This article summarizes the key points in my previous article.
Kettering’s school levy advertisements give erroneous information. The ads wrongly promise “ZERO Increase In Taxes.” The current “effective tax rate” for this 6.9 mills levy is 6.162 mills. By approving the renewal of this 6.9 mill levy, voters are authorizing the auditor, over the next five years, to increase the current rate (6.162 mills), if necessary, to its maximum effective rate (6.9 mills). This would be a 12% increase.
Total property valuation in Kettering is decreasing. In the last three years, there has been a 4.9% decline in Kettering’s total property valuation. Nobody believes that this slide in total property valuation in Kettering will stop anytime soon. The impact of the disappearance of GM from Kettering is still to be felt. But this levy obligates Kettering property owners to every year raise a total of $8.2 million to support their public schools. To raise this $8.2 million, when total valuation decreases, the tax rate must increase.
When the levy was first approved, in 2004, the 6.9 mill rate, each year, generated $8.2 million revenue for Kettering Schools. Ohio Law says that a tax levy can never generate more money that what was originally approved. Unless it is an “emergency levy,” however, it can generate less. After 2004, the total valuation of property in Kettering kept increasing, and the 6.9 mill rate, if applied, would have generated revenue in excess of $8.2 million. The county auditor, therefore, for several years, adjusted the “effective rate” downward. In 2004, in order to generate $8.2 million, an effective rate of 6.9 mills was needed. In 2009, because Kettering’s total property valuation is greater than it was in 2004, in order to generate $8.2 million, an effective rate of 6.162 mills is needed. Kettering’s total property valuation is declining — toward a return to 2004’s total — and the effective tax rate is moving upwards toward the 6.9 mill rate it started at in 2004.
If the Kettering School Board had wanted to offer voters a levy that guaranteed to not increase the tax rate, the board should have offered a levy with a ceiling, a maximum millage rate, pegged to the current effective rate — 6.162 mills — not a maximum that is 12% higher. This 6.162 mill rate generates this year $8.2 million. But, because every year total property valuation in Kettering is decreasing, a 6.162 mill levy would mean that every year, after this year, Kettering Schools would lose revenue. The option chosen by the board means that even as total valuation in the district goes down, the $8.2 million revenue to Kettering Schools will be maintained and property taxes will go up (a maximum of 12%).
By agreeing to approve this 6.9 mill renewal levy, voters are agreeing that, if necessary, in order to continue to generate $8.2 million each year for Kettering Schools, their tax rate can increase, over a five year period, by as much as 12% — from the current effective rate (6.162 mills) to the maximum effective rate (6.9 mills) approved by this levy.
Advertisement signs around Kettering, that urge support of the 6.9 mill renewal levy and promise “ZERO Increase In Taxes,” amount to false advertisement. Voters who want to support their public schools have a right to be know, when they vote “yes,” what they are voting for.
levy that guaranteed to not increase the tax rate, the board should have offered a levy with a ceiling, a maximum millage rate, pegged to the current effective rate — 6.162 mills
Mike, the rate is fixed to raise $8.2 million. An increase in taxes paid can only occur if your home’s value increases relative to the total taxable real estate in Kettering. The levy renewal doesn’t increase taxes–but changing valuations can.
Eric, the signs advertising the 6.9 mill renewal levy promise “ZERO Increase In Taxes.” The question is, what does this phrase communicate to 99.9% of voters reading such a sign? The message levy ads are communicating is that, by approving this renewal levy, the effective rate of taxation that property owners are currently paying will not increase. What else could it mean? The current effective rate is 6.162 mills or $6.162 for every $1000 of taxable property. When, within the next five years, this rate increases beyond 6.162 mills, then, regardless that there is zero increase in a property’s valuation, that property will be required to pay more taxes, regardless.
The fact that the levy obligates Kettering voters to raise a fix amount each year — $8.2 million — is the source of the problem. The tax base in Kettering is shrinking, so in order to generate this fixed amount, everyone’s tax rate must go up. If the county auditor determines that, because of decrease in the tax base, the total valuation, the current effective tax rate will fail to generate the $8.2 million, then the auditor will increase the effective rate sufficient to raise $8.2 million. It’s just mathematics.
You write, “An increase in taxes paid can only occur if your home’s value increases relative to the total taxable real estate in Kettering.” Sorry, this statement is simply not true. You need to reconsider this statement. As I point out in the previous article, the increase in tax rate for this levy is already occurring. In 2007 an effective rate of 6.13 mills was required to raise the total $8.2 million; in 2008, an effective rate of 6.16 mills was required to raise the same amount.
If you have a property whose accessed value was constant, you would notice that for every $1000 of taxable property value, you paid 3 cents more in 2008 than you paid in 2007. You had an increase in the amount of tax you were required to pay and this increase had noting to do with fluctuation in your property’s value.
