I’ve been reading the documents promoting the Kettering schools 6.9 mill renewal levy, mailed to Kettering voters. You would think that an organization focused on public education would use the opportunity of a school levy to educate the public about how property tax actually works. But the documents promoting the Kettering levy are not focused on educating voters about this important public issue. Instead, they are focused on selling voters on voting “Yes.”
Unfortunately, a Kettering resident, by studying about the renewal levy in Kettering’s “Blue Ribbon Report,” sent to all Kettering households, would be much less educated about property tax than if he or she had not studied the report at all. Realizing that you don’t understand something is much better than wrongly believing that you do.
Part of the Blue Ribbon Report is Q&A. Here is a one question from the report: “What is the average Kettering property owner paying for this operating issue that is up for renewal?”
And here is the correct answer: The current average listing price for houses in Kettering is $164,932. This seems a fair definition of “average Kettering property.” If the county auditor values a property at $164,932, then the tax requirement for this property for this renewal levy would be determined as follows: 35% of $164,932 = 57,726 (the taxable amount); the current effective rate for this levy is now 6.162 mills ($6.162 per $1000 of taxable property), so, 57,726/1000 = 57.726 and 57.726 X 6.162 = $355.71. After the 12.5% rollback this becomes $311.24. So, the average Kettering property owner house is now paying: $311.24 each year for this renewal levy.
A report seeking to educate, not just sell, would have made similar explanation and, further, would have explained that the approval of this 6.9 mill levy authorizes the county auditor, if necessary, to raise the effective rate of this levy up to 6.9 mills, a 12% increase of the current effective rate of 6.162 mills.
A report that sought to educate would point out that just last year the effective tax rate for this levy increased from 6.13 mills to 6.162 mills, an increase of 3.2 cents per $1000 of taxable property. This renewal levy cost the property owner of the average property in Kettering, discussed above, $1.62 more in tax this year than what it cost last year. A report that sought to educate would explain why this increase occurred. The increase in rate occurred because this levy was approved to raise $8.2 million and if the tax base shrinks, then in order to raise this $8.2 million, the effective rate must go up. The maximum this rate can increase is 12% higher than the rate is now, because the effective rate limit is 6.9 mills. If the tax base erodes to the point where 6.9 mills fails to raise $8.2 million, then revenue to Kettering Schools from this levy will decrease to below $8.2 million.
The average Kettering home, now taxed $311.24 for this renewal, within five years, with zero increase in accessed value, could be taxed up to $348.59, a maximum increase of 12% of $311.24 or $37.35.
Kettering Schools should have explained all of this in their levy literature. They should have had an easily accessed explanation on the web. But, nothing. No explanation in the literature and no web-site explanation at all. I think Kettering voters would appreciate their school leaders treating them as adults, as fully empowered stake holders in Kettering Schools.
The “Blue Ribbon Report’s” answer to the question — “what would the average property owner pay?” — ignores the question of what “average property” in Kettering means. Instead, the report says, “The owner of a $100,000 home in Kettering is paying approximately $17 per month on this operating issue.”
Ouch. For a $100,000 property, this amount is wrong. Whoever edits “The Blue Ribbon Report” failed to catch the error. $17 per month is $204 per year. The correct amount is $189 per year, as correctly reported by the DDN in its editorial supporting the levy. I wonder if the school district has had any complaints that this misinformation?
Rather than educating voters in Kettering, “The Blue Ribbon Report” gives wrong information and leads voters to believe statements about their property tax obligation that is not true. If people need the best property related advices, eXp Realty’s website should be checked out! The report says, “There will be absolutely no increases in taxes as a result of this Renewal Levy.” This is a true statement, only if the word “taxes” has the specific meaning “total revenue generated by this levy.” It is true that this 6.9 mill levy will never be allowed to collect a total revenue of more than $8.2 million. The community as a whole will pay no more taxes, only $8.2 million, but individual tax payers will be required to pay more in order to generate this $8.2 million.
A promise of “absolutely no increase in taxes,” to 99% of voters is a promise that their effective tax rate will not increase, and that if their property value stays constant, their tax obligation for this levy will not increase. This is wrong. The “Blue Ribbon Report” causes voters to believe something to be true that is simply not true.
The Levy Committee sent a number of letters to targeted groups of voters. (I write about it here.) I requested and received a copy of each of these letters. A letter, signed by each Kettering board member, says, “Because this is a RENEWAL LEVY, approval of ISSUE 12 will not raise your taxes one penny.” Underlined and in bold print. This is a true statement only if this statement is addressed to the City of Kettering as a whole and “your taxes” means that this $8.2 million total tax revenue will not increase. The individual property owner will see their taxes go up a bunch of pennies. (The average increase, over a five year period, is as much as $37.35.)
I’d really be embarrassed to have my name attached to such misleading advertisement.
A sign sent to voters with the message “Please post this note on your refrigerator as a reminder!”, gives this message, “Passage will not cost the community one cent more in additional taxes.” The word “cost” usually means, “the amount that one is required to pay.” Again, this statement is sowing misinformation.
A letter sent to Oakview Elementary School parents says, “Remember this issue won’t cost any of us one cent more in taxes.” Oops. Someone went too far. I can’t find a way to define these words, even in some very narrow absurd way, by which this Oakview statement could possibly be defended as truthful.
Another letter says, about the 6.9 renewal levy, “It won’t cost us a penny more in taxes.” This statement is true, only if its meaning is “it won’t cost the school system one penny lost in tax revenue of $8.2 million,” hardly what anyone reading such a phrase would understand it to mean.
Again, I’d be embarrassed as a teacher or principal to attempt to explain to an inquiring voter why such misleading advertisement was used.
The letters acknowledge that the economy is in a rough period. One letter says, “These are very challenging times for everyone.” Another letter says, “In these challenging economic times, supporting our schools is more important than ever.”
But nothing in these levy advertisement letters begins to explain the implication of these challenging economic times for property tax owners. Not a word is said about the fact that Kettering’s tax base is shrinking and therefore to raise the same revenue, tax rates must go up. If the tax based shrinks to where it was in 2004, then the effective rate of this levy will return to where it started, 6.9 mills. This is a 12% increase.
If Kettering Schools had wanted to design a levy that would have guaranteed a “ZERO Increase In Taxes,” they would have needed to offered a replacement levy pegged to the current effective rate 6.162 mills. Then, regardless of a shrinking tax base, the tax to the homeowner would have stayed constant, and, instead, as the tax base shrinks, revenue to Kettering Schools would shrink.
As an organization supposedly focused on education, Kettering Schools, in this levy missed a big opportunity to educate the public about this key issue of public importance, property tax. Schools that fail to be scrupulously honest with voters risk causing dangerous long term erosion of public support. In its zeal to make a short term gain — passing an important school levy — Kettering Schools chose a path that risks causing a long term problem.
While I respect your opinion, I have one specific point of disagreement. Using the “average listing price” is not a good measure for tax analysis or property values.
The listing price does not reflect real cost of property, nor does it usually match the assessed value of a property for tax purposes. It is usually a starting point for negotiations. Most sellers do not expect to receive this price.
Other than than, you raise some interesting and valid concerns. I would be curious to see an analysis that did not begin with this faulty assumption.
Skeptic, thanks for your comments. My point in using the “average listing price,” was to give a ball park calculation of what the 6.9 mill renewal levy would cost for an average property in Kettering and to demonstrate how this calculation is accurately made.