By Greg R. Lawson

Thank you, Chairman Maag, Vice Chair Kunze, and Ranking Member, Slesnick for the opportunity to testify today before the Ohio House State Government Committee. My name is Greg R. Lawson. I am the Statehouse Liaison at The Buckeye Institute for Public Policy Solutions.

I am here to offer a few brief remarks about Amended Senate Bill 152 and the issue of residency requirements for the purposes of local public works projects.

The Buckeye Institute is a free market think tank. We believe low taxes and limited government regulations lead to a more prosperous Ohio. All Ohioans should be free to secure the best possible jobs they can in order to pursue life, liberty, and the pursuit of happiness. Residency requirements for private employees seeking to work on local public works projects in different jurisdictions flies directly in the face of those principles.

It also flies in the face of precedent established by the Ohio Supreme Court. The Court determined in the 2009 Lima v. State case that Ohio’s home rule authority does not grant cities the power to require their employees to be a resident of the municipality as a condition of employment. If that rationale holds for public employees, it should apply equally to workers in the private sector seeking to work on various public works projects funded by tax dollars.

Residency requirements are fundamentally unfair to workers across the state. Ohio’s economy is best served by a rising tide that will lift all boats. Residency requirements are inherently protectionist and can easily lead to a lack of employment for those that are qualified and willing to work. Residency requirements discourage overall job creation, something no state, least of all a state that still suffers from a slower than ideal recovery, should seek to accomplish.

You have already heard from a myriad of witnesses that raise another troubling component to these public works requirements–they cost taxpayers. The increased costs emerge in a variety of ways. Most importantly, it restricts competition in the labor pool from which contractors are able to secure workers. Less competition will increase costs and waste tax dollars. It can also force contractors to shift between various teams of workers, based on where they live, in ways that are not efficient and result in cost overruns. Finally, it can lead to the hiring of less qualified workers based solely on their zip code of residency which is likely to result in long-term cost overruns. Given that public projects are paid for by tax dollars either on the front side or the backside, if initially funded through bonds, these costs are passed along. There is no justification for local taxpayers to be gouged by such anti-competitive practices.

The bottom line is this: from a free-market perspective there is absolutely no sound reason for cities to impose residency requirements. It is bad public policy. Thank you for your time, and I would welcome questions from committee members.