As many cities prepare to set their 2013 budgets, local officials are facing millions of dollars in anticipated losses because of shrinking state funding through the Local Government Fund and the coming repeal of the estate tax.

The road to a balanced budget will not be smooth for many areas, as most say they already are living in very lean times.

“We don’t think there is a lot left to cut,” said Donnie Jones, finance director in Huber Heights. “You are going to get to the point where there will be reduction of services that people are used to unless alternative revenue sources are found.”

Huber Heights voters in March rejected a .25-percent income tax increase.

Last June, already cash-strapped Ohio counties, cities, villages, townships and park districts learned that the state — as part of an effort to reduce an nearly $8 billion budget gap — would slash the money distributed through the Local Government Fund by half. The cuts will come between state fiscal year 2011, which ended June 30, and fiscal year 2013.

That alone means at least $14.4 million less distributed to local governments from the state to Warren, Montgomery, Greene and Miami counties, according to the Ohio Department of Taxation.

The state also will distribute a smaller amount of money directly to local governments.

The state also repealed the estate tax beginning on January 1, 2013.

Cuts have been dramatic in some cases.

Huber Heights received about $908,702 in 2010.

Jones said his city expects to receive about $454,000 less from the fund in 2013. It anticipates receiving $340,000 less this year and another $300,000 less by the end of 2013 because of the estate tax repeal.

Huber Heights has not filled about a half-dozen director positions and has fire and police vacancies.

Dayton Deputy City Manager Stanley Earley said the city has spread cuts throughout several different departments.

Besides the estate tax repeal and cut to the Local Government Fund, the city also was hit hard by the state’s decision to end reimbursements from the tangible personal property and public utility taxes on businesses in 2013 instead of 2018, as previously expected.

Earley estimated the combined loss will be $9.3 million by 2013. The city’s general fund budget is $150 million.

“We have less of a capacity to deliver a lot of different kinds of services,” Earley said.

Rob Nichols, spokesman for Governor John R. Kasich, said the cuts were necessary because of the hole in the budget. “All of this is about job creation. The only way to do that is cost reduction,” he said. “When the economy is humming and people are working, local governments will be the first to benefit from it.”

Kent Scarrett, director of communication of the Ohio Municipal League, said local governments are bracing for the cuts by implementing changes ranging from mandatory income tax filings to cooperative operation agreements with other governments.

He urged the state to provide more funds to local governments because it received more revenues than expected from taxes.

“We were all in to it together when the state had an $8 billion deficit. Now that the state is able to generate greater revenue, we’d like funding consideration for our local governments,” Scarrett said

Some communities will be affected more by the cuts to the Local Government Fund while others — typically more affluent communities — will be affected more by the estate tax repeal.

In 2010, area cities, villages and townships collected nearly $18 million from the estate tax.

Oakwood city officials are holding meetings all over the city to inform residents of what’s coming and to seek strategies for dealing with the loss of an estimated $3 million a year. The average annual loss because of the estate tax will be $2.6 million.

No decisions have been made, but City Manager Norbert S. Klopsch said these options all are being weighed: shared services with area communities, cuts in expenses, cuts in services, tax increases, higher fees and, what may be most likely, a combination of all of those.

State budget cuts also have led to reshuffled responsibilities in many communities.

“We recognize the situation,” Beavercreek police Chief Dennis Evers said. “People have had to jump in and do more.”

Because of the state cuts, the police department has not replaced police cruisers as often or filled two police officers slots. The department also has not filled a crime-prevention position and many responsibilities previously assigned to a technical services supervisor have been added to a sergeant’s duties.

The city also has left three maintenance worker positions and one foreman position in the street department open.

Bevercreek City Manager Michael Cornell said the possibility of asking voters to approve an earnings tax has been discussed.

Beaverceek is one of the few cities in the state without an income tax.

Beavercreek anticipates losing $839,000 in revenue this year from the local government fund. The loss is expected to be more than $1.2 million in 2013. That includes approximately $500,000 that will be lost due to the repeal of the estate tax. 

“It (the cuts) is requiring us to look at the overall state of the city to make sure we are proving a high level of service at an effective cost,” Cornell said.

The city hopes to consolidate more services with other governments . It is exploring the possibility of sharing a prosecutor with the city of Fairborn.

Beavercreek Twp. Trustees, Beavercreek City Council and the Beavercreek Twp. Park District recently approved a park consolidation agreement. The park district is expected to place a levy on the November ballot to operate the consolidated district.

An exact millage has not been set but a 1.4-mill levy has been discussed. It would generate about $2.1 million a year.

A struggling economy and losses in revenue because of a reduction in property taxes are among the factors that already had some government tightening belts.

Montgomery County Administrator Deborah Feldman said the county already has made most of its cuts in anticipation of shortfalls and is concentrating on key safety and social services.

“We have 500 fewer employees than we did three years ago,” she said. “We now ask our own employees to clean their own offices, take out their own trash.”

Most recreational programs at parks are gone, as are extras like concerts at Courthouse Square. But the county now is able to fill positions when workers leave.

“What we believe we have done is right-size to the budget,” she said.

Contact this reporter at (937) 225-2384 or arobinson@DaytonDailyNews.com. Staff Writers Terry Morris, Marc Katz and Steven Matthews contributed to this report.