Schools, libraries weigh impact of Ohio tax change
COLUMBUS, Ohio (AP) — Two years ago, residents of the tiny Manchester Local School District in Summit County agreed to a levy that cost $136 a year for the owner of a $100,000 home.
The levy would have been higher if not for a combined 12.5 percent rollback on property taxes that the state of Ohio has been paying on new levies since the 1970s — not only for schools, but for local government, libraries and other services that are funded by property-tax levies approved at the local level.
Superintendent Sam Reynolds is skeptical whether voters in his district — where the median income is just $35,000 a year — would have felt they could afford anything more than the rate they approved.
"Without the rollback, this levy would have cost $156 per year — and may not have passed," Reynolds said.
But in the $62 billion, two-year budget signed by Gov. John Kasich on Sunday, the rollback was removed for all new and replacement levies beginning in 2014.
Supporters of the move defend it as eliminating what was essentially a contribution from state taxpayers who had no say over the levies.
The state "essentially subsidized property owners' taxes with income and sales taxes paid by all Ohioans," said Ohio Department of Taxation spokesman Gary Gudmundson. He said there are "probably thousands" of property tax levies on the books around Ohio, but the change only affects those levies passed in November 2013 and beyond.
During last week's budget debate, state Sen. Bill Seitz, a Cincinnati Republican, defended the GOP-led Legislature's decision to lift the rollback — saying he routinely quizzes constituents on two state tax issues.
"The first question I ask them is, 'Anybody who can tell me what they pay per year in state sales tax to the nearest hundred dollars, I'll eat my hat.' Nobody knows what they pay to the nearest hundred dollars in state sales tax. Nobody," Seitz said. "The second question I say is, 'How many of you nice folks know that the state of Ohio is paying 12.5 percent of your property tax for you before you get the bill?' That's darn near nobody."
Seitz said, "Nobody knew we didn't, they're certainly not going to know we quit doing it."
According to state estimates, elimination of the rollback will mean an increase of just $4.38 a year — 37 cents a month — for the owner of a $100,000 house. And that estimate does not take into account that many residents may pay multiple property-tax levies, for example to their local schools, library and county or township.
Reynolds says his district, like many around the state, faces growing costs for health care, special needs education and curriculum and testing mandates — an estimated $769,000 that is not offset by funding increases in a new budget of about $110,000 over the next two years.
He said legislators have never satisfied the Ohio Supreme Court with a school-funding formula that addresses its overreliance on property taxes, and so the change to the rollback is premature.
"It appears to me that this change will handicap the schools in requesting additional funds at the local level, when at the state level we're not being provided support," Reynolds said. "What are we supposed to do?"
Jim Lynch, a spokesman for the state Office of Budget and Management, said the rollback policy has been flawed since it was enacted in 1971.
"The fact is that this so-called tax relief is a myth, since the state simply taxes all Ohioans more — including seniors and the low-income who don't own property — to cover the cost of this relief," he said.
Backers of the package of tax changes in the budget — including the Association for Aging and the Ohio Farm Bureau — argue that showing property owners the real cost of the levies they pay will make the system more transparent and fair.