchase goods and service and pay their bills.

Xenia taxpayers will have even less after-tax income to spend once the 1/2% income tax, health service tax, and other tax increases take effect.

Source: Thoughts from the Frontline Weekly Newsletter

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Ohio, 46th Worst Business Tax Climate : The Tax Foundation’s 2011 State Index

Posted on November 1, 2010 by | Leave a comment

The Tax Foundation released the newest edition of the State Business Tax Climate Index, which ranks from 1 (best) to 50 (worst) the tax systems of the 50 states. South Dakota’s tax system is most welcoming to economic activity while New York’s tax code ranks 50th as the least hospitable. Ohio almost caught up with New York being ranked as 46th least tax friendly state.

The goal of the index is to focus lawmakers’ attention on the importance of good tax fundamentals: enacting low tax rates and granting as few deductions, exemptions and credits as possible. This “broad base, low rate” approach is the antithesis of most efforts by state economic development departments who specialize in designing “packages” of short-term tax abatements, exemptions, and other give-aways for prospective employers who have announced that they would consider relocating. Those packages routinely include such large state and local exemptions that resident businesses must pay higher taxes to make up for the lost revenue. As a result, businesses often move to other regions or states to remain competitive.

States with the best tax systems will be the most competitive in attracting new businesses and most effective at generating economic and employment growth. As we will see, Ohio need more than government generated jobs. Ohio needs a serious tax code revision.

The index ranked states based on five component tax indexes:

• The Corporate Tax Index
• The Individual Income Tax Index
• The Sales Tax Index
• The Unemployment Tax Index
• The Property Tax Index

The Corporate Tax Index assesses both corporate income taxes and/or gross receipts taxes. Ohio taxes business on the latter gross receipts.

The Individual Income Tax Index measures the effect on small businesses and entrepreneurs, on labor costs, and, depending on the type of business, on consumer spending. One reason Ohio ranks among the worst states is it arranges the top income brackets in the middle range of income. Ohio is among the states with the highest marriage tax penalties. Ohio’s local income tax rates also are the third highest in the nation.

Sales Tax Index measures the rates and effects of taxes both on business. A form of double taxation exists when a business pays sales tax that increases the cost of goods and services and when the consumer pays sales tax on the same goods or services. The two components of the index consist of the tax rate and tax base, which is the range and types of goods and services taxed.

The Unemployment Insurance Tax Index measures the effects state and federal rate structures and related policies and how potentially damaging to business they may be. Ohio was ranked as among the states with the best unemployment insurance structures.

Finally, the Property Tax Index is comprised of taxes levied on the wealth of individuals and businesses. These include taxes on real and personal property, net worth, and the transfer of assets. Some studies property taxes are a significant factor of business location decisions.

So how did Ohio rank on each of these indexes?

Tax Indexes 2011 2010 2009 2008 2007 2006
Corporate Tax 39 38 33 33 39 47
Income Tax 44 46 47 47 49 50
Sales Tax 35 37 39 39 38 43
Unemployment Tax 11 10 15 15 11 48
Property Tax 39 38 33 33 39 13
Overall Rank 46 47 48 48 47 47

 

Anyone for lower sales, income and property taxes? If you are, you must also be for more efficient government operations and fewer unnecessary government programs.

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Xenia Employee Conundrum and Issue 9

Posted on October 28, 2010 by | 4 comments

By Daniel Downs

City management claims the proposed income tax levy (Issue 9) will allow them to rehire six police and fire employees. The proposed levy also will be used for streets and other capital improvement projects. When looking at the 2009 State Audit Report, the employment data does not match the levy rhetoric.

Consider the following:

In 2009, the City of Xenia reported having 297 employees. The number of total city employees for 2007 was 290. That means the city had more not less employees last year than the past two years. If city officials laid off 6 police and fire employees, how can there more employees than in 2008?

The employment conundrum only gets more interesting.

In the same financial report for 2009, the total number of full time equivalent employees numbered 216.5, but in 2008 the total was 227.5 and 227.25 for 2007.

I have heard of “Two and a Half Men,” but a quarter!

The difference between the employment figures above shows the city actually laid off 11 full time employees, none of which adds up to 297 or 290.

By now, you smart readers have figured out that the large differences between 297 and 216.5 employees is probably due to volunteers who are considered employees. If the 60.5 employees are not volunteers, then who the heck are they?

