Friday, June 13, 2008

You Think We've Got Problems... Part II

Back in March, I wrote about the predicament facing New Albany schools, who receives nearly half their funding from a single 20.7 mill operating levy that expires in December 2009.

Since then, their 36-member finance committee has been working to develop options for their Board of Education. This is what they came up with (as reported in today's The Columbus Dispatch):
  • A permanent, 25-mill operating levy. It would replace the current 20.7 mills expiring at the end of 2009 and add 4.3 mills. The levy would raise $22.4 million annually, up from the current $18.4 million.
  • A 1.75 percent income tax to replace the expiring 20.7 mills. The income tax would raise $22.2 million a year. It would be combined with a 2.5-mill bond issue that would raise money for a new fifth- and sixth-grade building and an addition to the kindergarten and first-grade building.
  • A permanent, 25-mill operating levy combined with a 2.5-mill bond issue to pay for the new fifth- and sixth-grade building and the addition to the kindergarten and first-grade building.
Can you imagine trying to get any of these options passed in today's economic climate?

The Village of New Albany, like many municipalities in central Ohio, already levies a 2% income tax on the earned income of its residents (ie they exempt investment earnings and retirement income) . The Dispatch article didn't mention whether the committee recommended an earned-income-only school tax as well.

Remember from my previous analysis that a conversion from a property tax to an income tax on earned income only would serve to benefit not only the proverbial "senior citizen on a fixed income" but also wealthy individuals who get a large chuck of their income from investments, like Mr. Wexner.

Notice that in the case of the property tax options, the committee recommended going for 25 mills and making its a permanent levy this time. Clearly, they don't want this exposure again.

This is going to be quite a challenge for New Albany. Even though 80% of this levy will do nothing more than keep taxes the same, how many folks - especially those without kids - will see it as a chance to knock a huge chuck off their property tax bill.

I tend to agree with this thinking: "Everett Gallagher, a finance committee member, proposed that the district go for a renewal of the 20.53-mill operating levy and make it permanent. He said the district could get by for 18 to 24 months after the vote without returning to the voters." I think it would be easier to sell a replacement levy now, and go for additional dollars later than bet the whole farm on one big levy right now.

This is going to be interesting to watch. Our levy committee should connect up with their counterparts in New Albany and see what their campaign strategy will be.


  1. One difference btwn New Albany & Hilliard is New Albany is rich. That usually helps.

  2. Maybe so, but they still voted down the bond levy which was on the ballot in Nov 2007. They already have kids taking classes in trailers, and are leasing four more for next year.

    New Albany is not just the McMansions around the country club - it's also the many long-time empty-nester senior citizen residents who balk at cranking up their taxes to support the rich families who have screwed up their rural paradise.


  3. ... by the way, if you want to understand why the people of Brown and Prairie Twps tend to vote against our school levies, this is it. They voted for plenty of levies in the past, when generations of their family went to Hilliard schools (back when it was called Scioto Darby Local Schools).

    Go into Otie's Pub sometime and check out the Hilliard High School class composites from years gone by. You see kids with names like Roberts, Carter, Leppert, and Delinger - names we know today only from the roads that once ran across their farmland.

    They did their part in creating the great school system we have today. Going forward, we should let them off the hook and be funding our operations with income taxes on earned income and our buildings with impact fees.

    and yes, as I have disclosed before, I would benefit from such a tax structure...

  4. Paul, agree with an income tax provision and have said so in the past. The property tax, given our present structure is not cutting it.
    I said so at Ted Celestes meeting.
    Kind of got a lot of dirty looks.

    New Albany, will have some challenges, passing a levy for all of the reasons you noted. Other districts are also facing ballot measures and honestly Dublin has probably the best chance, because
    the lay it all out and make cuts as necessary.

    I think the real challenge in our district is beyond this levy, as we pass a 24% increase now, and in
    2 to 3 years another similar increase because we will remain on the same path as we are now.

  5. Paul,

    I have my own opinion on taxes ... regardless, take a look at this document from the Department of Taxation.

    Appendix D details the Taxation-defined tax burden of each Ohio school district. This statistic is the total amount of local school district property and income taxes devided by the total FAGI (Federal Adjusted Gross Income) of the district. In essence, the relative tax burden for local schools.

    There is a delay in the data, the latest version of the document being from 2006 with the tax data being from 2004 (It looks current administration does not support this document -- it used to be updated yearly).

    Rgardless, you could use current tax data to generate the 2006 value with little effort.

    Anyway, New Albany (Plain Local) is not a low tax-burden district. Wasn't in 2004, and probably still isn't.

    By the way, the data shows Hilliard ranked 84 and Olentangy 104. But, times and tax levies have changed a lot since then. We have gone up a lot over that period.

    Take a look.

  6. Jim:

    Thanks for the link to the document - very interesting stuff.

    If I'm reading Appendix D correctly, it's saying that - on average - the citizens of New Albany (Plain) Local School District were in 2004 paying 2.09% of their federal AGI in school taxes. That compares to 2.58% for Hilliard, 2.63% for UA, 1.89% for Dublin, and 2.49% in Olentangy.

    New Albany is right in the middle of the pack at 2.09%. Maybe I'm not following your thinking, but if you look at this report as showing the capacity for the New Albany community to pay more taxes, then I agree - they should be willing to take on more.

    But I don't think the voters will process the decision that way. Unless New Albany has been much better than most districts at educating their voters about the sources and uses of school funding AND have their buy-in on taking on more taxes - at a rate that will probably increase their burden (tax/FAGI) - I think they're in danger of a fiscal meltdown.

    As is our case, New Albany has a couple of shots at getting their levy passed - both Nov 08 and March 09 (more if they want to hold a special election). It will be very interesting to watch how they go about the campaign.