This could impact 47 of the 57 school districts in Butler, Clark, Greene, Miami, Montgomery and Warren counties, according an analysis by this news outlet of data provided by the nonpartisan Legislative Service Commission — to a total of $553.7 million.
Butler County Auditor Nancy Nix, who has advocated property tax reform for years, said this provision is “out of the blue” and could easily backfire.
“How are school districts supposed to budget with that, can they even keep their bond rating with their cash so low?” Nix said. “Then it just promotes all kinds of shenanigans, to move monies in irregular ways. I don’t understand this at all, that’s not property tax reform.”
Warren County Auditor Matt Nolan, who is president of the County Auditors Association of Ohio, said they have been pushing for appropriate carryover balance standards but “this is not a plan for property tax relief.”
“These superintendents are smart, school treasurers are smart, they’re well educated people, it would take them 15 minutes to move their money around so that it doesn’t fall under this,” Nolan said. “In the best case scenario you would get one year of property tax relief and then everything would shoot right back up the next year. The way our system is set up this doesn’t work.”
Nix said the state auditors have discussed the budget plan and found concerns:
- Real estate values move up and down due to exemptions, Board of Revision cases and public utilities. Rates and values work together, so changes in valuation can cause big swings in rates hampering a school district’s ability to budget accurately.
- The method stated for “refunding the carry-over funds” to the taxpayers would require county auditors to reduce tax rates in the next property tax billing cycle. With eight of the ten Butler County school districts at the 20-mill floor, it would be unconstitutional to reduce rates for those districts further.
- This rule would take away the voice of the voters who elect their school board members to decide the level of funding for their school districts.
- The county budget commissions are comprised of the county auditor, prosecutor and treasurer. The budget provision would swap the prosecutor for the county commission board president. This “creates an inescapable conflict of interest” since the commissioners hold the county purse strings.
House Republican leadership tapped former Ashtabula County auditor Rep. David Thomas to spearhead property tax reform, a priority for the current General Assembly after historic property value hikes hit taxpayers in many counties in recent years.
Thomas told this media outlet the proposed budget takes aim at the system which will eventually bring long-term relief.
“This is actually a tax policy that’s long lasting because budget commissioners should be right now decreasing the tax rates every year based on what is actually necessary,” Thomas said. “Our property owners are being overtaxed given what’s necessary for services, that’s the response to this isn’t actually tax reform, it is.”
He said many county officials believe their budget commissions don’t have this power but they do and he is drafting legislation to clarify and strengthen that power.
Nolan said “confirming that the budget commission may reduce levies is not a bad thing” but they shouldn’t be asked to be the “school police.”
“School boards are elected, just like we are. They should be monitoring their budgets and making these determinations, not the county,” he said. “I agree that the county can serve as a backstop in extreme circumstances, those are rare but they do exist. But asking the County Budget Commission to determine what schools need to operate is going way above what it was ever intended to do.”
Montgomery County Auditor Karl Keith said it is “good, sound public finance policy to have a healthy carryover balance.” As for proposed budget bill, he says they are “talking out of both sides of their mouths, take a position.”
“One of the things that is disappointing is that on one side they say schools have too much money, there’s too much money, they’ve got these big carryover balances, so we need to force them to spend down that money and cut back,” Keith said. “Then on the other hand when people criticize them for cutting school funding they say oh no we’re not cutting school funding, we’re giving schools more money than we ever gave before, well which is it? Do they need more money or don’t they?”
The budget is in the Senate’s hands now and it’s anyone’s guess what’ll happen to property tax reform there. Sen. Bill Blessing, chair of the powerful Senate Ways and Means Committee and a member of the Finance Committee where the budget bill now sits, told this news outlet he is “not a fan of that provision.”
“I don’t like that cash reserve piece at all, it’s a mistake. You’re really kind of punishing districts for being fiscally responsible,” the Colerain Twp. Republican said, later adding: “From my perspective I’m going to try and get that whole thing pulled out. I don’t think having a cap of any sort helps.”
He said like anything that’s not means tested, the people who need relief the least would get the most.
“You’d be dumping out of the school’s cash reserve and the bulk of it really would be going to those that have the most property in terms of valuation would get the most benefit,” Blessing said. “That’s just not right because by definition they would probably be the wealthiest.”
Democratic Rep. Dan Troy of Willowick, who was on the joint property tax committee and House Finance and Ways and Means committees, said his school districts say this provision would be “devastating” and it should have been vetted, not buried in the budget.
“I’ve always had a problem with doing changes in the Ohio Revised Code and putting them in the budget bill,” Troy said. “This thing should be a separate bill, it should have hearings in committee, let people come in and explain the benefits of it, let people come in from the other side and say it’s problematic.”
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