Quarterly Community UpdateOctober 2007
This November, Lakewood Schools have two very important issues that require the community's attention. Two levy issues are on the November 6 ballot. The first is a renewal of an existing Emergency Levy. We're asking voters to renew it for the same dollar amount ($2,058,646) that you approved in 2003. It will be for another fiveyears.
The wording on the ballot for the renewal is confusing. The ballot will read, "Renewal ($2,058,646) + Increase ($294,613)." This wording is required so Lakewood can continue to receive the full renewal amount plus a $294,613 REIMBURSEMENT from the State of Ohio for the loss of tangible personal property tax revenue. This increase does NOT come from taxpayers. We told you in 2003 that the levy would last for fiveyears and it did.
The second ballot issue is a one percent (1%) income tax assessed ONLY on earned income. It will be continuous. The income tax will NOT apply to Social Security, pensions, interest, dividends, capital gains, unemployment compensation, alimony, child support and gambling winnings. Revenue from both of these issues will be used for general operations for at least another fiveyears.
This combination was chosen to keep from putting all the burden on property taxes. With the General Assembly's approval of the new $25,000 homestead exemption for ALL property owners 65 years or older or permanently disabled, the cost for our senior citizens for these two issues will be less than in 2003.
We're not just asking for more money. Over the past 18 months, we have cut our costs by more than $700,000. We are constantly looking for ways to more efficiently operate the district and streamline spending to maximize resources, without jeopardizing the quality of education.
I hope we can count on your support for both issues on November 6. Please feel free to call me at the central officeif you have any questions.
- For a $50,000 market value home the 6 mill levy will cost $91.88 per year or $7.66 per month compared to the 2003 emergency levy which had a cost of $88.81 per year or $7.40 per month. Total increase from the original millage is $3.07 per year or $.26 per month.
- For a $100,000 market value home the 6 mill levy will cost $183.75 per year or $15.31 per month compared to the 2003 emergency levy which had a cost of $177.63 per year or $14.80 per month. Total increase from the original millage is $6.12 per year or $.51 per month.
- A 1% earned income tax will be based on the amount of your earned income (salaries). For a salary of $35,000 the cost would be $350 per year or $29.16 per month.
- HB 66 (effective July 1, 2005) phases out the tax that businesses pay on tangible personal property. The tax on general business and railroad property will be eliminated by 2009 and the tax on telephones and telecommunications will be eliminated by 2011. HB 66 also provided a "hold harmless" period for taxing authorities from fiscal year 2006 through fiscal year 2010 that reimburses the revenues lost due to HB 66. This reimbursement is based on the 2004 tangible personal property values. For fiscal years 2011 through 2017 reimbursement is phased out.
- Between fiscal year 2006 and 2012 the district will lose 1 million dollars in tangible personal property revenues which includes the "hold harmless" reimbursement by the State. The district will continue to see a decline in revenues subsequent to fiscal year 2012 as the phase out of the tangible personal property reimbursement continues.
- Under the current state funding calculations, the district is on foundation guarantees. The foundation guarantees hold the district at the fy07 (which was the previous fy06) total funding level. Items affecting the state funding calculations include some declining enrollment for the district, the decrease in property valuations due to the elimination of tangible personal property values and the elimination of the cost of doing business factor. Bottom line is that there will be no projected increases in district funding levels for Lakewood Local.
- Real estate tax revenue is the only source of revenue the district has which can experience annual growth. - The earned income tax will provide a continuing source of revenue which has the ability to grow and will allow the tax burden to be shared between district property owners and residents with earned income. - It will take 18 months to collect the total amount of earned income tax approved by the voters. The district will not see the full collections of this revenue until fiscal year 2010.
- The remaining earned income tax revenues will be used to offset the increase in expenditures of the day to day operations and educational programs of the district and to maintain/upgrade district facilities. The revenues of the district have become flat-lined, however the cost to provide educational programs and maintain/upgrade facilities continues to increase.
- The residents of the district would pay on earned income (salaries) and self-employment income (including income from partnerships).
- Earned income does not include items such as interest, dividends, capital gains, pensions, social security, unemployment compensation, alimony, child support and gambling winnings.
- The ballot language must say this for the district to continue to receive the renewal levy amount of $2,058,646 as well as the $294,613 in personal property reimbursement it is receiving from the state. There is no millage attributable to the increase and taxpayers WILL NOT be taxed on this amount.
- Millage is calculated using the real estate and tangible personal property valuations of the district. With the tax changes in HB 66, the tangible personal property valuations are being eliminated from the total valuations which results in higher millage.
- The new biennial budget includes a Homestead Exemption which will allow senior citizen homeowners and permanently/totally disabled homeowners, regardless of income, to withhold $25,000 of the market value of their home from property taxes. The emergency levy renewal will not cost as much for the senior citizen taxpayer as the current emergency levy costs. The cost of the 6 mill renewal levy with a $100,000 market value home would be $183.75. The new homestead exemption is $45.94, a 25% reduction in cost for the new levy using this example. The net cost of a 6 mill levy to a senior citizen with a $100,000 home is $137.81 a year.
- Only earned income and self-employment income would be taxed by the earned income tax. This tax does not include interest, dividends, capital gains, pensions and social security.
- The district has streamlined spending to maximize resources over the last 2 years so that the current emergency levy would last the 5 years as it was intended. The district has realigned for maximum efficiency and academic strength and was able to reduce staff as part of the realignment. The district has also implemented hiring practices which includes looking at the needs and the enrollment of the district at any time when an employee retires or resigns. The constant evaluation of district procedures/operations has allowed operational costs to be cut by over $700,000 over the last 2 years.
- Licking Valley LSD - 1% Traditional; Newark CSD
- 1% Traditional; Johnstown Monroe LSD
- 1% Traditional; Northridge LSD - 1% Traditional; Walnut Township LSD
- 1.25% Traditional; Pickerington LSD - 1% Traditional; Southwest Licking LSD
- .75% Traditional; Northfork LSD
- 1% Earned Income Tax (Passed Feb. 2007).
- An emergency levy is submitted as a dollar amount ($2,058,646) which means that the district will receive the $2,058,646 each year for the life of the levy. When property values increase the amount paid for an emergency levy should decrease. An increase in property values will result in lower millage, which equates to reduced taxes.