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Question:
Regarding the upcoming levy vote, I'd appreciate it
if you or someone with the detailed knowledge will provide info
that will help me and my family to make an better decision re:
our vote.
Specifically, I understand that the continuing levy may be replaced
by the new levy which will generate about twice as much money
for the department. My confusion arises regarding why the department
hasn't benefited from additional revenues from all the new real
estate developed in Beavercreek in the last 10 years. If the
continuing levy sets a cap on total revenue generated then my
portion of the annual $1.7 million should have diminished to
almost zero over those 10 years but it hasn't. Please help me
to understand how new development impacts tax rates in a continuing
levy situation. Thank you.
Answer: Thanks for the good question. Chief Thomas asked me
to send you a reply. Your question highlights the confusing nature
of levy tax law in the State of Ohio. Even as professionals dealing
with these issues on a regular basis, its difficult to keep up
with all of this. To answer your question:
1) Why hasn't the department benefited from real estate development?
The fire department, and every other agency dependant upon
tax levies (e.g. schools, police, etc...) have benefited
from real
estate development. At the time our 2.75 mil levy was first
passed in 1986, the taxable property valuation for Beavercreek
was approximately
$300 million and the levy generated approximately $900,000.
The 2006 estimates for that same levy (not including the
proposed
replacement) are based upon a taxable property valuation of
$1.2 billion and the levy is expected to generate $1.7 million.
This
represents an increase of Beavercreek's valuation of almost
400%, but an increase of corresponding revenue of only 200%
or about
10% increase per year. While that it is a substantial increase, the community's growth
has created in a 300%, or about 15% per year, increase in calls
for service over the same period. The result is that even before
increases in the cost of delivering service are factored in,
demand for our service grew 5% faster than revenue to support
it. During this same period changes to the community drove
the fire department from a primarily volunteer system (which
is relatively
inexpensive) to a fully paid system (which is relatively expensive).
So, while the fire department has benefited from the increased
development of the community, that benefit hasn't matched the
increase in demand for service.
It is also worth noting that there is no absolute "cap" to
the revenue that the levy can generate. As the numbers above
show, as the community develops it generates more tax revenue.
However, there are restrictions to protect property owners from
having to pay more than they agreed to when passing the levy.
2) Why hasn't your portion of the levy diminished to almost
zero? The answer to this question goes back to the confusing
nature
of tax levy law in Ohio. When a levy is passed, the voters
agree to pay a certain amount of money for the service
supported by
that levy. The amount of money is based upon the "total
tax valuation" of their property (which is 35% of the County
Auditor's appraised value) for that tax year. In the case of
the 2.75 mill levy, that means that a property owner agreed to
pay 2.75 mills of the total tax valuation of their property in
1986 for the duration of that levy. The "920 Reduction Factor" is
applied to the tax rate of the levy each year, to ensure that
the property owner does not have to pay more than they agreed
upon when voting on the levy. This effectively reduces the tax
rate used to figure property taxes, hence the te rm "effective
rate". The result is that property owners are protected
from paying additional taxes as a result of increase in appraised
value to their property.
For
more information regarding property taxes in Ohio, please
visit http://www.tax.ohio.gov and
read the edition of Taxing Issues here.
So, in summary, while the fire department has benefited
in additional revenue due to the development of Beavercreek,
it has not been
enough to keep pace with increases in the demand for
service. Also, while tax law protects property owners from
paying
additional money due to increases in their property value,
the reduction
factors do not actually reduce the individual owners'
tax burden.
I hope this information answers your question.
If it does not, please feel free to email me directly.
Thanks for your interest.
Mark Thomas
Fire Chief
Beavercreek Fire Department
(937) 426-1213
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