Prepare for Changes in 2011

There will undoubtedly be changes to the state and local budgets after Governor-elect John Kasich takes office on January 10, 2011. Ohio faces a potential revenue shortfall of as much as $8 billion to $10 billion, as we enter the next two-year budget.  Gov-elect Kasich prepares to balance the next state budget while simultaneously promising no tax increases.

Throughout the state, city leaders are concerned about whether the changes will eliminate or severely cut the local government fund to help bridge the budget gap.  Many municipalities have already seen a cut in the amount they receive from the local government fund.  The local government fund comes from a variety of taxes levied by the state and was created to replace revenue that communities lost due to past state tax reforms.¹

In addition, it is uncertain whether the economy will improve, which makes it difficult to project what will happen with the cities' income taxes. Various city officials are hoping the collection of income taxes, which have been down for many years in a row, will be up slightly next year.

We've seen local municipal budgets manage through furloughs, employees going without raises, concessions and spending cuts.  Local municipal budgets, however, cannot be finalized until Gov-Elect Kasich presents his budget to the Ohio Legislature in March, and the Ohio Legislature passes it by a June 30 deadline.  Gov-elect Kasich said he intends to move fast and be ready to put together a biennial budget before the March 15 deadline.

Ohio's local governments must become smarter, cheaper, and more effective.  Ohio's 3,700 counties, cities, townships, villages, school districts and special districts vary in size and sophistication. Some of our 1,308 townships are relatively large, while a third have populations of fewer than 1,500.²

What can local governments do?  One thing is cut costs while increasing revenue.  Outsourcing is key to accomplishing both.  Outsourcing is not a new concept. It is based on the simple premise that no one can be perfect at everything. Outsourcing was initially driven by cost/efficiency gains. Today more than ever, local governments must focus on the disciplines, functions or operations in which they excel -- their "core competencies" -- and consider outsourcing the rest to experts.³

Regardless of whether a municipality operates an internal collection department or contracts with a billing party, every government should consider whether to use an outside firm.  According to ACA International, the "majority of federal agencies, 43 states, and thousands of cities and counties nationwide" are using collection agencies in some capacity.⁴

Weltman, Weinberg & Reis, Co., L.P.A. (Weltman) understands the intricacies involved with the collection of all types of government claims and is committed to helping generate revenue while maintaining the highest degree of professionalism.  We offer services from letter programs, fee driven legal executions, contingency collections and litigation, bankruptcy representation, to foreclosure services.  We also offer secure, on-line access to all matters outsourced, so each claim can be accessed remotely by the governmental client that referred the claim.  We generate revenue through collection recovery, allowing you to put dollars to work improving the lives of residents.

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¹Crain's Cleveland Business, January 3-9, 2011, Cities Brace for Impact as Budget Cuts Loom, Page 18.
²Ohio's Metropolitan Chambers of Commerce and the Ohio Chamber of Commerce.
³Clarity Consulting, Making the Decision to Outsource, by Ian S. Hayes.
⁴Government Revenue Collection Association, Improving Collections.