Property tax is the predominate method communities use to raise additional revenues in Ohio. Property tax comes in two forms:
• Real Property Tax – This is a tax levied on land and buildings located within the school district. Private individuals, businesses, and public utilities that own land and buildings pay tax.
• Tangible Personal Property – This is a tax levied on furniture, fixtures, machinery, equipment and inventory owned by business. This is currently being phased out and will no longer be collected.
Local Property tax rates are always computed in mills. One mill costs the property owner $1.00 for every $1,000. of assessed valuation each year. In our example, the $100,000. home will produce $35. in tax revenue for each mill.
In Ohio, millage is referred to as “inside” millage and “outside” millage. Inside millage is the millage provided by the Constitution of the State of Ohio and is levied without the vote of the people as established very early in the State’s history. The inside millage rate is limited to ten mills in each political subdivision. Public schools, cities, counties and other local governments are allocated a portion of the ten inside mills. The Crooksville Exempted Village School District’s portion is 4.20 mills. Outside millage is a millage voted upon by the public. The minimum amount allowed by the law is 20 mills. This is referred toas the “20 mill floor.” Crooksville Schools is currently operating at 20 mills. Crooksville Schools has not had a new operating levy since 1992.
There are two (2) major forms of tax credits property owners receive on their tax bill.
• Rollback – The first is a 12.5% millage rollback. With this credit, a homeowner receives a credit of 12.5% on the total gross property tax amount due. In our example, the property owner would receive a credit of $4.38 [$35. X .125].
• Homestead – The second is the homestead exemption. This credit is only available to qualified elderly and disabled homeowners meeting minimum income level requirements. These credits can range from $70. to $650. per year and require completion of an application process.
The annual net tax bill for 1 mill on a $100,000. home would be $30.62 [$35.00 – $4.38] in our example. An additional amount could be deducted if the taxpayer qualified for the homestead exemption. The State of Ohio reimburses rollback and homestead credits so that the taxing authority end up collecting the full amount of the levy.
HB 920 – THE CONTROLLING FACTOR
Another key tax credit is the tax reduction factor. Also known as House Bill 920, this credit, which went into effect in 1976, effectively freezes all voted real property millage at the dollar amount collected the first year the millage went into effect. As property values rise through reappraisals, the outside millage rate is commonly referred to as “effective” millage is reduced. The inside mills are not affected by the House Bill 920 credit, so a very small amount of additional revenue is gained as property values increase.
The largest portion of Crooksville Schools funding comes from the State Foundation – The State of Ohio provides funding to school districts by way of a foundation formula. The foundation formula method of funding Basic Aid takes into account the ability of school districts to raise taxes locally as well as a state determined minimum amount necessary per student to provide an adequate education. The formula is designed to provide a higher lever of assistance to school districts with low property wealth relative to districts with higher property wealth. It takes into account several other factors including enrollment.