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URGENT – Please contact your legislators - Property tax valuation changes; 20-mill floor modification

By Katie Johnson posted 10-08-2023 05:25 PM

  
To: Treasurers, other school business officials, school board members, and superintendents

From:
Katie Johnson, OASBO — 614.431.9116
Paul Imhoff, BASA — 614.846.4080
Nicole Piscitani, OSBA — 614.540.4000

Re: URGENT – Please contact your legislators - Property tax valuation changes; 20-mill floor modification
It is critical that you contact your legislators in both the House and Senate this week about the potential impact of adjusting the 20-mill floor and encourage them to let the Joint Property Tax Review Committee study the issue to fully understand the impact.

House Bill (HB) 187, a bill that would temporarily require the use of a three-year average for reevaluating property values, including current agriculture use value (CAUV) for farmland, which results in real property valuations being based equally on the past three years (rather a three-year look back on sales with an emphasis placed on the most recent year’s sales occurring closest to the tax lien date). Further, HB 187 would give county auditors, rather than the tax commissioner, the final authority regarding the property tax equalization of a county’s real property, with the tax commissioner able to appeal to the tax appeals board.

The bill was voted out of the House Ways and Means Committee last week and could be considered on the House floor next week. In addition, Senate Bill 153, a companion bill in the Senate, has received several hearings with suggested amendments by county auditors to adjust the 20-mill floor.

Other suggested changes provided by interested parties include limiting growth for 20-mill floor districts to inflation as well as moving the floor to a lower amount (such as 18 or 15 mills).
Please reach out to your legislators as soon as possible to explain the difficulties, unintended consequences, and in some cases, catastrophic implications of these changes. Issues and talking points to consider highlighting:

  • Modification to the 20-mill floor — limiting growth to inflation. The proposed amendment to limit growth of districts at the 20-mill floor to inflation essentially results in different floors applied for various districts, which also raises constitutional concerns related to uniformity. This modification needs further discussion and analysis.
  • Modification to the 20-mill floor — lowering the floor. There has been discussion around lowering the 20-mill floor. This modification needs further discussion and analysis. For those districts that are not undergoing a reappraisal or update and are at the 20-mill floor, this change would have an immediate, detrimental impact on finances, forcing certain districts into financial distress overnight.
  • Three-year average. We understand that some school districts support (while others oppose) the approach of applying a three-year average for reevaluating property values. We encourage districts to continue to contact their legislators and share their thoughts on this modified approach.
  • Application to tax year 2023. There is a question as to whether it is possible to apply the modified three-year average approach in counties undergoing a reappraisal or update in tax year 2023. If applicable, please stress to your legislators how the delay in collections and distribution for tax year 2023 would create serious cash flow issues for your district, while in some cases leave districts without sufficient funds to make payroll.
  • Final authority in the tax equalization process. Providing county auditors, rather than the tax commissioner, with the final authority regarding the property tax equalization of real property will lead to inconsistent and unpredictable results. This change will result in different approaches applied across county lines due to the differing views of each county auditor, raising potential constitutional concerns, as it would be impossible to ensure uniform taxation across the state. This will be particularly challenging for districts whose boundaries cross county lines.

It is critical that you contact your legislators in both the House and Senate this week with details related to the potential impact of the changes highlighted above. 

Important Resources
  • Look up your legislative districts and legislators – click here
  • Senate contact information – click here
  • House contact information – click here
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