Thursday, January 31st, 2013
End of estate tax may begin local government woes
By William Kincaid
While many residents welcomed the end of the state's estate tax on Jan. 1 that sapped a portion of the value of a deceased person's personal assets, some elected officials have said they may have to cut services once funded by this tax or look for a new revenue source.
In Mercer County, 23 municipalities and townships took in $5.4 million in estate taxes from February 2008 through August 2012. The entities are estimated to receive another $1 million this year as taxes continue to trickle in. Heirs have nine months to settle estates, Marilou Slone of the Mercer County auditor's office said.
The state tax brought in $285.8 million in 2010, $230.8 million of which was distributed to local governments. The remaining funds went to the state's general fund, according to the Ohio Department of Taxation.
The tax was 6 percent for estates worth more than $338,333 and up to $500,000. For estates worth more than $500,000, the tax was $9,700 plus 7 percent of the amount over $500,000.
State Rep. Jim Buchy, R-Greenville, recently hailed the end of the estate tax, first enacted in 1968 to replace a state inheritance tax.
"This regressive and outdated taxing method has become a major impediment to economic growth and has cost companies and family farms a great deal of money, sometimes forcing them out of business," he said. "Some local governments even gambled on the death of residents by accounting death tax revenues into their budgets."
But some officials, mostly township officials who deal with smaller, tighter budgets, said they are contemplating cutting services that were funded by the tax.
"That's what we survived on for probably the last five years," Blackcreek Township Clerk Guy Brigner Jr. said Wednesday.
From February 2008 to August 2012, Blackcreek took in $244,793 in estate taxes.
Blackcreek Township has nearly the most miles of roads to care for among all of the county's townships, and Brigner said it has one of the smallest budgets due to a lack of businesses and a low population. Trustees usually chip-seal about two to three miles of the township's 42 miles of roads each year, he said.
"It's going to be less road repair," he said referring to the end of estate tax funds.
Brigner said if worse comes to worse, trustees may have to seek an operating levy.
"I hope we don't have to do that for a long time," he said.
Brigner added that he hates to see the tax wiped out for the township but does believe it is a good thing for the people.
"Because that hits some people pretty hard," he said.
Granville Township Trustee Linus Clune said estate funds ($85,436 during the last four years) helped pay to blacktop and maintain roads in his township.
Marion Township used its $160,716 the last four years to purchase equipment such as trucks and tractors for mowing, trustee Larry Reichert said.
Reichert said trustees haven't decided how they'll account for the loss of the tax dollars.
"It's going to hurt," he said.
Some years, the township took in substantial revenue from the estate tax while other years no money came in.
"That's something you can't rely on," Reichert said.
According to the county auditor's department, Marion Township will receive a payment of more than $400,000 in the coming weeks for estate taxes assessed in 2012 that still must be paid. Slone said it's one of the biggest estate tax payments the county's ever seen.
The federal estate tax remains in place.
Estate tax revenue:
Funds received 2008-2012
|Fort Recovery|| $137,304.74|
|St. Henry|| $289,690.32|
|Blackcreek|| Township $244,793.32|
|Butler Township|| $278,941.76|
|Center Township|| $309,338.52|
|Dublin Township|| $342,151.71|
|Franklin Township|| $205,144.58|
|Gibson Township|| $261,004.67|
|Granville Township|| $85,436.52|
|Hopewell Township|| $192,543.20|
|Jefferson Township|| $261,544.19|
|Liberty Township|| $358,803.39|
|Marion Township|| $160,716.87|
|Recovery Township|| $200,346.92|
|Union Township|| $165,048.29|
|Washington Township|| $195,193.27|
|Total $5.4 million|