PARMA, Ohio — Gov. Mike DeWine’s signing of a bill this week will significantly limit a school districts’ ability to contest the property tax valuations on commercial properties and, in turn, potentially cause millions of dollars in lost revenue for school districts across the state, administrators said.
In a win for real estate developers, large commercial property owners and the multi-family housing lobby, Gov. DeWine signed House Bill 126into law this week, which clamps down on a school district’s ability to contest potentially undervalued properties as well as severely restricting a district’s ability to intervene in property tax disputes.
According to data provided to News 5, the Cleveland Metropolitan School District could potentially see a significant drop in funding. From 2015 to 2020, CMSD has collected more than $7 million annually from property tax disputes. Under HB 126, that figure drops to just over $1 million a year, a drop of more than 75%.
In Parma, Superintendent Dr. Charles Smialek said HB 126 would cut $1.6 million in funding in 2022 alone.
“Our communities are frustrated by the whole levy cycle and it’s difficult to ask people, especially in times of inflation and increasing gas prices, to go ahead and voluntarily fork over more money,” Smialek said. “This was a tool that we used pretty effectively to come at really a fair settlement [with commercial property owners].”
The legislation, which would take effect later this summer, has been spearheaded and supported by organizations including Ohio REALTORS, the Ohio Chamber of Commerce and the Ohio Apartment Association. The legislation was vehemently opposed by education advocates, teachers’ unions and the state’s urban school districts.
For Parma Schools, the drop in funding puts the district in an even more precarious position considering it hasn’t had a new money levy pass since 2011 and 18 of 21 new levy ballot issues have been voted down by residents.
“That is not to point fingers at any campaign effort or superintendent or school board or even our community; it just tells you that there is not a whole lot of appetite out there to reach deeper into pockets that, in many cases, are already stretched thin,” Smialek said. “Ultimately we have to make one of two choices: We cut programming, which means we cut staff and cut and opportunities for kids, or we turn to the community to ask for more money. Neither one is a pleasant scenario for us.”
Smialek said the loss in $1.6 million as a result of HB 126 won’t affect core education but could possibly lead to larger class sizes, the elimination of extracurricular activities and other program reductions. $1.6 million equates to 26 to 28 teachers, he said.
Despite the funding reduction, Smialek said the district will adjust and adapt the budget as much as possible before potentially asking the voters for a levy increase.
“That’s all a numbers game. We know we have to make our budget balanced because we can’t consistently turn to the community to ask for more,” Smialek said. “We are being as fiscally responsible as possible. When we do come to them for money — and that day will come — it’s a sincere effort, it’s a strategic effort to be as careful with tax dollars as possible and not come in a superfluous way.”