OPINION: Ohio’s lack of stable local school funding hurting taxpayers

An attempt to provide stable funding outside of property taxes has led to the trend of more urban school districts asking for income tax levies, which used to be relegated to rural communities.

For example, Fairfield City Schools has a slight operating surplus, yet is asking for a 1.25% permanent earned income tax levy, which they claim is the revenue equivalent of an 8.6 mill levy. Earned income taxes exempt retirement incomes and further shift tax burden onto working families who may or may not own property, rather than the taxing all real and utility property in the district. Based on property tax abstracts and existing TIFs, that is a $21.5m levy ask. 2026 General Fund Revenue expectations are $112m. In a normal budgetary climate, this would be an astoundingly large ask, especially for a levy without reduction factors. However, with mixed signals from the state and potential further property tax reductions, can we blame them?

If the funds were raised with 8.6 mils of property taxes, industrial/commercial property would pay 24.6% of the ask; not to mention the additional charge to large apartment complexes which typically only pass ~85% of the costs along through rent increases. Additionally, property tax levies are subject to reduction factors so the tax burden does not keep pace with inflation, whereas the income tax levy is charged uniformly as incomes rise.

The impetus for recent property tax reforms stem from a statewide outcry that seniors are being “taxed out of their homes” due to value increases. If a home increases 50% in value, but a property tax bill increases 15%, is that really a cause to defund local schools or have those districts push for earned income tax levies that just puts more pressure on young working families still saving to buy their first home?

Effectively, the state’s lack of stable local school funding is:

Matthew Mesisklis is the City of Trenton finance director/tax administrator