Projected 42% Butler County property value hike is a 'crisis', auditor says
May 6—Butler County Auditor Nancy Nix is "sounding the alarm" that if legislators don't step in, an average 42% property value increase ordered by the state will mean increased taxes for many taxpayers.
Nix is in the early stages of the mandated triennial property value update so exact value increases aren't yet available but Ohio Tax Commissioner Patricia Harris has ordered an average 42% increase countywide. Under normal circumstances, property value hikes don't automatically translate to higher taxes but Nix said these aren't normal times.
Nix told the Journal-News "we're sounding the alarm" because only two of the school districts — the schools collect 55% to 72% of property taxes — Fairfield and Lakota haven't hit the 20-mill floor.
"At this point I don't think we can give anyone any sort of comfort; I feel it's sort of a crisis we're in," Nix said. "Because the average is 42% and it doesn't seem like the tax commissioner is bending. The only thing we can say for sure is Lakota and Fairfield are the only school districts not at the 20-mill floor, all the other 8 of 10 districts are at the 20-mill floor, meaning their taxes will by and large go up proportionately with their valuation increases. Which has not been the case in the past before this heavy inflation set in."
There are mechanisms in place to ensure taxpayers are generally protected from huge value hikes. Voted levies are capped at the amount taxpayers approved. Unvoted taxes are allowed to be collected up to a certain level, by Ohio law. That level is 10 mills for governmental bodies and 20 mills for schools.
When a school district reaches the 20-mill floor, the millage will not decrease any further, which causes a school district to collect additional funding as values increase. The 20-mill floor only applies to operating levies, not bond, permanent improvement, emergency, or income tax levies.
How much will taxes go up?
Nix will not hazard a guess as to how much taxes will increase — it is too early in the process and there are too many variables to say with any certainty.
In Montgomery County — where the value increase recommendation is 37% — Auditor Karl Keith said at this point they only have a recommendation, and they have 97 different tax districts. Things such as newly passed levies — several passed on Tuesday — new construction, abatements and exemptions all "come into play."
"We're still working on final values and they're going to vary from neighborhood to neighborhood, so trying to estimate what the average increase would be is irresponsible," Keith said. "Ultimately, we'd throw out a number and people would say that's not what I got. We really hesitate to do that."
Ross Schools saw a third consecutive try to pass a property tax levy fail on Tuesday by a 59% to 41% margin. They were asking for a 5-year, 9.44-mill emergency levy. If it had passed, it would have cost the owner of a $100,000 home $330 more.
Interim Finance Director Jenni Logan told the Journal-News they know they will get a bump from the value hike because they are at the 2-mill floor, but obviously don't know how much yet. She said that will be taken into account as they consider next steps. The district has fallen under the Ohio Department of Education (ODE) and Ohio Auditor's office designation of "fiscal caution" so inaction is not an option.
"We're very much aware of the impact this will have on our taxpayers if a 24% or 42% increase is assessed on their home values. They're going to see an additional tax burden. We want to take all of those things into account as we're weighing out all of our options," Logan said. "When we went through the levy proceedings for the May ballot this was nowhere on our radar, of course we knew there was a valuation update being done, but these percentage increases are like nothing we've seen before."
According to Nix's Real Estate Director Mike Stein, the new property values will not be in place by the time taxing bodies must get their November tax levy requests on the books, so the 2022 values will be the baseline. If they do a renewal, taxes won't be raised regardless, new or replacement levies won't get the benefit of the higher values until next year.
Ross Twp. is in the throes of deciding what kind of police levy it needs to put on the ballot because the current levy expires this year. Fiscal Officer Julie Joyce-Smith said "if it fails in November, we have no revenue stream."
"This rate hike is huge and we understand that people are going to be hurting and then we have the constant, ever-present issue with the school district looming, we can't not think about that," Joyce-Smith said. "It's a horrible time to have to run a levy because people are just scared to death. But we have to."
At this point it appears Trenton is the only other governmental body considering a November property tax ballot question. Finance Director Matthew Mesisklis recently presented the city council two options to beef up fire department staffing, a 6.5 mill and 4.75 mill levy options to fund those employment models. For a $200,000 home in Trenton, those prospective levies would raise the tax bill about $512 and $374 annually, respectively.
Summit convened to take aim at the problem
Nix alerted county officials a couple months ago to a possible 24% value jump — based on figures they received from the state — and the county commissioners convened a summit of state lawmakers last week to address the issue.
Summit attendees were shocked to learn the value hike has ballooned to 42%, based on a recommendation from the state tax commissioner.