In order to continue to raise the obligated $8.2 million each year, because total property valuation in Kettering is sinking every year, the current effective rate of this levy, 6.16 mills, will probably return to its initial amount, 6.9 mills. This will be a 12% increase in tax obligation for property owners. If an effective rate of 6.9 mills fails to raise the $8.2 million, the rate will not increase beyond 6.9 mills and revenue to Kettering Schools from this levy will fall below $8.2 million.
I imagine an average property in Kettering is paying about $300 per year to support this levy and that this tax, within the five years, will increase to about $336 per year. This is not a huge amount of increase, and for a taxpayer who has loyally supported Kettering Schools, it’s not an amount that would probably matter. But the point is, the advertisements are wrong. By voting “yes,” taxpayers are authorizing a 12% increase in the rate of this tax. Levy advertisements are disseminating misinformation. It is wrong to communicate to voters that by approving this renewal levy, there will be “ZERO Increase In Taxes.” There will be an increase.
This has always been a challenge to levy committees, having served on a few. How can you convey the point in a few words on a sign effectively. “No new tax”, “”No Increase”, etc are all commonly used in Ohio when talking about renewal levies. I’d like to hear what words you think would be appropriate on a levy sign.
And Mike don’t forget if the economy does turn around and property values begin to rise again the rate will have to decrease.
Eric and Stan have it right. Just because the tax rate increases, doesn’t mean your tax bill goes up- the levy is still generating the same amount of revenue. The tax rate can only go up if everyone’s value has gone down. In such a scenario, the increased tax rate is offset by the drop in value within the district. The only way someone could see a tax increase is if a person has their value increase while everyone else’s value in the taxing district decreases.
To twist the language so much and nitpick this to the point of calling it false advertising is not correct or fair. By your standard, every district that has ever campaigned for a renewal levy has committed false advertising.
If you really do support this levy, I suggest letting it go.
Bruce, an officially sanctioned school levy advertisement should never, never make a promise that is not true. It is simply not true that the approval of Kettering’s 6.9 mill renewal levy will result in “ZERO Increase In Taxes.” There is a 100% certainty that over the next few years, the effective tax rate for this renewal levy will, in fact, increase. I’d say it is a pretty safe bet that within the five years of now, the time this levy renewal would be in effect, that total property valuation in Kettering will return to the level it was in 2004, and, if so, the effective rate of this levy will increase 12% over what it is now. Maybe total valuation will not fall to that 2004 level, but it is falling as I write this and, therefore, there is a certainty that next year’s effective tax rate will be greater than this year’s.
If we had the economy of a few years ago, when Kettering’s tax base was increasing every year, then promising that this renewal would result in “ZERO increase” would make sense. But the trend now is unmistakable. The record shows that the effective tax rate in Kettering is increasing from year to year. No one paying attention expects the downward trend in Kettering’s total valuation to reverse itself anytime soon, and every year as Kettering’s total valuation decreases, in order to generate the fixed amount of $8.2 million each year, the effective tax rate for this levy will increase.
When the effective tax rate increases, that is called an “INCREASE In Taxes.” It is patently false to say otherwise.
When a statement is not true, it is a false statement. And, Joe, please reconsider what you are saying. This statement you made — “The only way someone could see a tax increase is if a person has their value increase while everyone else’s value in the taxing district decreases” — is flat out wrong. The effective rate for this levy is 6.162 mills. Approval of this levy gives the auditor authority to raise this rate to as much as 6.9 mills — a 12% increase from what it is now — and when the effective tax rate increases, then even if a property’s value stays constant, the tax goes up.
It’s not true that “every district that has ever campaigned for a renewal levy has committed false advertising.” Kettering could have simply advertised: “This is a RENEWAL Levy.” This is a true statement. Most people reading such an ad would wrongly conclude that approving a renewal levy would mean zero increase in tax, but the responsibility for making that wrong conclusion would have fallen on the reader, not the advertiser. Many advertisements give the wrong impression and come up to the line of falsehood without actually saying something flat out untrue. But advertisement that crosses the line and makes a promise that the advertiser well knows is simply not true is false advertisement. Schools should not risk losing the trust of their constituents by playing fast and loose with their constituents’ trust. An officially sanctioned school levy advertisement should never, never make claims that are flat out not true.
when the effective tax rate increases, then even if a property’s value stays constant, the tax goes up.
The auditor only has authority to increase the effective tax rate if the total taxable assessed value goes down. So, “if a property’s value stays constant” when the total values have gone down, that property’s value has increased “relative to the total taxable real estate.”
Schools have a responsibility to instill “principles of democracy and ethics.” Levy committees are legally obliged to avoid making false statements during campaigns. I don’t see how the committees alleged shortcoming would even warrant discussion in a high school government class. High school teachers would be better advised to have their students explore the effect on democracy and ethics of Governor Strickland’s education reforms.
