July 24, 2013

A tale of three (huge) Ohio tax increases

Filed under: Ohio Economy,Ohio Politics,Taxes & Government — Tom @ 12:45 pm

The lowest in the bunch is 24 percent.

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This column went up at Watchdog.org with minor edits Tuesday evening.

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Three proposed tax increases in Ohio communities are so large that they make one wonder if the state should revise an old state slogan — “The Heart of It All” — and change it to “The Heart of Taxation.”

One of the increases came to my attention in a phone call. A polite young lady encouraged me to support the upcoming police levy for Deerfield Township in Warren County. I asked her if the levy was a renewal of an existing tax or a tax increase. She didn’t know. Seriously.

It turns out that the levy is a tax increase, and that one has to work a lot harder than should be necessary to determine how large that increase is.

At the “about” page at KeepDeerfieldSafe.com, the levy’s support site, Warren County’s sheriff tells readers that per-resident police protection in the township currently costs far less than it does in surrounding jurisdictions. That’s fine, but left completely hanging is how much more the township wants property owners to pay.

After repeating the per-resident stats the sheriff provided in his letter, the very end of the site’s “fact sheet” finally gets to the required answer: a current 2.5-mill property assessment will increase to 4 mills. That’s a 60 percent increase.

Is it justified? A brief phone discussion with Township Administrator Bill Becker was mostly but not completely satisfying.

Becker indicated that the township now has to pay for the wage and benefits costs of six deputies the county used to cover. That appears to explain about 40 percent of the extra $1.722 million the township wants.

Looking at things from the other direction, Becker said the levy’s failure would cause the township to have to lay off ten or eleven officers. Taking him at his word, that explains about 70 percent or so of the requested increase (including the 40 percent identified earlier).

Becker said he believes that if the levy passes, the township will not have to go back to voters for another ten years. Maybe the need to cover future inflation explains the remaining gap of about 30 percent, but it still seems high.

Another annoyance is the fact that the levy’s vote will take place in early August instead of November. Becker said that’s because the township, which is planning a parks levy for the November ballot, doesn’t want to try to pass two levies at once. You’ll have to forgive me for believing that it might be just as important to have a quiet summer campaign where supporters make sure to show up at the polls while potential opponents are either on vacation or tied up with summer activities and not paying attention.

A 67 percent tax increase will be on the November ballot in the northeast Columbus suburb of Gahanna, which wants to increase its income tax from 1.5 percent to 2.5 percent. This hike is particularly offensive because voters rejected the increase in May. The city’s excuse for going to the election well only six months later is that May’s turnout was low and therefore not representative of residents’ true sentiments. That’s pretty funny, given that the usual reason for non-November elections is to slip increases past the voters.

The city’s strategy appears to be to give a little bit back to the majority of residents who work in other income-taxing jurisdictions so it can take a lot more from residents and non-residents who work at businesses in town and from residents who work at home. Residents whose jobs are in other towns with income taxes will mostly get a small tax cut by receiving full credit for taxes paid where they work instead of the current 83.3 percent. Out-of-towners working in Gahanna, along with about 5,500 residents who work in town or at home, will bear the entire brunt of the 60 percent increase.

An annoying aspect of this particular tax is the meme that the city “hasn’t had an income-tax increase since 1976,” or, as the Columbus Dispatch recently phrased it, “since Jimmy Carter was president.” That’s not true. The more people have made during the past 37 years, the more they have paid in, i.e., their taxes have increased. The city takes in millions more dollars every year than it did in the 1970s. It’s true that there hasn’t had a rate increase since then, but so what? Even after conceding that there have been cuts in state aid, city leaders need to do a better job of explaining exactly why voters should approve such a steep increase.

Although it’s the smallest increase in percentage terms, the 24 percent property tax increase on the November ballot in Columbus for its school system, already inexplicably endorsed by Governor John Kasich, is easily the most irritating.

Just a year ago, Columbus City Schools were shown to have been involved in blatant, pervasive and illegal “attendance scrubbing” for over a half-decade. By playing games with which students they excluded from their reports to the Ohio Department of Education, CCS inflated both its attendance rates and average test scores, as a result making appearances look far better than the underlying ugly reality.

Since then, investigations into wrongdoing by the state auditor and the FBI have expanded into alleged massive grade-changing, contract fraud, bid-rigging, and other areas.

Though the situation may change in the coming months, those involved have largely thus far been allowed to retire or go away without meaningful discipline or legal punishment. CCS has been obstructionist instead of cooperative with investigators, racking up hundreds of thousands of dollars in mostly unnecessary legal fees as a result.

Maybe the ambitious building and charter school effort envisioned by tax-increase promoters would be worth it — but certainly not before CCS thoroughly cleans house. What are the chances such people, if still in charge, will responsibly handle massive amounts of additional money?

I suspect that many other very large tax increases will appear on ballots throughout Ohio this summer and fall. Voters need to vet them thoroughly.

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