State Budget Means Millions Less for Westlake

The city of Westlake is facing millions in revenue cuts under the recently passed state budget. The looming elimination of estate taxes in 2013 and a cut of about $1 million in local government funding over the next two years has city officials crunching numbers for next year’s city budget.

“We all knew going into this year that we were going off a cliff in Ohio,” said State Rep. Nan Baker. “Unemployment is too high, a lot of people are in stress with their homes, college students leaving for jobs. I think everyone knew we were going to have to cut back on state resources and revenue.”

Under the recently passed , Westlake will lose between $400,000 and $500,000 in 2012 and 2013 from the Ohio’s local government fund, according to Finance Director Prashant Shah. The estate tax elimination will mean millions of more cuts for the city.

Over the last five years, the city has received an annual average of $1.6 million from estate taxes. Last year alone, Westlake collected $3 million in estate taxes, according to Shah.

“The estate tax was a little more of a hit than our district anticipated,” Baker said.

“That cut is going to be a big, big number,” Shah agreed.

The other big hit for the city is coming from the acceleration of the commercial activity reimbursement.

Shah said the city does not yet have exact numbers on how much it will lose from the tax, which is imposed on companies that do more than $1 million of business in the state. It was created to replace the personal property tax in 2007.

“The carryover surplus is the first thing that will be impacted,” Shah said. “Then we’ll certainly look at operating costs and see if there are ways we can cut back. Every organization can find certain ways to cut back. The goal is to not have that impact the residents when we do cutbacks.”

Last year, the city banked about $12 million in surplus carryover, but based on this year, Shah expects to have about $2 million less.

“As painful as some of these decision were for local governments, hospitals, prisons and nursing homes and others that are dependent on state funding, we had to ask them to tighten their belts,” Baker said. “We can’t get through this by raising taxes.”

Money in the bank translates to a good bond rating, Shah said, which in turn will provide the city with the best interest rates possible.

“Then we’re not paying that money in interest and it can be used to provide services to our residents,” he said.

City hall will continue to work plan the 2012 budget carefully, to spread out the impact, Shah said.

“We certainly want to maintain the kind of balance we have maintained,” he said. “We have to have priorities. Fortunately, we have other funds that support infrastructure and capital purchases and various funds set aside for those.”