2010-04-24 / News

Analysis: How do Lakewood school taxes stack up?

HEBRON – Lakewood School District voters face a critical decision on May 4.

The district is seeking an additional 9.9 mill emergency operating levy for the next 10 years. If voters approve, the levy will generate $3,656,649 each year for operating expenses.

If additional income is not approved this year, the district has detailed some $4.4 million in devastating cuts that include laying off 42 teachers, reducing class offerings to state minimums, cutting classroom time by one hour per day and eliminating all extracurricular activities including athletics, band, drama and after school clubs. Bus transportation to school would be cut back to state minimums, requiring students within two miles of their school to walk or be taken to school by family members.

The new revenue is needed to replace the loss of tangible personal property tax revenue. House Bill 66, signed by the governor on June 30, 2005, among other things phased out taxation of all tangible personal property used in business over four years, beginning in 2006 and ending in 2009, when all such property became exempt from taxation. HB 66 was the biennial budget bill and made changes to literally thousands of provisions in state law.

HB 66 also phased in a new Commercial Activities Tax that is assessed against a business’ gross sales. As a property tax, tangible personal property tax revenue was shared with school districts. The new CAT tax revenue is not shared directly with school districts.

Lakewood officials acknowledge that an additional 9.9 mill levy is tough for voters to swallow. However, they find themselves between the proverbial rock and a hard place. So how do Lakewood local school taxes stack up with other area school districts?

There are two options for funding schools at the local level – property taxes and district income taxes. School district income taxes are only paid by district residents and generally only on earned income which excludes income from Social Security, disability payments and retirement benefits.

Property tax millage is set to raise a set amount of revenue each year. The new Lakewood levy is set at 9.9 mills to raise $3,656,649 per year. That $3,656,649 won’t change over the 10 year life of this emergency levy. As property values increase and new taxable property is built, the millage or tax rate necessary to raise that $3,656,649 each year will decline. So we will have the voted rate which is 9.9 mills and as our local real estate markets recover from the deep recession that 9.9 rate will decline.

Each year the county auditor’s office calculates an effective rate for each levy. Actually there are two effective rates – one for residential and agricultural property and a higher one for commercial/ industrial property. This analysis focuses solely on the rate for residential and agricultural property.

Our analysis above includes all 10 school districts in Licking County plus Liberty Union Thurston and Walnut Township in Fairfield County and Northern Local in Perry County.

Currently Lakewood has the sixth lowest property tax of the 13 districts considered. However, four of five districts with lower property tax rates have income taxes ranging from 1% to 1.75%. Consequently, only Northern Local has lower school taxes for anyone with earned income than Lakewood.

If Lakewood voters approve the additional levy, Lakewood would have the second highest property tax per $100,000 valuation out of the 13 districts. Granville would still be significantly higher, while Heath, Licking Heights, Newark and Northridge would be slightly lower. Of that group, Newark and Northridge have 1% income taxes. Of the 11 districts with lower property taxes per $100,000 valuation if the new levy is approved, all but three have district income taxes.

It is clear that under no circumstance will Lakewood have the highest school taxes in the area. Granville will continue to hold that distinction. Northern Local in Perry County will have the lowest.

Exactly where Lakewood would fit in between those two if the levy is approved depends on the level of earned income in the household. Lakewood’s taxes will be relatively lower for families where both the husband and wife work and children have part-time jobs. Lakewood will range higher in the group for households living on Social Security and retirement benefits.

Lakewood property owners have paid less for years due to the amount of industrial property in the district relative to other area rural school districts. Now some of that advantage is being lost as businesses pay less in taxes on equipment and more directly to the state.

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