Property tax art

EDITOR'S NOTE: This story was written in response to reader-submitted query through Open Source, a platform where readers can ask Richland Source’s newsroom to investigate a question.

MANSFIELD -- Many Richland County residents saw their property taxes rise after the reappraisals completed for the 2020 statewide triennial update. Linda Walls of Washington Township saw her property tax bill go up by more than $200, which led her to ask where those extra dollars will go. 

Walls submitted the following inquiry to our Open Source forum: “Do schools and local agencies get the same income as before the real estate re-evaluations? If so, where does the additional tax money go?”

The short answer is that local taxing entities like villages, cities, townships and school districts may see a slight increase in tax revenues due to increased property values and inside millage. But like questions involving taxes, the answers to "how much?" and "why?" are complicated.

A shifting tax base, a 1970s tax reform bill and the difference between inside and outside millage all impact how much of your extra tax dollars actually translate into extra revenue for your local government or school.

When property values go up, property owners will typically see a slight increase in their taxes -- but it’s not necessarily proportionate with an increase in tax revenues, Richland County Auditor Pat Dropsey explained. That’s because a bump in property values will only impact revenues collected from inside millage.

The Ohio Constitution permits local taxing entities to jointly collect tax up to one percent of a property’s value (10 mills) without voter approval. This is known as inside millage.

In Richland County, tax revenue generated by inside millage is divided up between the county and other entities where a taxpayer resides, including cities, villages, townships and school districts. 

There are more than 60 taxing districts in the county, but only 19 actually collect the maximum allowed 10 mills of unvoted property tax. Most taxing districts’ inside millage is around 8 or 9 mills.

Inside millage rates are fixed; so when a property’s value goes up, the amount generated by inside millage rates goes up too.

The remaining tax paid by a property owner comes from outside millage -- levies and bond issues that were approved by voters at the polls.

Outside millage rates fluctuate due to a piece of legislation known as House Bill 920. The bill, passed in 1976, established effective tax rates -- meaning that tax rates are adjusted so that voted levies will generate the same amount of money from year to year regardless of changing property values. There are two types of levies exempt from this rule -- emergency levies and bonded debt levies. 

Thus, government entities like cities, townships and school districts collect essentially the same amount of money after a reappraisal as they did before on any voter-approved taxes (outside millage).

“In the state of Ohio, the way a reappraisal is designed to work is that there's very little increase in revenue because of a reappraisal,” said Randy Harvey, treasurer of Ontario Local Schools, in an explainer video.  

“The only increase (in revenue) that is received during a reappraisal for schools is on the inside millage.” Harvey added. “What can happen and does happen during reappraisal is there could be a significant shift in tax burden amongst different taxpayers.”

During this year’s statewide triennial update, property values are re-appraised by the Ohio Department of Taxation based on property sales in the surrounding area.

The Ohio Department of Taxation reviewed local property sales over the last 18 months and ordered the Richland County Auditor to increase the value of "Class 1" properties, which are residential and agriculture. No increase was ordered for "Class 2" properties, which are largely commercial and industrial.  The change was effective in tax year 2020, which is collectible in 2021.

Since Class 2 properties did not see an increase in value, the tax burden shifted slightly towards Class 1 property owners, who saw their rates go up. Meanwhile, tax rates on Class 2 properties went down.

It's also worth noting that the percentage of property value increase is not uniform across the county. It's literally done parcel by parcel across the county's 75,000 parcels and more than 60 taxing districts. So while the increase in property values may be fairly uniform in your neighborhood, there may be a slight difference in the next township over or even across town.

Dropsey was quick to note that property value reappraisals might not be the only reason your tax bill changed. It could be a brand new levy or a replacement levy. It could be that your local school district refinanced its debt. It could be that the state legislature switched up the tax code.

"There are a number of factors that could cause a resident’s property tax bill to go up," Dropsey said. “I could talk about taxes for another two or three hours and still not talk about everything that could happen."

If you want an explanation regarding where the money goes from your specific property tax bill, it’s best to call the auditor's office at 419-774-5501.

“The easiest thing for people to do is call our office and we’ll talk to them or try to go through it with them,” he advised.

Remember, property taxes are a bit like DNA -- there’s a lot of common threads, but ultimately everyone’s is a little bit different.

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Staff reporter focused on education and features. Clear Fork alumna. Always looking for a chance to practice my Spanish. You can reach me at katie.ellington@richlandsource.com