The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
Later this week, Ohio’s Property Tax Reform Working Group will go over their draft report ahead of the Sept. 30 deadline set by Gov. Mike DeWine.
Last Thursday, the members went through the list of proposals they’ve considered to make sure they’re on the same page.
In all, Co-Chairman Bill Seitz walked the members through more than 20 different ideas, gently badgering them to settle any remaining quibbles and turn in proposed language for any last-minute ideas.
As they have been throughout, working group members are largely on the same page.
Existing Ohio House bills limiting property tax increases across the board to the rate of inflation and freezing taxes for low-income seniors both got a thumbs up.
Previously vetoed
Budget provisions previously vetoed by DeWine came back with significant tweaks.
State lawmakers wanted to punish school districts for carrying a cash balance greater than 40% of their operating budget year to year.
The working group would put the carry over limit at 100% and apply it to all taxing authorities.
“What’s sauce for the goose is sauce for the gander,” Seitz said. “Some of the worst examples in some people’s minds of large, large carryovers are not from schools. They’re from other special levies and saving for a rainy day that would rival Noah and the ark.”
Similarly, the working group put guardrails on a proposal empowering County Budget Commissions, made up of the local auditor, treasurer, and prosecutor, to roll back levies the commission deems excessive.
DeWine bristled at the idea of county officials negating a measure the voters just approved.
The working group determined there should be a five-year safe harbor for new levies and two years for renewals.
State lawmakers also wanted to restrict the kinds of levies school districts can propose — including the removal of fixed-sum emergency and substitute emergency levies.
The working group wants to allow emergency levies, but only if the auditor has placed the district in fiscal caution, watch, or emergency.
Their proposal would also limit emergency levies to five years without any renewal.
During the discussion, Pickaway County Commissioner Gary Scherer asked: with all those changes, what’s the difference between an emergency levy and ordinary operating levy?
“You can use the word emergency.” Seitz said. “I mean, if it’s truly an emergency, the voters need to know it’s an emergency.”
Still wrestling
The working group is still working through out a handful of ideas, though.
A proposal for presenting levies as a percentage on the ballot is still waiting on draft language.
But the working group spent much more of its time debating interest.
When voters approve a levy, the collection and administration of that money is typically handled by the county. While it’s in the county’s hands, that money earns interest — which the county keeps.
Co-Chair Pat Tiberi doesn’t like that arrangement.
He sits on Delaware County’s Board of Health, and explained they delayed going to voters with a new levy for as long as possible.
When they eventually did, he said they were “100% shocked” to learn that they don’t get the interest on that tax revenue.
“Someone pointed out to us that Pickaway County’s Health Board gets to keep their interest,” he said, “and In Delaware County, the interest the previous year was $350,000. Derived from our levy — just one year. It was in the millions of dollars over the term of the levy.”
If that interest got plowed back into the Health Board he argued, they could’ve put off going to the voters.
Allen County Treasurer Krista Bohn and Warren County Auditor Matt Nolan tried to warn him off.
Nolan praised Tiberi’s intention but worried about how it would work in practice.
“It’s not wrong, I don’t disagree with that at all,” he said. “I’m just worried about the amount of work that it takes.”
Bohn explained that interest revenue is paying for offices like hers to manage their books — not to mention cover the agency’s rent.
If you start splitting the funds up, she added, there’s less opportunity for meaningful returns.
“To keep it completely separate, as you’re asking,” she said, “the cost and the administrative, the staffing, everything to Matt (Nolan)’s point, would increase significantly, and the interest would decrease,” she said.
They were quick to add that when interest rates are low, county officials are effectively subsidizing their agencies
Tiberi pushed back, noting that if some places like Pickaway County already do it, why can’t they be a model?
Scherer, who serves as a Pickaway County Commissioner, chimed in that his county’s arrangement isn’t so much that the agencies get to keep the interest on their levies, as it is that the agencies and the county make a deal to share it.
Scherer promised to share the formula.
