Undue Influence by Findlay Mayor on City’s Audit

September 8, 2012

Findlay Mayor, Lydia Mihalik, explained in an open letter to the residents of Findlay how her administration had an influence on the audit being performed on city operations by the Ohio State Auditor’s office.

The Mayor wrote, in part: “The State Auditor’s Report has not been finalized at this point. When taking office my administration reviewed the information that was being considered for the final report. After this review, we had questions relative to what a “peer” actually was, and then requested that Auditor Yost’s office re-evaluate their assessment.” (See the full text of the letter below.)

The question is, were the changes in the audit procedure reasonable or did the city administration exert undue influence on the audit process, thereby invalidating the independent nature of the audit.  The answer is, without 100% transparency, the public will never know.

What information did the Findlay City Administration review that caused such consternation that they felt the need to seek relief?  The public has the right to see, in detail, all of the information that passed between that audit team and the city administration.  Any documents, email exchanges, the nature and details of any conversations, should be made public immediately.  Also the original findings based on the original methodology of the audit should be made public with the final report.

Mayor Mihalik would have us believe that this kind of give and take between an audit team and the organization being audited is common place.  I find this to be a highly dubious assertion.  Regardless, the only way to maintain the integrity of this audit process is for the administration to provide detailed information, now rather than later, on what they found to be objectionable about the original audit procedure and for the public to have full knowledge of how the administration changed the audit methodology and how those changes influenced the outcome of the audit.

To the extent that the Mayor has influence over that audit, it would be in her and everyone’s best interest if the final report from the State Auditor’s office is released well in advance of the November election.

Complete text of Mayor Mihalik’s open letter:

Findlay Resident,There have been numerous questions and comments placed in several local publications regarding the ¼% income tax renewal and the way that we as a city conduct business. I fully expect that other opinions will be offered over the next 60 days, and my administration will do its best to respond and keep the public accurately informed. While I believe it is correct that little has been done to prepare for this situation, I disagree that we aren’t making strides towards a leaner and more productive government for our taxpayers. Here are the answers to a few questions that have been posed:The State Auditor’s Report has not been finalized at this point. When taking office my administration reviewed the information that was being considered for the final report. After this review, we had questions relative to what a “peer” actually was, and then requested that Auditor Yost’s office  re-evaluate their assessment. We did what any other business owner would do and requested a fair assessment. Not asking for additional work to be done in this audit is unfair to the process and would not yield productive ideas on how to reduce the size of our government. Instead, we feel that this information will be valuable and will be a true representation of our needs. This report is not completed and, therefore, has not been shared with the public or other elected officials.Auditor Staschiak reported at the July 24, 2012, mid-year budget review that the City of Findlay’s employee count has decreased by 3 full time positions since my administration took office 9 months ago. We have instituted more seasonal and part time employees to reduce the amount of wages and overall burden on the general fund. My administration will continue to examine potential staffing efficiencies and what may be available through attrition.I have seen many comments in regards to the Hochstettler building that was purchased for the potential home of the Health Department. As it has been reported, we have had productive conversations with members of the District Advisory Council on a county wide health district. There are still many logistical aspects of the plan that need to be worked out. That being said, it would be a waste of taxpayer dollars to add additional money to update this facility, when we are unsure exactly where the Health Department will be located.It is clear that potential shared services must be evaluated to reduce costs and increase efficiencies in some cases. That is why we have collaborated through conversations with County and Township officials alike. The work with the District Advisory Council on a potential county wide health district is just one opportunity. Additionally, we have evaluated a potential consolidation of the City’s emergency notification system. Officials from both the City and County have met several times to evaluate the needs and resolve any concerns that may be present. Consolidating services is not something that can be completed overnight, and we will continue to look at opportunities in the future. Rest assured, we will continue evaluating potential shared services for all sectors of our local government.

In these challenging economic times, all city departments have been required to cut their respective budgets in light of our current financial situation. It is also apparent that we have not been growing other departments at the expense of others. Our capital needs are a priority but, as I have said many times, we do not have a clear plan for our capital needs. Developing such a plan will allow us to accurately assess these types of projects, which was discussed at length in nearly every meeting we attend. I believe that having an ad hoc committee dedicated to a solution for this problem will be beneficial for our entire community.

It should go without saying that my administration is not able to control every aspect of the past. We can, however, take responsibility for the situation that we are in and work together to fix it. If you have questions about how we operate or where we are headed, please contact my office at 419-424-7137 Monday- Friday 8:00am-5:00pm, or send me an email at mayor@findlayohio.com . I look forward to continuously working with members of our community as we seek to reform our local government to be efficient and effective for our residents.



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The City Income Tax and Trust Fund Babies

September 7, 2012

What Every City Councilperson (and everyone else) should know about the City Income Tax.

A few weeks ago Charles W. Weasel, a local Attorney, wrote a letter to Findlay City Council suggesting a fix to the City of Findlay’s budget crisis.  A crisis largely caused by the decrease in State funding.  His idea; change state law to permit the city income tax to include taxing interest and dividend income as well as wages.  As Mr. Weasel wrote “Currently only the “working man” pays the Findlay City Income Tax.  Wealthy retirees and “Trust Fund Babies” are given a free ride at the expense of the wage earner.”

