Buckeye Institute Testifies on Ohio House Bill 473 to End Opaque Public Perk

The Buckeye Institute, a think tank that advances free-market public policy, recently testified before the Ohio House Public Insurance and Pensions Committee on the policies in Ohio House Bill 473. The bill aims to reform public employee compensation by making it more transparent for taxpayers. The institute's research fellow, Greg R. Lawson, emphasized that public compensation is the single largest line item for local governments in Ohio, leading to ever-rising property taxes.

The Buckeye Institute's testimony highlighted the issue of pension pick-up plans, where taxpayers cover the employer and employee contributions to employee retirement plans. This arrangement puts public employees ahead of their private-sector counterparts, who must make their own retirement contributions to receive employer matching funds. Lawson argued that this "double-dipping on the taxpayers' dime" has real fiscal consequences, diverting money from public services and requiring property tax hikes.

Key Takeaways:

• Public compensation is the single largest line item for local governments in Ohio, accounting for a significant portion of ever-rising property taxes.
• Pension pick-up plans in Ohio, where taxpayers cover both employer and employee contributions, put public employees ahead of private-sector employees.
• The pension pick-up loophole has serious fiscal consequences, including diverting money from public services and requiring property tax hikes.
• House Bill 473 aims to reform public employee compensation by making it more transparent for taxpayers and ending the pension pick-up arrangement.
• The bill's proponents argue that compensation changes should occur transparently through open negotiations, allowing taxpayers to see the true cost of public employment.

Statistics:

• Public compensation accounts for the single largest line item for local governments in Ohio, contributing to ever-rising property taxes.
• Private-sector employers in Ohio contribute an average of 6.2% of employee wages to Social Security and 4% to 401(k) retirement plans.
• The Ohio Public Employees Retirement System and the State Teachers Retirement System offer a 14% retirement matching contribution for public employees, a 4% advantage over private-sector employers.
• The pension pick-up loophole in Ohio adds an estimated 4% advantage to public employees' retirement benefits, diverting money from public services and contributing to property tax hikes.

Sources:

• The Buckeye Institute: HB473 Ends Opaque Public Perk Fueling Taxpayer Frustration
• The Buckeye Institute: Testimony by Greg R. Lawson on Ohio House Bill 473
• Ohio House Bill 473: Public Insurance and Pensions Committee
• Ohio Public Employees Retirement System (OPERS)
• State Teachers Retirement System of Ohio (STRSO)