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Education


Ohio GOP lawmakers shift toward higher property taxes, lower income taxes
Ohio's new two-year budget may gradually eliminate a tax-break for homeowners
by WKSU's M.L. SCHULTZE


Web Editor
M.L. Schultze
 
Courtesy of 401(K) 2013; flickr
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In The Region:

Ohio’s GOP lawmakers are backing a plan that would cut income and businesses taxes, but would increase future taxes on homeowners by more than 12 percent. WKSU’s M.L. Schultze spoke with a school treasurer who expects such a move will make it harder to pass local levies – and to understand your tax bill.

 

 

LISTEN: School treasurer/tax expert Mike Sobul on the give and take on taxes

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Mike Sobul wasn’t around the Statehouse back in 1971, when lawmakers passed Ohio’s first income tax and pretty much assured Gov. John Gilligan, would be a one-term governor.

But during Sobul’s 25 years with the Ohio Department of Taxation -- followed by the last two as treasurer of Granville schools – he’s followed the give-and-take of tax policies. He says, with that first income tax came a local tax cut – and a safety net for local schools.

“At that time, all real property got a 10 percent break on  taxes that was then paid by the state to the jurisdictions so the jurisdictions didn’t lose money by that.”

Then came a 2.5 percent further rollback in 1979, again with the state promising to make up the lost revenue to local schools and governments.

“Actually it works just like the 10 percent rollback; it’s just a little more restrictive. It only applies to owner-occupied homes and it only applies to the home and one surrounding acre.”

An increasingly pricey proposition
Over the years, there was talk of cutting the state’s reimbursement to the locals. In  2005, the state changed its business tax code. Business got some breaks, but it also lost the real-estate rollback. 

The talk of bigger changes escalated during the go-go years of the housing boom. That’s because the state’s costs, says Sobul, were getting out of control.

“It was one of the fastest growing line items in the state budget, (and…) the state really had no control over it. Before we got to the real-estate crash four years ago, … it was going up at a rate of 6 to 6.5 percent a year.”

How residential real-estate reductions work, per the County Auditors Association of Ohio:

The 10% rollback applies to non-business property, defined by state law to include all uses of property except farming; leasing property for farming; occupying or holding property improved with single-family, two-family, or three-family dwellings; or holding vacant land that the county auditor determines will be used for farming or to develop single-family, two-family, or three-family dwellings. 

The County Auditor's office also administers the 2 1/2% Property Tax Reduction Law for residential and agricultural parcels on which there is a home site occupied by the owner.

In addition, the Homestead Exemption is open to any Ohio homeowner who currently lives in their home including manufactured homes, and that home is their primary residence,  who:

•        Is at least 65 years old or will reach age 65 during the current tax year; or

•        Is certified totally and permanently disabled as of Jan. 1 of the current tax year, regardless of age; or

•        Is the surviving spouse of a qualified homeowner, and who was at least 59 years old on the date of their spouse’s death. Manufactured homes are also included in this Homestead Program.

Making local levies a harder sell
But Sobul says eliminating the state reimbursement all together will likely make local levies a harder sell. That’s because levy supporters often hone their sales pitches down to a concrete dollar figure: This levy will cost the owner of a $100,000 home this amount.

And, says Sobul, “if they’re doing it (their job) right,” they make sure to deduct that 12.5 percent when they explaining a levy to homeowners.

Sobul says even a slightly higher cost the homeowners “can’t help” in passing any levy.

Different rules for old and new levies
The new rules would not apply to existing levies, nor to their renewals – but  only to new money issues passed after this year.

But oOverall,  Sobul maintains, the whole process will be more complicated “when you have some levies that are going to get the rollback and some levies that are not.”

“It becomes a little bit harder to explain to people. People looking at their bills, it’s a little bit harder to calculate.”

“Now you go on (the county tax Web sites) and say, ‘My starting  bill is $1,000 and my 10 percent rollback is $100.’ … Well going forward as you start getting new levies, that 10 percent rollback isn’t going to be 10 percent anymore.”

Mike Sobul’s Granville school district plans to put a levy on the November ballot. If it passes, his district will at least delay that confusion. But he doesn’t see a mad rush by school districts to get on the ballot this year – at least no more of a rush than in recent years.

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