Accounting for the 60.5 volunteers-employees does not solve the entire conundrum. According to the State audited report, Xenia laid off 9 full time and 2 part-time employees plus 2 employees retired. This adds up to 13. City management wants to rehire 6 laid off security personnel. So who were the other 5 employees the city let go?

Let’s look at a summary of changes in city employment for 2009:

– 3 full-time and 1 part-time finance department workers were laid off.
– 2 full-time and 1 part-time employees were added or transferred to the legal    department or court.
– 1 full-time administrator was laid off or transferred elsewhere.
– 2 full-time information technology positions were added and filled.
– 3 full-time police officers were laid off.
– 1 full-time fire fighter also was laid off.
– 7 full-time and 1 part-time street maintenance personnel were laid off.
– 2 full time of street maintenance workers were transfer to a new department    called garage.
– 4 full-time and 1 part-time recreation workers were laid off.
– 1 full-time and 1 part employee were transferred to newly formed positions    under Parks.
– 8 full-time service employees were transferred to (at least on paper) to the    following categories:
– 4 full-time positions were created under development and planning.
– 4 full-time positions transferred to engineering.
– 4 full-time and 1 part-time employees were added (or transferred) to the    water department, and finally,
– 1 full-time sewer worker was laid off–that job stunk anyway.
–  28 total full-time and 3 part-time workers laid off.
+ 17 total full-time and 3 part-time workers added (or transferred).
 

Out of all the lay-offs, transfers, and new positions, it is difficult to pinpoint who the 5 actually were. We know for certain that the number of police and fire personnel actually laid off were 4 and not six in 2009.

Did you notice only one fire fighter was laid off? Did the Second Street fire station (No. 2) employ only one fire fighter? He must have been one tired professional working 24 hours a day and seven days a week.

Interestingly, closing fire state no.2 and laying one fire fighter did not decrease expenditures of the fire department. Instead of offsetting a $500,000 decrease in tax revenue, expenditures increased $26,000 in 2009.

Just when I was certain the conundrum was resolved, city council sent out a “Vote No on Issue 10” postcard claiming the passage of the 1/2% income tax levy will enable the city to bring 12 laid off public safety officers. Since when did the city lay off 12 fire and police officers? Not last year! It just so happens the city laid off 5 police officers and 2 fire fighters in 2004. Adding those laid off in 2009, the number of laid off safety personnel equals 11.

So what’s 1 lost employee anyway? Maybe he/she fell into the black hole of political rhetoric.

It is true the city had less revenue in 2009, which is actually part of a recurring trend in municipal finance. The 10-year history of the city’s revenue and expenditures shows this trend occurs every 2-3 years. This time around the decreased revenue stream is the result of government bureaucrats in Washington and their fellows in the state house as well as reckless lenders. In the financial report, city management reported a 12% unemployment rate for Xenia. Because of this, it is claimed city tax revenues have decreased. It is true some taxpayers are without jobs; some have moved away; and some small business owners who are still in business remain concerned about the possibility of a double-dip recession. Yet, if the number of tax filers is any indication, employment among residents actually increased in 2009. The number of tax filers increased by 76 among last year. The problem with more individual income tax filers was less income tax revenue. According to the financial report, their contribution to the city’s general revenues was down by $4,400. It is clear the nearly $500,000 decrease in tax revenues was not the result of unemployment. It was the result of both recessionary effects on business and property values.

Once the economy fully recovers, city tax revenue will exceed pre-recession levels. The lost employee might be found and 6-11 new safety personnel hired. That is as long most of the nearly 3,000 new residents remain and new businesses replace those the recession closed.

Because of all these factors, Xenia voters should say NO to the municipal tax levy (Issue 9); NO to the fire and police unions’ ordinance that will force Xenia taxpayers to hire previous or new employees and allow them to increase expenditures (Issue 10); and YES on Issue 11, which will enable the city to hire part-time employees until unemployment is reduced to post-recession levels and the economy is viable once again.

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Does Passing Issue 10 Make Any Sense?

Posted on October 25, 2010 by | Leave a comment

By Daniel Downs

Xenia fire and police want us to believe passing their proposed charter amendment (Issue 10) will guarantee the continued safety of Xenia citizens and their property. What it will actually accomplish is force taxpayers to maintain no less than 42 full-time certified fire fighters and 46 full time police officers at all times no matter the cost to the city. City council claims passing Issue 10 will bankrupt the city by 2013.

Bankrupting the city does not make sense.

