Bills pending before state legislators will have an impact on Lake Township’s financial condition, Tom Hays, township solicitor, informed the board of trustees Tuesday, with the likely result being the township becoming more dependent on local property taxes.

The changes stem from a plan by lawmakers included in the state budget five years ago to phase out the tangible personal property tax on manufacturing machinery and related equipment as well as some utility equipment.

In place of the tangible personal property tax, a commercial activity tax was established and levied – in phases beginning July, 2005 - on gross receipts of businesses.

To lessen the effect on local governments, the state established a “hold harmless” reimbursement plan that would be phased out after calendar year 2018.

Last year, for example, the state reimbursed Lake Township $321,799 – approximately 11.6 percent of the township’s total resources, which include its total property tax receipts and total tangible personal property and utility reimbursements.

Gov. John Kasich’s proposed biennial budget calls for accelerating the reimbursement schedule.

Citing projected figures from the Ohio Department of Taxation, Hays told the trustees payments to the township will fall by $55,000 through 2013.  They’ll remain steady in 2013 and 2014 and resume falling the next year before ending completely in 2017.

The amounts the township expects to receive are:
• 2011 - $266,374
• 2012 - $210,950
• 2013 - $155,525
• 2014 - $155,525
• 2015 - $100,100
• 2016 - $44,675
• 2017 – 0

Hays also informed the trustees the Ohio Township Association is anticipating the state will cut its local government fund by half over the next two years and a bill to end or severely cut the estate tax is expected to be in effect by December, 2013.

Vicki Schwamberger, township fiscal officer, said the township received about $160,000 last year from the local government fund and about $20,000 in estate taxes.

“Have any good news, Tom?” Melanie Bowen, who chairs the board of trustees, joked after Hays’ presentation.

According to the Ohio Department of Taxation, the test for a township’s reimbursement is based on whether the reimbursement exceeds 2 percent of the calculated total resources.

Neighboring Troy Township in Wood County is facing a complete phase-out of reimbursements in two years, according to a tax department spreadsheet.

In other business Tuesday, the Lake Township trustees again met in executive session to discuss fire department personnel and compensation issues but took no action. The trustees also held an executive session in March for nearly an hour to discuss department personnel issues.

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