Mike, you are exactly correct. I believe a lot of levy campaigns, perhaps the majority of them, mislead. The lap dog press, who never met a levy it did not support, absolutely refuses to do real reporting. Rather the mainstream press acts as a transcription service for the levies.
Rick, thanks for your comments. I missed the deadline for DDN letters. I didn’t start looking into this Kettering levy until it was too late.
Eric, you seem very knowledgeable about how school property tax in Ohio works. You acknowledge, it appears, that “if a property’s value stays constant” but that the value has increased “relative to the total taxable real estate,” that this renewal levy authorizes the auditor to raise the effective tax rate for this renewal levy from the effective rate it now is, 6.162 mills to as much as 6.9 mills, a 12 % increase. You will not be surprised when your tax bill goes up, even though your property valuation stays constant, and, if you are a Kettering resident, it sounds like you will vote “Yes,” for the levy. I respect that. You know what you are voting for. And, you are aware that this levy is being advertised as “ZERO Increase In Taxes.” I imagine you would agree that most everyone would interpret a “ZERO Increase In Taxes” as a zero increase in the effective rate of taxation. In other words, I think you would agree that the levy ads are giving misinformation. This doesn’t seem to bother you and again, you will vote “Yes.” Regardless that you know the advertisement techniques used to promote this levy are inappropriate, you will vote “Yes.” I respect that. You know what you are doing.
But I am bothered that the advertisements for this levy gives misinformation and many people voting “Yes,” will not have your knowledge. Most people voting “Yes” will take the advertisement at face value and will have no idea that, regardless of the “ZERO Increase In Taxes” promise, by voting “Yes,” they are authorizing the auditor to raise the effective tax rate by as much as 12%.
Most people voting “yes,” I imagine would basically agree with you, and, even if they knew their “yes” vote was obligating them for a small effective tax rate increase, it wouldn’t matter. They would vote “yes,” regardless. But they should have the information so they can make an informed decision. This is explained no where. Kettering Schools has a web-site, but it says nothing about the levy.
The fact is, voters should be able to trust the veracity of school approved advertisements. And there is a big problem with the advertisements for this Kettering levy. It makes no sense to claim that schools are under local control, if voters don’t know what they are voting for.
Another way to look at “Zero Increase In Taxes” is dollars. A levy actually authorizes a specific number of dollars to be levied. That total never goes up on the properties in existence at the time the original levy is implemented. A renewal does not change the amount to be collected thus there is a zero increase in the amount of tax to be collected, with one exception.
Some “new” money will get added to the approved total automatically. This occurs through collections against properties constructed after the tax was implemented. Except for some faster growing communities this usually amounts to very little new money.
The allocation of how that total is collected changes from time to time based on property valuation adjustments. There will be individuals thet will pay less and individuals that will pay more every time one of these adjustments is implemented.
Does the sign say “Zero Increse In YOUR Tax” ?
Bruce, the understood meaning for the phrase, “Zero Increase In Taxes,” is “zero increase in the effective rate by which taxes are accessed.” If last year the sales tax was at a rate of 6% and today the sales tax rate is also 6%, I would express that fact by saying that there has been a zero increase in sales tax. I don’t think I would be confused about what “zero increase in tax” means, regardless that one year I spent more than the other year and therefore my tax varied.
When someone sees a sign dealing with property tax and the sign promises, “Zero Increase In Tax,” they take that to mean, zero increase in the effective tax rate. (Maybe I’ll take a random poll of voters to test my certainty about this point.) But, over the five years of the levy, the effective rate is certain to increase. It increased just last year, so this fact is not a surprise. So the phrase is communicating something that is not true. I’ve got to wonder what the levy campaign committee’s discussion about this phrase consisted of.
The renewal levy renews the taxpayer’s obligation to be taxed as much as 6.9 mills in order to raise $8.2 million each year for Kettering Schools. An accurate sign would have read, “Zero Increase In Tax Obligation”
So you are saying you would prefer “No New Money” as opposed to “No New Taxes”?
I haven’t had a pay raise in the last 2 years. Why does Kettering keep going after property owners? It’s getting to the point where I’m paying the city to live here. The back door school levy for Trent Arena was pretty bad, the last defeat of a levy where the city couldn’t take “no” for an answer was even worse when they came back and spent thousands of dollars to get out the “word”. This city needs to look for other forms of raising cash.
The “kids” have so much now it is pathetic! They have no respect for what they do have and think that the money just never ends coming in. Sorry, but the gravy train has derailed. VOTE AGAINST THE TAX RENEWAL LEVY!
The gravy train for schools has derailed.
VOTE NO FOR THE SCHOOL RENEWAL LEVY!