Why do Schools Keep Asking for Levies?
The Background and Impact of House Bill 920

 

 

The Background

In 1976, the Ohio legislature passed a tax reform law known as House Bill (HB) 920. The purpose of the lawwas to keep inflation from increasing the amount collected through voted tax levies.

 

The thought behind HB 920 is that when voters approve a tax levy, they are agreeing to pay a certain amountof money for a specific purpose. All property owners pay their share in proportion to the value of theirproperty.

When property values increase due to inflation (a reappraisal or update), HB 920 kicks in.

Suppose a school district receives voter approval to raise $6.3 million through a 4-mill levy. The following year, after a reappraisal, property values have increased. HB 920 does not allow the school district to receive any additional revenue from this voted levy. The voted 4 mills will be reduced to a millage amount that generates the $6.3 million agreed upon by voters. The new, lower millage amount is called the “effective” tax rate.

 

The Impact

For school districts and other public agencies that rely on property tax funds, HB 920 means a return to the ballot each time additional revenue is needed to meet the financial demands created by factors such as inflation, new government mandates, service expansion or aging facilities.

For homeowners the impact of HB 920 depends upon the percentage change in the valuation of their
homes. If a property increased by exactly the same percentage as the district as a whole, the taxes for that property will stay the same. If a property increased by less than the average, taxes will decrease. If a property increased by more than the average, taxes will increase. While the total tax dollars raised stays the same, an Individual taxpayer’s share will be based on his new property value.

 

Example: Average home values increase by 10 percent