Area schools seek property, income tax hikes: Do they need the money?

Karl Keith, Montgomery County auditor, said property taxes have always been unpopular, but with a booming real estate market, many homeowners have seen their property values skyrocket — along with their taxes.

About 57% of property taxes in Montgomery County go to schools, Keith said. In the state, between 60% and 80% of property taxes in a county go to schools, he said.

Concerns about property taxes have some school districts looking to income taxes. Districts in Montgomery, Clark and Warren counties have school income tax increases on the ballot. But voters in another Warren County district will vote on a citizen-led income tax repeal.

Spending debate

School officials say they are coping with the same inflationary pressures as households, while dealing with uncertainty and potential funding reductions forced on them by state lawmakers.

Some advocacy groups say a shrinking state share of the cost to run a local school district has left local voters to pick up the tab.

“As we look long-term over the last few decades, the state share of spending is going down and the local share is going up,” said Paul Imhoff, director of governmental relations for the Buckeye Association of School Administrators, which represents school superintendents in Ohio.

Imhoff noted that the amount of money that schools spend per pupil rose 19.4% between 2000 and 2022, while the amount of money the state provides to local schools rose about 6.3%, accounting for inflation. Imhoff said Ohio schools are spending less per pupil than the national average.

But state Rep. David Thomas, R-Jefferson, who is leading the Ohio House’s property tax reform efforts, said he believes taxpayers are fed up with tax increases. He argues that schools across the state are overly reliant on property taxes, and should be asking voters for income taxes, along with property tax cuts, instead.

“I always caution folks, when we talk about the state, that we taxpayers are the state,” Thomas said. “When folks say, well the state should fund schools — there isn’t a magic money tree that is the state. It’s us as taxpayers.”

State budget impact

Overall, the most recent state budget increased the amount of money given to local schools in the next two years. But several local schools are losing funding.

The latest state budget cut funding to districts that were either considered “underperforming” on state report cards, or are projected to lose students in the next two years, further complicating school funding.

Districts projected to lose some amount of funding during the next two years include Franklin, Dayton City Schools, Northmont City Schools, Fairborn City Schools, Middletown City Schools and Springfield City Schools, according to the nonpartisan Legislative Service Commission.

It’s not exactly clear how that funding loss will impact schools yet.

Philo said he believes the state is projecting his district will lose students in the next two years but said the change in finances should not make them go to the ballot earlier than expected.

Katie Johnson, executive director for the Ohio Association of School Business Officials, which represents school treasurers, said it’s clear many Ohioans are feeling the strain of property taxes. She said the organization believes that relief should be targeted to those who need it most, including exploring a property tax freeze for seniors.

“At the same time, the state must continue to strengthen its investment in public education,” Johnson said.

Districts in dire straits

Two local districts — Franklin Local Schools and Jefferson Twp. Local Schools — are facing some form of fiscal oversight from the state if their levies do not pass, according to each district’s respective treasurer.

Franklin has about 6% of annual revenue in cash carryover for this school year, according to a five-year forecast submitted earlier this year. Franklin Treasurer Kevin Hawley said the latest state budget cut the district’s state share, so they are even more reliant on local dollars and spending even further into a deficit.

“Right now, we’re projecting towards fiscal emergency,” Hawley said.

Franklin is proposing a 1% traditional income tax levy, which would raise roughly $6 million per year, according to the district. Traditional income tax levies do not apply to Social Security but can apply to various types of income.

Craig Jones, the treasurer for Jefferson Twp. Schools, said that district is asking for a 1% earned income tax for three years, which would generate roughly $1 million per year.

“We’ve cut just about all that we can cut, and we can’t solve the issue by cutting a million and a half dollars out of the budget,” Jones said. “There just isn’t that much to cut without affecting the education of our students or violating the law.”

Jefferson Twp. previously was in a fiscal emergency from 2008 until 2011, according to the auditor of state.

Fiscal oversight

Ohio’s auditor of state and the Ohio Department of Education and Workforce closely monitor school finances, with local schools legally required to submit a five-year forecast to the state twice a year.

In general, schools are recommended to have 30 to 60 days of cash on hand.

Under fiscal emergency, a financial planning and supervision commission can take over all or part of the powers of the board of education and develop a financial plan to alleviate the crisis.

Reporter Brook Spurlock contributed to this story.