Issue 10 will also require the city to adhere to a staffing norm of 1.5 fire fighters per 1,000 population and 1.7 police officers per 1,000 population. The latest financial report has Xenia population at 27,314 and the above minimum number of safety personnel reflects this normative formula. However, the current number of police is 69 and fire fighters totals 41 not 46 police and 41 fire fighters.

Why then does Xenia employ 69 police officers rather than 46? The answer is response time and supervisors. Many years ago, city management and council decided they wanted police to respond more quickly to calls. That meant adding more police officers and supervisors per shift to guarantee the results.

Employing more police for quicker responses to calls does make sense.

What does not make any sense is allowing fire fighters to reformulate requirements that will result in more supervisory staff. It appears fire fighters are attempting to set a minimum number of fighters without clearly delineating the requirement for more supervisory and administrative staff to support them. If this is so, they are misleading voters to get what the police have–more personnel. The problem is no one sees the need for more fire fighters. In fact, city officials didn’t see the need for less either. Only 1 fire fighter was laid off, according to the city’s state audited financial report.

Failing to provide for a reduction of safety personnel should Xenia population significantly decrease only makes sense if you are trying to pass a 1/2% income tax levy. It’s the good cop-bad cop routine.

Whether or not this was intended, Issue 10 still lacks provision to reduce safety personnel in case of decrease on population. For example, if Issue 10 passes and Xenia population grows to 30,000, the city will be required by law to hire 4 more certified fire fighters. But, if the recession caused enough people to move away that the population shrunk back to 24,164 as it was in 2008, city could not lay off 5 police and 5 fire fighters.

It does not make sense to employ more safety personnel unless to improve call response times or prevent crime.

A question still needing an answer is how many residents are there now? Put differently, how many residents have moved away since the recession? According to recent U.S. Census Bureau estimates, Xenia population grew to 27,437, which is an increase of over 3,291 since 2007.

Assuming all of the new residents live in family households and average $20,000 of taxable income, the city should have seen an increase of nearly $400,000 in income tax revenue per year. That does not include any additional property tax increases. In actuality, the city reported $555,025 less income tax revenue, which means most of them became unemployed, some of them became unemployed and some other did as well, or census estimates are wrong. In actuality, the number of taxpayers increased by 76 in 2009 but paid $4,468 less income taxes. This suggests that most of the decrease in income tax revenue was the result of significant decline in local business revenue.

It does not make sense for taxpayers either to make up lost revenue for local business or to add more safety personnel when local unemployment rate is 12 percent as reported by city officials.

Issue 10 will also create an unfunded mandate, which is the reason past and present city council members oppose it. It does make any sense to pass a law that will cost taxpayers more money without creating legal means to fund it.

Passing Issue 10 simply does not make any sense, which is a good reason to vote NO on November 2.

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Police & Fire Retirees Become Public-Service Millionaires

Posted on October 23, 2010 by | Leave a comment

The Buckeye Institute for Public Policy Solutions today released “Dipped in Gold: Upper-Management Police and Fire Retirees become Public-Service Millionaires.” Through the Deferred Retirement Option Plan (DROP), public safety officials are eligible to retire on paper, yet continue to work for up to eight years while their pensions (along with three percent cost-of-living allowances and five percent interest payments) accumulate in untouchable accounts. When the officers exit DROP, it is not uncommon for them to collect lump sum payments totaling roughly $1 million dollars. Since they are treated as if they are in year 9 of retirement when they exit DROP, many in upper management also collect yearly pension payments in excess of $100,000 for the rest of their lives.

Since the Ohio Police & Fire Pension Fund (OP&F) is a highly secretive entity, the report details DROP payouts and pensions for hypothetical Columbus and Cincinnati police officers. Supposing the average DROP participant is a Columbus police officer, taxpayers would save nearly $1.2 billion if the DROP program were eliminated and the retirement age were raised from 48 to 55. The report also suggests several other money-saving options such as terminating cost-of-living allowance increases during DROP, tying the interest payments to market rates, and disallowing participants to keep their required employee contributions to OP&F.

Mary McCleary, Buckeye Institute Policy Analyst, stated: “Making public servants millionaires when they retire is not the bargain you agreed to as a taxpayer. Ohioans bear the seventh highest state and local tax burden due to expensive programs like DROP. Private-sector taxpayers, many of whom have experienced job losses, pay freezes or cuts, and benefit reductions, cannot afford to finance the gold-plated compensation packages of their police officer and firefighter neighbors.”

The report can be viewed on The Wire at www.buckeyeinstitute.org.

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