Some communities in central Ohio are scrambling to patch holes in their budgets if the state legislature repeals the estate tax.

Some communities in central Ohio are scrambling to patch holes in their budgets if the state legislature repeals the estate tax.

But New Albany officials say that community is not one of them.

"It really does depend on the community," said Scott McAfee, communications director for New Albany. "A community like Upper Arlington is going to be greatly impacted. I think they get in excess of seven figures a year. In 2010, we budgeted $100,000 and actually didn't get any."

In New Albany, even though several residents have estates with estimated high taxable values, the village typically does not count on large revenues from the estate taxes.

"The 2011 budget for estate tax revenues is zero," McAfee said. "It's not zero because we necessarily expected the state would get rid of it; it's zero because our revenues were zero in 2010 and we figured not to assume anything for 2011.

"If you go back, we've budgeted around $100,000 in the past and have been somewhat close to that (in estate tax revenues). But it's never been a big revenue generating thing for New Albany."

Commonly known as the "death tax," the estate tax was enacted in 1968, according to information from the Ohio Department of Taxation. Under current law, when a state resident dies and his or her estate has a taxable value of more than $338,333 and less than $500,000, a 6-percent tax is owed. Estates with a taxable value of more than $500,000 are taxed at 7 percent. Estates with a taxable value under $338,333 are exempt from paying the tax.

The estate tax is paid to the treasurer of the county where the resident lived. Local governments share the tax, with municipalities and townships receiving 80 percent and the state receiving 20 percent.

Ohio's estate tax generated $333.8-million in revenue in fiscal year 2009, according to information from the department of taxation, and $269.4-million of that went to local governments.

House Bill 3, which was recently introduced and has been assigned to the House Ways and Means Committee, would stop collections of the estate tax after Jan. 1, 2011, by making the bill, if it is passed, retroactive to that date.

State Rep. Jay Hottinger (R-Newark), who co-sponsored the legislation with Assistant House Majority Whip Cheryl Grossman (R-Grove City), said for years the tax has been a heavy burden on people who inherit an estate and has caused many people who own property to move out of state as they age so their families will not have to deal with the tax.

"I believe this is the most unfair, egregious tax and it double- and triple-taxes people," Hottinger said.

Ohio is one of only 20 states with an estate tax. Most do not require people to pay it unless the estate is valued at $1-million or more, Hottinger said.

Ohio currently has the lowest estate tax exemption in the country. The average exemption amount for other states that have an estate tax is approximately $1.7-million.

Hottinger said the reason the legislation is requested to stop the estate tax is because local governments are "unjustly benefitting" from it.

"I would argue that betting on how many people will die in your jurisdiction is not sound budgeting," he said.

Also, Hottinger said, estates for residents who died in 2009 and 2010 are still going through probate court, so governments will continue to receive those revenues when the cases are settled.

"This is a matter of fairness," he said.