“The things that are impacting the housing market in those different communities really dictate what’s happening with values — sales, the number of foreclosures, the number of vacant properties,” Montgomery County Auditor Karl Keith said. “That’s more predominant in the urban core. The real estate market is certainly healthier than it was three years ago, but a lot of that healthier activity is in those outer-ring suburbs.”
Montgomery, Greene and Butler are the three local counties doing property revaluations this year, but only Montgomery County has data so far on the levy impact.
Christy Donnelly, who was interim superintendent of Kettering City Schools this summer, said administrative staff have already discussed budget cuts as a result of the projected $1.1 million loss in 2015. She said no layoffs will happen this year, but the news could affect Kettering’s levy plans.
“We have a renewal levy this year, a renewal next year and then a new-money levy (planned) the year after,” Donnelly said. “I think the board will want to have a conversation about whether they can stay on that same schedule, or do they need to do something different with that second renewal?”
Northmont City Schools are projected to lose $722,000 in tax revenue next year, and their focus also turned to levy issues.
“It just adds urgency to pass the renewal levy we have on the ballot in November, to maintain what we have,” assistant superintendent Tony Thomas said. “(The loss) is a sizeable number.”
Jackson, the Northridge superintendent, took a long-term view, saying the shrinking tax base will hurt future levy campaigns because it will take higher millage rates to raise the same amount of money. In the meantime, the district will look for savings.
“We’re always looking at ways of saving money — anything from contracts with outside vendors, textbooks and supplies, to new ways with technology,” Jackson said. “But bottom line, we are a people-oriented business, so most likely the impact is slightly larger class sizes down the road, more kids on a bus than we’re used to having, things like that.”
Changing the law?
The hardest two things for the schools are that two-thirds of the 2015 revenue loss will be permanent, and that the losses come on the heels of similar reductions in 2012.
Keith explained that Ohio House Bill 920, passed in 1976, prevents residents’ property taxes from rising dramatically when their property value rises. But the law didn’t anticipate the property value of an entire community dropping — which has been going on in Montgomery County since 2008.
When that happens, recent levy millage rates are applied to the new, lower tax base, and therefore produce less money for schools, cities, libraries and other agencies.
Under HB920, Keith said the new, lower revenue total becomes the new maximum the levy can ever collect, whether property values bounce back or not.
When asked about this issue in 2012, as county schools were losing a similar $6.6 million, State Sen. Peggy Lehner, R-Kettering, said “the legislature needs to take a close look at this.” Lehner chairs the Senate Education Committee.
Keith said some legislators did call for an explanation in 2012, but he’s seen no action since.
“No one envisioned a long-term decline in home values,” Lehner said. Unfortunately the drop in property values have had the greatest impact on our most struggling districts. The legislature is going to have to address this problem.”
Her Senate Education Committee colleague, Bill Beagle, R-Tipp City, agreed that the issue should be reviewed, but he offered caution.
“With our current environment in Columbus being very sensitive to taxes and tax increases, these are difficult conversations to have,” Beagle said. “I don’t think there is a real appetite to repeal HB920. Is it possible to make some modifications to account for the extraordinary reductions in housing values, even on a temporary basis? Those are conversations worth having. … But I think it would be a lengthy conversation, and one that would probably generate a fair amount of heat.”