Of all the inequities built into the city income tax (look for future posts on the other inequities) the fact that wages are almost exclusively taxed, while interest, dividend and capital gains income are not, seems blatantly unfair.  A very wealthy person whose income comes solely from inherited investments could live their whole life in Findlay and never pay a dime in city income tax.  Findlay City Councilperson Anne Spence was so impressed with the idea that she promised to pass it on to Ohio State Senator Cliff Hite-R and Ohio State Rep. Robert Sprague-R, quoting chapter and verse of the Ohio Revised Code Section that would require changes to accommodate adjusting the City Income Tax.

Of course this proposed change to state law is NEVER GOING TO HAPPEN and Miss Spence should probably know that.  There are two reasons that the GOP controlled Ohio State government is never going to allow cities to tax investment income.  The first reason is a matter of mechanics.  Collecting and administering a flat income tax on wages is relatively easy.  Adding investment income to the mix would require every city to set up its own version of the IRS.

But, Mr. Weasel stumbled on the real reason why Gov. Kasich, Senator Hite and Rep Sprague are playing this taxation shell game in the first place.  Mr. Weasel and Miss Spence, the reason your city income tax is going up is because the city income tax does not tax investment income.  The GOP plan from the beginning is to shift the totality of municipalities and state taxes from investment income, (the rich) to wages (Ohio’s working families).  On top of that, they are cutting progressive taxes like the estate tax and the state income tax only to force increases in city taxes that are a flat rate tax.  So, the lowest paid worker pays the same rate as the best paid wage earner in the city.

If Miss Spence was paying attention to her Republican playbook she would know that cutting taxes on the wealthy and their investment income, not raising their taxes, is fundamental to the GOP’s game plan.

Higher Local Taxes Thanks to Gov. Kasich and Rep. Sprague

March 28, 2012

Higher local taxes are in your future thanks to Governor Kasich and Representative Sprague.  The elimination of the Estate Tax will cost the City of Findlay about .8 million dollars a year in lost revenue.  That is about 3.3 % of the city’s annual budget.  It may not seem like much, but when you add to that the loss of other sources of state funding and the roll back of the quarter percent emergency city income tax, the city of Findlay is facing a $4.9 million shortfall for the year 2013.

Rep. Robert Sprague and The Courier acknowledge that local taxes are bound to go up, but they believe that trading state taxes for local taxes is a good deal for the citizens of Ohio and Findlay.  I fail to see how trading one tax for another makes Ohio more competitive.

For a Governor that has his sights set on a presidential run in 2016, cutting the Estate Tax is all gain and no pain.  Governor Kasich can stick a nice feather in his cap by cutting the Estate Tax, long the whipping boy of the Republican Party.  Then Kasich will let local governments and local tax payers make up the loss of revenue.  Cutting the Ohio Estate Tax will play well with the Republican base at the national level, but where does it leave the Ohio tax payer?

I would ask; are Ohio’s Republican lawmakers using this budget crisis not only to shift the burden from the State to the Local level, but more importantly to shift the total of our state and local revenues to a less progressive and a more regressive tax system?   Elimination of the Estate Tax is the keystone in the Republican plan to shift a greater tax burden from the wealthy to working families.

In an environment where the state government is pinching local government at both ends with decreased funding and increased unfunded mandates to close the state’s budget gap, cutting the Estate Tax and placing a high tax burden on working families, in favor of the wealthy, seems irresponsible and wholly unfair.

Courier Editorial “Unbalanced”: http://www.thecourier.com/opinion/editoral/2012/Mar/23/ar_ed_032312.asp?d=032312,2012,Mar,23&c=e_0

Courier Editorial “Balancing Act”: http://www.thecourier.com/opinion/editoral/2011/Jun/21/ar_ed_062111.asp?d=062111,2011,Jun,21&c=e_0

Rep. Sprague Supports Job Killing Regulation

February 6, 2012

Recently on the WFIN “Good Mornings” show with Chris Oaks, State Representative Robert Sprague-R stated that Ohio would have the world’s best regulation of the oil and natural gas drilling industry.  It would seem that Rep. Sprague did not get the memo from his Republican party that regulations kill jobs.  The GOP is right you know, regulations do kill jobs.

Take the oil and natural gas drilling industry, any regulation to protect the environment, whether to protect the water table or that restricts drilling operations in seismically unstable regions, will kill jobs.  It may make some wells too costly to operate or the added costs could put some marginal drilling companies out of business.  Whole sections of our state could be off limits to drilling because of the risk of seismic activity caused by drilling operations.  In all of these cases, jobs will be killed.

So, why would Rep. Sprague support regulating the oil and gas drilling industry?  Well, slogans like “Job killing regulation” may win votes, but slogans do not make for good public policy.  In the real world, government regulations protect consumers, the environment and regulations protect industry for itself.

The classic example of the government regulation that was at the foundation for a whole new industry is the FAA (Federal Aviation Administration).  In 1926, the pioneers of civil aviation came to the federal government asking to be regulated.  They believed that without federal safety standards the public would never perceive flying to be safe enough to support civil aviation as a viable business.  The FAA and business worked together to build public confidence in civil aviation.

This is the lesson that Rep. Robert Sprague is trying to apply to the oil and nature gas drilling industry.  The market cannot regulate itself; the incentives run 180 degrees in the wrong direction.  In the long-term, effective government regulation is essential to a healthy marketplace.  The question for Rep. Sprague is, how can one be an effective legislator when you belong to the party that puts simple minded political slogans before sound public policy?  “GOP slogans kill good government”.

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