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House Bill 920 and inflation
House Bill 920 is designed to keep Ohio property owners from facing increases in taxes as their property values rise. It effectively lowers the tax rate school districts can charge when property values go up, keeping revenues at a steady amount over the life of the levy. The result is that district revenues typically do not rise with inflation.
Example: A hypothetical school district has $200 million in property value in 2005. (To simplify, this example uses only residential property value and ignores the impact of new construction.)
The district has 5 mills on property tax in what is called unvoted or inside mills. These are taxes that the Constitution allows districts to enact without voter approval, and House Bill 920 does not apply to them. Revenue generated by unvoted mills grows as property values increase.
The district also has 22 mills of property tax that has been approved by voters. Because of HB 920, the revenue generated by that portion of its property tax does not change with property values.
In 2005, the district earned $1 million from the unvoted mills and $4.4 million from the voted portion, for a total of $5.4 million in property tax revenues.
The chart below shows what happened during two reappraisal cycles. In each reappraisal, the property tax base increased 15%.
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Property
Value
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Unvoted
Rate
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Tax
Revenue
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Voted
Rate
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Tax
Revenue
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Effective
Rate
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Total
Revenue
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Revenue Growth
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2005
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$200,000,000
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5 mills
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$1,000,000
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22 mills
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$4,400,000
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27.00 mills
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$5,400,000
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2006
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$230,000,000
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5 mills
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$1,150,000
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22 mills
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$4,400,000
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24.13 mills
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$5,550,000
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150,000
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2007
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$230,000,000
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5 mills
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$1,150,000
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22 mills
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$4,400,000
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24.13 mills
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$5,550,000
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150,000
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2008
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$230,000,000
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5 mills
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$1,150,000
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22 mills
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$4,400,000
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24.13 mills
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$5,550,000
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150,000
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2009
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$264,500,000
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5 mills
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$1,322,500
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22 mills
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$4,400,000
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21.64 mills
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$5,722,500
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322,500
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Because House Bill 920 held the tax revenue from the levy constant during this time,
the district’s effective tax rate went from 27 mills to 21.64 mills. It earned more than $1.3 million from unvoted mills, but still brought in $4.4 million from the levy.
This saved taxpayers cumulative tax increases of about $3.4 million - despite a 32% increase in property values, they paid only about 6% higher taxes in 2009 than
they paid in 2005. It also restricted increases in the district's revenues to about 6%, an amount that did not keep pace with inflation.
Return to House Bill 920 page.
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