State Budget Update

Last night, Governor Mike DeWine signed House Bill 96, the state biennial budget into law, after he vetoed 67 provisions in the bill including the following:

School District Property Tax Levy Restrictions

This item eliminates the authority for political subdivisions to levy replacement property tax levies and the authority for school districts to levy fixed-sum emergency, substitute emergency levies, and combined school district income tax and fixed-sum property tax levies. These levies serve as important tools for school districts as they seek to maintain their long-term financial stability. The DeWine-Tressel Administration recognizes the great need for property tax reform in Ohio and will convene a working group that will include legislators, agency officials, school officials, community members, and property tax experts to ensure this critical topic is given the attention deserved. Therefore, the veto of this item is in the public interest.

Local fiscal emergency receivership

This item creates a method for the appointment of a receiver for counties, townships, and municipal corporations that are in fiscal emergency for lengthy periods of time. This item enables the receiver to decide, under certain circumstances, that the county, township, or municipal corporation will file for bankruptcy under Chapter 9 of Title 11 of the U.S. Code. Under existing law, a political subdivision must seek approval from the Ohio Department of Taxation before a bankruptcy filing can be made. This provision is in conflict with existing law and may lead the federal bankruptcy court to question the authority for filing bankruptcy. Any decision of this magnitude should be made by an official who is subject to senate confirmation after appointment by the Governor. Therefore, a partial veto of this item is in the public interest.

Property Tax: County Budget Commission Authority & Procedure

This item gives county budget commissions the authority to unilaterally reduce a levy passed by voters for a school district or other taxing authority under certain circumstances. This breaches the approval of such millage by the voters. Further, this item requires the Ohio Department of Taxation to calculate tax rates for certain fixed-sum levies that are currently addressed by county officials at the county level. The tax commissioner does not receive sufficient information from county auditors to calculate these rates and the timelines in this item would result in delays to taxpayers regarding their tax information for proper filing. Therefore, the partial veto of this item is in the public interest.

Cash Balance Carry-Over

This item would require county budget commissions to reduce rates on current school district expense levies in certain circumstances where a district’s carry-over balance is more than 40% of its general fund expenditures in the prior year. The budget commission would be mandated to reduce rates on current expense levies until the carry-over balance is decreased to below the 40% threshold.

While the intention to save taxpayer dollars is understandable, this item would significantly limit the amount of funding that school districts can carry over year-to-year, resulting in more districts asking taxpayers to pass levies more often, which could very well exacerbate property tax increases instead of reducing them. While seeking periodic taxpayer approval of levies is appropriate, this item is contrary to local control and will undermine efforts by school districts to manage their finances responsibly and follow best business practices. Further, the increased levy cycle could cause more levies to fail due to levy fatigue, impacting the overall financial stability of school districts. Therefore, a veto of this item is in the public interest.

20-Mill Floor Calculation

This item requires that emergency and substitute tax levies, incremental growth levies, conversion levies, and the property tax portion of combined income tax and property tax levies be included in the 20-mill floor calculation for school funding purposes. The DeWine-Tressel Administration recognizes the great need for property tax reform in Ohio and will convene a working group that will include legislators, agency officials, school officials, community members, and property tax experts to ensure this critical topic is given the attention deserved. Therefore, a veto of this item is in the public interest.