The General Assembly is back in session this week. Of the education-related bills we are monitoring, there are three critical bills that have been assigned to the Senate Ways and Means Committee: Property Valuation Challenges and the Board of Revisions Process (HB 126); Modification of Ballot Language and Election Notices (HB 140); and Community Reinvestment Areas (HB 123).
To recap, all three bills were voted out of the House Ways and Means Committee, chaired by Rep. Derek Merrin (R-Monclova Township), and passed out of the House prior to the General Assembly going on break for the summer. The Senate Ways and Means Committee will hear sponsor testimony today from Rep. Derek Merrin on HB 126 and HB 140, with sponsor testimony on HB 123 to be scheduled.
Our three organizations have testified in opposition of all three bills, and where appropriate, we have offered alternative solutions to address the issues raised by the bills’ proponents. Click the following links for a copy of our testimony: HB 126, HB 140, and HB 123.
It is critical that you reach out to your Senator to explain the impact of these three bills on your district’s ability to raise its local share. The state and local partnership in funding public education has been frequently highlighted in our discussions with legislators regarding the Fair School Funding Plan and throughout the budget process. Therefore, tying these three bills back to your district’s ability to raise your local share should resonate more than ever with your Senator.
Please stress to your Senator the importance of opposing these bills. Listed below, we have summarized each of the three bills, as well as provided talking points that you and other district leaders may find helpful when discussing the legislation with your Senator.
Property Valuation Challenges and the Board of Revisions Process (HB 126)
- This is the third time Rep. Derek Merrin has introduced this legislation. HB 126 reverts back to the original legislation in HB 343 (132nd General Assembly) and HB 75 (133rd General Assembly) prior to the Senate twice adopting substitute bills largely removing most of the requirements.
- HB 126 requires a highly problematic and overly bureaucratic process for school districts when filing property valuation claims or counter-claims with county boards of revision (BOR), including:
- Notification to the property owners by the school district to let them know the district is considering filing a property valuation challenge or a counter-challenge to a property owner’s claim.
- This is a redundant mandate because the BOR process is already set up to notify affected property owners.
- After making notification, the board of education must then pass a separate resolution indicating it will challenge the values for specific properties.
- This step would have the effect of politicizing the decisions as to which properties would be challenged, as discussed below.
- Changes result in politicizing the BOR process.
- The new mandates in HB 126 appear to discourage boards of education from accessing the BOR process. This result will be unfortunate not only for school districts but also for the residential and commercial property owners whose values are accurate.
- Because of the effects of HB 920, commercial property owners with accurate property values will pay more than their fair share of taxes, subsidizing the lower taxes paid by commercial property owners whose properties are undervalued for certain types of levies. This is also true for residential property owners.
- HB 126 - Bill text, LSC Analysis and Fiscal Notes
Modification of Ballot Language and Election Notices (HB 140)
- Like the bill described above, this is the third time Rep. Derek Merrin has introduced legislation that would change required levy ballot language. HB 140 is similar to HB 342 (132nd General Assembly) and HB 76 (133rd General Assembly) that our three groups joined with other local government organization to oppose. Our opposition is informed from advice from three law firms that serve as counsel to several school districts; all of these law firms say the bill’s requirements are flawed.
- By necessity, ballot language is technical in nature and not meant to be an accurate estimate of the taxes owed by each individual taxpayer should the levy pass. Instead, the current ballot language describes the taxes that will be levied on behalf of the taxing entity.
- Sample ballot reflecting HB 140 suggested changes (proposed changes are underlined). Click here to view the suggested changes.
- Problems with HB 140:
- Among other changes, the bill revises millage on the ballot to be expressed in terms of $100,000 of appraised value rather than the $100 of tax value.
- During levy campaigns, school districts and other local governments routinely provide an estimated tax obligation on homes valued at $100,000, but they have the ability to distinguish the various factors that will affect this estimate, as described below.
- Many residential properties in Ohio are valued below $100,000.
- Not all types of property in Ohio are taxed uniformly.
- “Taxable value” accounts for differing rates that apply to various classifications of property, which is the term currently used in levy ballot language.
- The “appraised value” standard will not take those differences into account, leading to instances where the tax bill suggested in the ballot language may differ significantly from what will ultimately be owed.
- The following differences among taxpayers, levies, and properties mean the calculation of the actual taxes on an individual property derived from a levy will vary widely:
- Differences between Class 1 (Residential and Agriculture (CAUV)) and Class 2 (Commercial) Property (since the calculation is most often different among the two classes)
- Ex: Property valued using the CAUV method is not valued for tax purposes based on market value.
- The taxpayer may have specific discounts (i.e., the Homestead Exemption).
- The type of levy has a bearing on what a property owner will pay (i.e., for renewal levies, residential property qualifies for the state-paid 10% rollback; commercial properties do not.)
- HB 920 means property owners often pay lower effective rates for levies rather than the full voted rate after the initial year of implementation.
- HB 140 - Bill text, LSC Analysis and Fiscal Notes.
Community Reinvestment Areas (HB 123)
- This is the second time Rep. Mark Fraizer has introduced legislation that would change requirements for the state’s community reinvestment area (CRA) property tax abatement program, which is one of the state’s most-used incentives.
- Problems with HB 123:
- Repeals annual reporting requirements, eliminating locally impacted boards of education from receiving reports on agreements that are in place during a given year.
- Increases the threshold requiring board approval from 50 percent to 75 percent for a CRA property tax exemption for a commercial or industrial project.
- Increases the threshold from $1,000,000 to $3,000,000 (indexed to inflation) to trigger the requirement that municipalities share municipal income tax revenue generated by new employees at a large CRA commercial or industrial project with the school district encompassing that project.
- We oppose these changes because schools should be included in the negotiation of property tax incentives.
- Strong schools means that your community can offer an effective workforce, attract new population, and provide a great quality of life.
- An ongoing supply of quality labor is one of the most critical elements in business attraction, even more important than incentives offered for the construction of a new building.
- The tax abatement process can be used to help companies see the school’s value and can even inform workforce and career development programs.
In addition to contacting your Senator to express your concerns, please consider testifying in opposition of these three bills. If you are interested in testifying, we would be more than happy to work with you to prepare to give your testimony. We will keep you updated on the Committee’s schedule.
If you have any questions, please do not hesitate to contact us.
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