By Kevin Aldridge
Enquirer staff writer

Taxpayers could wind up paying the price - one way or another - if state lawmakers decide to eliminate a pot of money set aside for cities and townships.

Efforts by the Ohio Legislature to sew up a $3 billion-plus hole in the budget are starting to put a strain on some local governments. Three years ago, lawmakers froze the amount of money jurisdictions received from the state's local government fund - a pool of cash used to help cities and townships pay for basic services.

The freeze has forced some government officials to cut key services or come to taxpayers for more money.

"Most people don't pay much attention to this sort of stuff," said Delhi Township Administrator Joe Morency, whose township receives about $500,000 annually in local government funds. "Unfortunately, it's going to affect taxpayers one way or another come Nov. 2."

There are at least 20 tax levies on the November ballot in more than a dozen communities across Hamilton County.

Some local government officials say the need for tax proposals is a direct result of a drop in estate tax revenues and the frozen local government fund.

In Delhi Township, voters are being asked to approve police and fire levies that would add $245 a year to their property tax bills, based on a $100,000 home. The levies would be the first in the township in 11 years.

In Green Township, if a property tax is not approved, police and fire service could face possible cuts. Meanwhile, Cheviot city leaders are asking voters to support an operating levy that would increase their taxes annually by $95 on a home valued at $100,000..

Susan J. Cave, executive director of the Ohio Municipal League, said the burden on taxpayers could get even heavier if lawmakers eliminate the local government fund.

Lawmakers have indicated the fund could be dissolved to balance the budget in the future.

"The local government fund is one of the few remaining big pots of money available to the state budget folks," Cave said. "I think that's why everybody looks at it as a target."

The local government fund is a 70-year-old funding source the state uses to help cities and townships pay for police, fire, street maintenance, parks and libraries. It distributes about $1.2 billion a year.

Cave said cuts to or the elimination of the fund would devastate communities with smaller tax bases, and those already wrestling with budget challenges.

"The taxpayers are not going to want to increase local taxes at the level necessary to make up that difference," Cave said.

City and township leaders have made the point that a 1 percent sales tax set to expire next June generates about $1.3 billion a year. Some have suggested that keeping the sales tax at that level could help rescue the local government fund.

Some state officials say the funds could be cut by as much as 10 percent. Local government funds for the year starting July 1 are already $81 million less than four years ago.

State Rep. William Seitz, R-Green Township, said many of his colleagues in Columbus would like to abolish the fund when lawmakers revisit the budget in March and June.

"It's a matter of the Legislature's discretion to put money into that fund at all," Seitz said. "They (cities and townships) should be happy with a freeze as compared to the alternative, which was a rather draconian cut."

Seitz said a proposed property tax rollback for Cincinnati residents could jeopardize the local government fund. The ballot initiative would phase out the city's 5-mill property tax by 10 percent a year over 10 years. The tax amounts to about $31 million a year.

"If Cincinnati has so much money that it can afford to get rid of its property tax, then why should we be forking over millions of dollars to the city through the local government fund?" Seitz said.

Mayor Charlie Luken agreed that the property tax rollback would send the wrong message to legislators. Cincinnati draws about $24.9 million annually from the local government fund. The loss of local government funds coupled with reduced property taxes and flat income taxes would create "the perfect storm," Luken said.

"The city simply could not withstand that," Luken said. "The safety forces, homeland security and basic services; all these things would be very much at risk if these things come to pass."

John Kruse, a Hyde Park resident and proponent of the property tax rollback, said he expects voters to pass the measure. Kruse said he doesn't believe city officials are using the tax dollars they already have efficiently.

"Property taxes have gone up by about 10-20 percent in the last five years," he said. "Most people's household budgets have not gone up by that much. They (taxpayers) just can't handle it anymore."

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E-mail kaldridge@enquirer.com