n-3 bex lose 3a 1-20-11

estate tax. House Bill 3 has been assigned

to the House Ways and MeansCommittee, where it will under-go further consideration.

“The city of Bexley has beensitting on pins and needles foryears anticipating this effort asestate tax repeal has been a fa-vorite target of certain legislatorsevery time the legislature con-venes,” said Jeff McClelland, Bex-ley City Council president.

“I’m sure Rep. Grossman hashard evidence that the estate taxis a major reason for 400,000 jobsleaving the state of Ohio and thatsuch repeal will no doubt con-tribute somehow to closing an $8-billiion budget gap,” he said, “butone fact is certain and indis-putable: Ohio estate tax receiptsare essential to the ability of Bex-ley city government to deliverservices that our citizens expectand deserve. While the incomestream from the estate tax is oftenerratic and unpredictable, mak-ing annual budgeting a challenge,there have been years when un-expectedly high receipts havebailed the city out of serious budg-et situations.

“Unfortunately, by state lawour revenue sources are limitedand as a result, we do necessari-ly rely on the estate tax as a majorrevenue source,” McClelland said.“Doing so does afford some prop-erty tax and income tax relief toour citizens.”

McClelland said Bexley CityCouncil and the administrationwill be meeting to discuss effortsto educate state legislators on thecritical need of certain cities foran estate tax.

“Tax ‘relief’ that merely shiftsa taxing burden from the state tothe city is nothing more than po-litical shadow boxing,” he said.

“Irrespective of your feelingsregarding the existence of an es-tate tax for Ohio, the eliminationof the Ohio estate tax would bedevastating to the city of Bexley’sfinances,” said Ben Kessler, whochairs city council’s finance andjudiciary committee.

“Income to the city from theOhio estate tax has averaged ap-proximately $1.8-million per yearover the past 10 years,” Kesslersaid. “That is roughly equivalentto 20 percent of our general fundincome over the same period. Aloss of income this significantwould impact every level of cityservices in a tangible way.”

Kessler said the news comesat a particularly difficult time for

Bexley.“This proposal couldn’t come

at a worse time,” he said. “Thecity is already operating understressed financial conditions as aresult of hard economic times,and we’re already facing the veryreal possibility of losing revenuefrom the Ohio local governmentfund during the 2011 state budg-et process.”

According to statistics provid-ed by finance director BeecherHale, local government fundsfrom the state have accounted foran average of nearly $1-millionper year (or 9 percent of operat-ing revenues) over the past 10years.

Kessler said Bexley is chal-lenged by the makeup of its busi-ness community.

“Like many other first-ring sub-urbs throughout Ohio, Bexley hasa lower ratio of the payroll-in-tense commercial uses that pro-vide many Ohio communities withthe bulk of their funding for cityservices,” he said. “Because ofthis, we already operate on a shoe-string budget.

“The elimination of the estatetax would dramatically impactthe city’s ability to provide cityservices,” Kessler said, “and itwould require a series of austeremeasures in order to make up forthe loss.”

Kessler said city officials re-acted immediately to the news.

“Even though this news justbroke today, Mayor (John) Bren-nan and members of council arealready working hard to makesure Ohio lawmakers understandBexley’s reliance on this revenuesource,” he said. “We have con-tacted other communities that arein a similar position to us to dis-cuss formalized engagement withthe statehouse, and we have beenin contact with our statehouse andsenate representatives.

“The finance committee dis-cussed this issue at length tonight,”Kessler said, “and we will dis-cuss it further once we have hada chance to thoroughly reviewHouse Bill 3 and once we have abetter feel for our options.”

City council member Jed Mori-

son said any loss of revenue willhave to be made up through othersources.

“Regardless of one’s views onthis, it is important for people toknow that if Bexley loses this rev-enue source, it will be a signifi-cant loss that will have to be madeup some other way for us to main-tain basic city services,” Morisonsaid.

“Most don’t realize that the cur-rent law only affects less than 10percent of the general public,” hesaid. “Perhaps, instead of a com-plete repeal, certain exemptionsshould be considered, such as theestates of family farmers whowould otherwise face hardships.”

Richard Sharp, also a memberof city council, said the legisla-tion offers no solutions for localgovernments.

“Many of the bill’s sponsorswould probably agree with theanalogy ‘It is better to teach a hun-gry person to fish than to give hima fish,’ he said. “In this case thestate is breaking the fishing poleand draining the pond. That mightnot be bad if the pond was ran-cid and drying up anyway and theperson was given a net and foodto make the 3 day trip to a largerlake. Unfortunately HB3 breaksthe pole, drains the pond and thenwalks away.”

Sharp said a reasonable legis-lator would give Ohio local enti-ties a supply of food for the jour-ney.

“An example in this case wouldbe for the State to make supple-mental payments to those localentities based upon the prior 5year average estate tax receipts,”he said. “The first year (2011)100 percent of the average andthen have that amount phased out25 percent per year for the fol-lowing four years (2012-2015).

“If the sponsors truly feel thatthere will be an economic bene-fit to the state by the change, theyshould be willing to share via sup-plemental payments, at least dur-ing such a 5-year phase out.”

He also supports simplifyingOhio’s municipal income tax sys-tems.

“The state already set prece-

dence for this since that is the tax-able basis for school districts thatimpose an income tax,” Sharpsaid. “This allows the municipaltaxable income of Ohio residentsto be calculated in the same waythroughout the state, and at thesame time would greatly increasethe taxable income base.

“Communities such as Bexley,which have a large number of res-idents who earn currently untaxedinterest, dividends, and capitalgains are also the same commu-nities that previously had largeestate tax revenues.”

Sharp said it is also importantfor local governments to becomemore self-sufficient.

“At the same time, I think it isthe responsibility of local entitiesto stop crying that Mommy andDaddy took our pacifier, and beginthe process of growing up and askMom and Dad to take us to thestore to get our kindergarten sup-plies so that Ohio local entitiescan move on to a new and excit-ing stage of life, so that somedayOhio can be valedictorians aheadof those pesky kids: California,Florida, Texas, China and SouthKorea.”jdonahue@thisweeknews.com

www.ThisWeekNEWScom

ThisWeek Community Newspapers Bexley Page A3January 20, 2011

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Estate tax may be repealed by legislatureContinued from page A1

The city of Bexley has been sitting on pinsand needles for years anticipating this effort asestate tax repeal has been a favorite target of

certain legislators every time the legislature convenes.

JEFF MCCLELLAND— Belxey City Council president

“”