"I know tax is like a hose put in my pocket to suck the money out," West Chester Twp. Lee Wong said. "And it's going out faster and faster."
Sen. George Lang, who was among five state lawmakers who attended the summit on Monday, didn't hold anything back when he told the Journal-News previously — when the estimated hike was much lower — legislators will get to work on a solution.
"I think it's bulls-t; I want to push back hard," Lang said. "Our citizens just got hit in some of our communities with a 20% increase a few years ago and then now come back with a 24% increase on top of that, without even taking into consideration what the local folks have to say. That to me is an atrocity."
The hike comes on the heels of the mandated average hike of 20% from the 2020 property value reassessment that former auditor Roger Reynolds fought. That failed fight meant tax bills for 2020 and 2021 had to be recalculated for residential and agricultural properties Reynolds challenged in Fairfield, Hamilton and Fairfield and West Chester townships, and the adjustments were on the recent first half tax bills.
It meant 48,999 taxpayers in those areas — where the bulk of the county's population resides — saw tax bill adjustments totaling $6.1 million.
The tax commissioner ordered Reynolds to increase values an average 20% in Fairfield, Hamilton and West Chester Twp. and 23% in Fairfield Twp. On average, the commissioner accepted Reynolds' 14% increase in other areas.
Reynolds disputed the former tax commissioners' reliance on the most recent year's property sales instead of the three-year examination. The Board of Tax Appeals — the decision was handed down last September — sided with the state giving the tax commissioner discretion.
"In short, the search for true value is not furthered, but rather is hindered, by compelling the Tax Commissioner to treat data from all three years the same, and RC 5715.012 does not require or compel such equal treatment," the opinion read in part. "It is very well established that sales closer to the tax lien date are more probative than remote sales."
Stein told the group, "What the state is taking into consideration is only the sales data. They're not looking at anything else, like the outside economic factors that are factoring into those increases at this point," and it appears they are relying on 2022, not the past three years.
Nix told the Journal-News if all three years were weighted equally, the value increase would be an average 24%, but she won't fight the 42% increase through the appeal process.
"There's a precedent set now and in fact they're using that case to other counties who are protesting," she said. "They have something to hang their hat on now. So I don't know that they're in a negotiating mood."
Tax commissioner says her hands are tied
Harris sent the commissioners a letter they called "dismissive" after they invited her to meet with them to discuss the estimated 24% increase. She basically said her hands are tied by the state laws and Constitution.
The Journal-News reached out to Harris requesting an interview, she sent this comment:
"I am aware of the considerable valuation increases in Butler and other counties, and I am not insensitive to the concerns being expressed by some local officials. I'm among the many Ohio homeowners subject to the market forces driving these value increases," she wrote. "That said, our job at the Department of Taxation is to follow the law and the Ohio Constitution to the letter. That is what we've done in partnership with the counties who have been part of this update cycle."
County Prosecutor Mike Gmoser told the summit attendees the legislators could implement a simple fix that would take away Harris' discretion. He said there are parts of the law that say the tax commissioner "shall" do certain things regarding data collection — which removes any discretion — and other parts say the commissioner "may" do certain things, like decide how to apply the data, "the Ten Commandments doesn't say thou may not kill, thou shall not kill."
"My suggestion is to our representatives and our senators that you take that word may and change it to shall," Gmoser said adding that will take away Harris' discretion.
The group discussed a number of ways the legislature can effect change such as taxpayer refunds if the market tanks after the values are hiked, capping value increases, adjusting the Homestead exemption and the big one is reforming school funding — the Ohio Supreme Court ruled it unconstitutional in 1997 — among other initiatives.
These things would all take time — and political will — and can't address the immediate crisis. Commissioner Don Dixon, who spearheaded the summit, said the legislators need to lean on the only person who can lessen the blow now by taking into account all three years worth on sales data.
"This is going to take a lot of push and a lot of don't tell me about it, show me, show me how we're going to fix this," he said.
Lang told the Journal-News he and other lawmakers are working on both short-and-long-term fixes, like Gmoser's idea. For right now he said they are vetting a proposal regarding limits on value increases that will need to be part of the new budget.
"One of the things we're vetting — and to be honest it might have some constitutional issues — but what if we just said all of the triennial reviews that just came out shall be capped at the rate of inflation since the last review plus 3%," Lang said. "That would severely limit the increase and that cap would be sunseted in three years... it forces our hand then."
He said every county in the state is facing this issue so he believes solutions will be found and implemented "we get it."
