OHIO’S REPLACEMENT LEVIES
Problem, Explanation, Solution
(Combination and revision of earlier papers)
April 23, 2004
by Carolyn J. Blow
This treatise is meant to be a primer for the novice on tax issues and a refresher for others. Perhaps it will serve as a catalyst for honest individuals to 1) work to educate other citizens, 2) work to get people into local government who will treat voters and taxpayers fairly and to expose those who do not, and 3) work to change the state law dealing with the replacement levy.
In 1990, the Ohio General Assembly gave school districts and most other government subdivisions the option to use the replacement property tax. Only joint vocational schools had had this option before. The law is found in the Ohio Revised Code, Section 5705.192.
PROBLEM – Deception and Confusion
The function of the replacement levy is that, when it is passed by voters, it replaces an existing levy for the purpose of generating more money for the government subdivision or agency. Replacement levies have generated large amounts of revenue, but not because voters have been so generous. Rather, they have been misled and are greatly confused for the following reasons:
1. One reason for confusion is that many citizens incorrectly believe the words “renewal” and “replacement” both refer to a renewal levy, which does not increase one’s property tax. Since many taxpayers are willing to vote for renewal taxes but are reluctant to vote for increases, they happily vote for the replacement levy because they think they are voting for no new taxes or even a tax decrease; that is, they vote the opposite of what they would were they to know that the replacement levy is always used to increase a property tax.
2. A second reason for confusion is the totally misleading ballot language. Although the replacement levy is always greater than the levy that it replaces – sometimes several hundred percent greater, the wording on the ballot never indicates it is a tax increase. What’s more, in certain instances, the deceptive ballot even appears to provide a tax reduction because it says it is a reduction and contains the words “reduction,” “decrease” and “portion of an existing levy” while it has no words to indicate that it is for a tax increase. (Examples of several types of replacement levy ballots, all of which are misleading, appear later in this treatise.)
Unfortunately, the ballot language is prescribed by state law. This writer has found that present-day state legislators have been unaware of the problem that an earlier General Assembly created and seem not to be interested enough once they are informed to dig in and work to rectify the problem. That might be because the issue, or the seriousness of the issue, is difficult for them to fully grasp; or because they want to remain in the good graces of local government leaders and therefore not kill the locals’ cash cow; or perhaps because the more money that is generated locally, the less is demanded from the state so they are not the ones to raise taxes.
3. A third reason for confusion has been that county and other local government officials and their employees and other levy proponents who want to increase revenue for a division of government have put out misleading levy campaign advertisements, articles, letters to the editor, and speeches. They have taken advantage of the improper ballot language for replacement levies and have emphasized that there is “no increase in millage” or there is a “reduction in millage,” all the while knowing that the millage to which they refer has nothing to do with the people’s taxes and knowing, too, that the voters do not know that. Levy proponents have been quite successful in passing replacement levies by not being forthright with voters on the tax issues.
Even though this writer has publicly pleaded with government officials and other levy proponents in Greene County to publish the full truth about replacement levies, still, all they have published to supposedly answer the plea is that there is such-and-such dollar increase above what people have been paying for the levy to be replaced (the existing levy), but they have never indicated the percentage of increase. That is because on countywide levies, with many taxpayers paying toward a levy, the dollar increase per property might appear to be “small,” perhaps, for example, $18.00 or $35.00 per year, and the levy proponents figure the taxpayers will not rebel at that figure. However, that $18.00 or $35.00 might be four times the amount of the levy to be replaced – a figure that would cause taxpayers to rebel. Not knowing this, the public does not know to ask why such a relatively large increase is needed. (Note: For some taxing subdivisions, such as school districts, the dollar increase for a replacement levy could be hundreds of dollars. Also, the severity of a replacement tax increase depends on the length of time since the levy that is to be replaced was passed as a new tax, which includes being passed as a replacement. The longer the intervening time, the greater is the percentage of increase.)
4. A fourth reason voters remain confused is that many do not believe their government officials would mislead them and/or they do not take the time to look into information that appears in letters to the editor that is contrary to the government line. The citizens willingly remain misled, which is easier for them than studying taxation. Unfortunately, newspapers and other media do insufficient investigative reporting and rarely print information about tax issues other than what is in press releases handed them by the taxing authorities. Too, relatively few people read newspapers, which do at least contain letters to the editor.
5. A fifth reason for confusion and the fact that voters are slow to learn about replacement levies and the effect they have on their tax bill is that the tax on these (as on all levies) is not collected till the calendar year after the vote and sometimes two calendar years after the vote. Although taxpayers may gripe when they see their taxes go up, because there are so many different taxes levied for so many government subdivisions and agencies, the taxpayers cannot remember which vote(s) caused their pain.
An expanded version of the following information may be obtained from the writer.