An increase is an increase; except when it isn’t
“Everyone should be able to know for the foreseeable future what the tax rate is going to be.”
— Ron O’Brien, Franklin County Prosecutor
“We conclude that the phrase “rate of levy” in this context refers to the amount of millage approved by the voters regardless of whether the effective or actual amount of taxes collected or paid has been reduced by other provisions.”
— Chief Justice Maureen O’Connor, Supreme Court of Ohio
It’s election season, and election season inevitably brings its share of lawsuits as parties, candidates and committees challenge the way we conduct our elections. This election season has been no different and while the big election-related legal news of the week was the U.S. Supreme Court’s refusal to hear an appeal over Ohio’s early voting hours, a major election-related legal story from last month got very little press time.
It involved a lawsuit brought by a group called Taxpayers for Westerville Schools which sought to have an issue approved to next month’s ballot that would have asked voters in Westerville to roll back a levy that they approved in 2009. The issue before the court was when an increase is an increase even though there’s no increase. (And if that made sense to you, you too could be a successful law student.)
It is necessary to know three things in order for the lawsuit, and the Ohio Supreme Court’s ruling in the case, to make sense. First, Ohio law only allows attempts to repeal levies like this one when there has been an “increased rate of levy.” But the statute doesn’t state exactly what “increased rate of levy” means and the precise meaning became very important in this case.
Second, Ohio’s method of funding schools, ruled unconstitutional in 1997, provides in part, for local communities to determine the amount of funding to be provided for education through levies — taxes on property value that have to be approved by the voters. The amount of those levies is set in ‘mills.’ In simplest terms, ‘mill’ is derived from the Latin for ‘thousandth’ and so a mill is a thousandth of the set value of property. The higher the millage of a levy, the more you will pay, but the amount you’ll pay varies depending on the value of the property to be taxed.
Ohio tax law has another wrinkle, though. Because tax levies usually run for several years, Ohio law provides that the amount collected by a tax levy cannot increase from the first year in which the levy is collected. For example, if you live in a home valued at $100,000 in 2012 and your community passes a 3.5-mill tax levy, then you might be assessed $350 in new taxes. If that levy runs for 10 years, you certainly hope that the value of your home will increase during the term of the levy. By 2022, your home might be worth $125,000. But Ohio law disregards the new value of your home for the purposes of that levy.
In 2022, the 2012 tax levy will still collect $350 from you. The theory here is that voters should have a definite sense of what the effect on their pocket book will be when they vote for levies. The negative side is that inflation results in the school district collecting less and less value over time. Thus, if your community passed a 3.5-mill replacement levy to take effect 2022, the same exact levy (3.5 mills) would now collect $437.50 from you — $87.50 more than it collected under the previous levy.
Third, the levy Westerville passed in 2009 collected 11.4 mills. The two levies it replaced (passed in the 1970s) also collected 11.4 mills. Because of increases in property value, however, the “effective millage” — the number of mills currently collected in order to match the original value of the 1970s levies — had dropped to 3.42 mills. So the voters in Westerville passed a levy that had no tax increase, but was actually a fairly sizeable tax increase.
As a result, the Ohio Supreme Court had to determine whether the new levy, which kept the millage rate exactly the same but, because of more than 30 years of inflation actually collected significantly more, was an “increased rate of levy.” The Court unanimously concluded that the rate of the 1970s levies had never changed. In fact, the statute that allows for the reduction in the amount collected specifically states, “No reduction shall be made under this section in the rate at which any tax is levied.”
The decision of the Supreme Court of Ohio upheld an action by the Franklin County Board of Elections removing the levy repeal from the ballot, although the ruling also removes it from the ballots of Delaware County voters who live in the Westerville School District. The case is State ex rel. Taxpayers for Westerville Schools vs. Franklin County Board of Elections and the full opinion can be found on the Court’s website at supremecourt.ohio.gov.
David Hejmanowski is a magistrate and court administrator of the Delaware County Juvenile Court and a former assistant prosecuting attorney.