Elimination of Ohio Estate Taxes Could Mean Millions Less for Westlake

The accelerated phase-out or elimination of Ohio's estate tax could cut millions from Westlake's revenue stream sooner than expected.

Mayor Dennis Clough said that because the city's estate tax revenue varies so much from year to year, administrators never bank on the money coming in, but the decrease in revenue may translate to fewer capital projects.

The city will lose approximately 8 percent of its revenue if the tax is eliminated.

“We get about $1.6 million per year from the estate tax,” said Finance Director Prashant Shah. “We’ll have to worry about it when it happens, but we’re planning for it. We’re looking at where we can shave off 8 percent so that it’s not as much impact.”

As it stands, the state imposes a 6 percent tax on estates worth more than $338,333 and a 7 percent tax on estates worth more than $500,000. Cuyahoga County takes 20 percent of the tax and passes the other 80 percent on to the local government where the estate holder lived.

That minimum of $338,333 may be increased to $1,000,000 in the future or even $5,000,000 for a period. The state may also completely eliminate the tax.

“Philosophically, I’m against an estate tax or a death tax," Clough said. "But as a mayor, I would appreciate a little bit of transition so that we can prepare for the decrease in revenue received from the estate tax."

According to city budget documents, Westlake collected $2 million in estate taxes in 2009, however Clough said that number ranges widely. Some years the city collects $300,000, and some years it collects $2 million.

“It all depends on who has passed that year,” he said.

Due to the uncertainty of the estate tax revenue, Clough said the city never budgets for the funding.

“It’s never allocated to operations of day-to-day activities,” he said. “We only use it for one-time expenditures. We’ll pick a capital project off of our five-year plan, but we always wait to get the money before deciding how to use it.”