Jim Brown surprised me. At the League of Women Voters community meeting last Wednesday, October 21, where all five candidates seeking election to the Ketttering Board of Education participated, Mr. Brown sided with the three incumbents. He defended the board’s advertisements for the 6.9 mill renewal levy last May, saying of the message of the ad campaign, “It was correct. It was accurate.”
At the meeting, I was flabbergasted by Mr. Brown’s stance, but I had only two minutes in my closing statement and so, at the meeting, I didn’t attempt to respond. Mr. Brown’s position is opposite of mine and aligns him with the school establishment. Mr. Brown says that he is a “tax guy,” and that he therefore can speak with authority. Here is what he said, and, below is my analysis.
I don’t want anyone here to leave with what I think may be a misconception. Mr. Bock has talked about the levy last year. There are two ways to renew a operating levy. Kettering has always chosen what I will call the kindest approach to the taxpayer. In other words they do a renewal.
My response:
Schools can choose either a renewal levy or a replacement levy. A renewal levy renews the original levy. In prosperous times, as a community’s total tax base increases, the effective rate for operating levies decreases. But in bad economic times or when a community has lost businesses or industries and the community’s tax base is decreasing, a renewal levy is far from kind. Kettering’s effective tax rate for this renewal is now 6.16 mills. By approving the renewal, voters agreed, if necessary, to allow this effective rate to return to 6.9 mills — a potential 12% increase.
The renewal is based on the original property values when the levy was originally passed. If property values have gone up, the millage goes down. As he pointed out, this was a 6.9 mill levy. The property values in Kettering are very dynamic. They are affected by very many different issues. The board of revision, changes in classifications, new buildings, buildings as razed. The final calculation is made at the state of Ohio, not even here in Montgomery County. So we went from 6.13 (mills) to 6.16 (mills).
My response:
In 2004, when the 6.9 mill operating levy was originally passed, at an effective rate of 6.9 mills, this levy generated $8.2 million each year in revenue to the school district.
Ohio law says that an operating levy cannot generate more revenue than what was originally approved. Kettering’s total tax base after 2004,for a while, increased every year. In order to avoid generating more than the approved $8.2 million each year the effective rate was lowered. A year ago it bottomed out at 6.13 mills, meaning that 6.13 mills was sufficient to collect the $8.2 million. But then, last December, 2008, the rate was increased to 6.16 mills. The effective had to be increased in order to collect the $8.2 million. When the school board approved the renewal levy, the trend was already established that Kettering’s total tax base was eroding, and that the effective tax rate needed to raise the $8.2 million was increasing. We were losing manufacturing plants; it was clear that the effective rate would need to continue to rise in order to generate the $8.2 million.
I’m going to do this without my teleprompter. OK Let’s say your house is worth $100 and the schools need ten bucks to run the schools, so we take ten bucks away from you. Now let’s say an economic decline happens and your house is only worth $50. But the schools still need $10. Your tax rate now goes to 20%. But you still only paid $10. That’s what the school board was saying, “No New Money For The Schools.” It was correct. It was accurate.
My response:
The school board’s ad campaign did not say, “No New Money For The Schools.” The board approved an ad campaign that said, “ZERO Increase In Taxes.” It said, “Not a Penny More.” It said, “Absolutely no tax increase. And the problem is, the emphasis was all on marketing and selling the levy. There was zero attempt to educate the public as to what renewing this levy in a time of economic downturn would mean. Not a peep anywhere about effective tax rates. The whole matter was dumbed down into a simple marketing strategy. There was no explanation on the district’s web-site, on its quarterly “Blue Ribbon Report,” or in its campaign literature where someone could read a complete explanation. Nothing. Not even any educative discussion at any public board meeting.
Most everyone who hears the word “taxes” interprets the word to mean what the taxpayer is paying, not what government is receiving. The ads, obviously, were meant to communicate that by approving the levy the individual taxpayer would not have a greater tax obligation.
Mr. Brown is right in defending the phrase “No New Money For The Schools.” But the problem is, this is not the phrase that was used. Listen to how Dr. Mengerink explains the renewal at the last board meeting before the May 5 election. Dr. Mengerink says, “A renewal means no additional taxes. It’s the same amount of money our taxpayers paid for the last five years, they will continue to pay, so long as they approve this renewal.” It seems clear that in his carefully worded statement, Dr. Mengerink is defining the word “tax” to mean what the taxpayer pays.
Mr. Brown is defending a phrase “No New Money For The Schools” that was never used. If he wants to defend the board, he needs to defend the phrases that they did use — “ZERO Increase In Taxes,” etc. — not a phrase that they didn’t use.
If I buy a $100 item today and am charged a tax of $10, and, if tomorrow I buy an item for $50, I would expect to pay a tax of $5. Any tax more than $5, I would describe as an increase in taxes. Who wouldn’t?
And I don’t want the taxpayers who are here to have the wrong impression that when an effective tax rate changes, the amount of money out of their pocket necessarily changes. Your individual property values effects that. I’m a tax guy.
My response:
Yes, when property values go up or down, of course the amount of tax obligation will vary. The only fair comparison is to see what happens if the property value stays constant. It is the effective rate that is always the point of focus when discussing taxes. If the effective rate of a sales tax goes from 6% to 7%, we say there was an increase in taxes. The increase in tax has nothing to do with whether the item purchased is for $100 or $50. An increase in tax always refers to effective tax rate. When the effective property tax goes from 6.13 mills to 6.16 mills, there is an increase in taxes. The concept of increase in tax has nothing to do with variation in property values.
The school board knew that because Kettering’s tax base is continuing to diminish, the effective rate needed to raise the same revenue of $8.2 million would need to continue to increase. It was wrong to promise “ZERO Increase In Taxes,” because, this phrase was meant to mislead the public.
If the board had wanted to advertise an operating levy with “ZERO Increase In Taxes,” it should have offered a replacement levy of 6.16 mills — the current effective rate. Right now, this 6.16 mills generates $8.2 million each year, but as Kettering’s tax base continues to diminish, these 6.16 mills would have generated revenue less than $8.2 million. To assure a “Zero Increase In Taxes” for the individual property owner, the board would have had to accept a decreasing revenue stream that would parallel the decreasing tax base.
Rather than having a decreasing revenue stream, the board decided to keep the revenue constant at $8.2 million and instead raise taxes on individual taxpayers. It makes sense for schools to have a reliable income and, if this had all been explained to the voters of Kettering, there would have been a good chance that an informed electorate would have approved the 6.9 mill renewal levy knowing that it was approving a tax increase. Kettering has a long history of supporting its schools.
But rather than being open and honest with the public, the board, instead, took the route of misleading and manipulating the public. This is the heart of the issue. My campaign is not about protesting paying a few more dollars in tax. It’s about protesting a culture of leadership that, if Kettering is to have a great future, must change.
I am disappointed that by making these misleading and self-serving comments, it appears that Mr. Brown, if elected, will not be an agent for improvement in leadership, but, instead, will fit right in.
