Sunday, October 22, 2000
Levy grade: D
LEVY REQUEST: A districtwide 0.75 percent income tax to raise $2.3 million annually when fully collected in 2002 or 2003. When an emergency property levy expires in December 2002, the net increase to schools would be $1.3 million a year. The new tax would be collected from every resident's income (except for Social Security). It would cost a person earning $35,000 about $263 a year.
OTHER LEVIES: A 4.52-mill emergency operating levy was renewed in 1997 (this is the one that expires in 2002). A 5.44-mill bond issue passed in 1997, and a 1.85-mill permanent improvement levy was renewed in March this year.
IF LEVY PASSES: It will cover current and additional operating costs including: opening and staffing a new high school; teacher raises averaging 4 percent annually the next three years; hiring an average 20 new teachers and other staff each year.
The board would reduce by half the collections on the 4.52-mill property tax levy in its final year and would not ask voters to renew it. Collections of the income tax would start in January 2001.
IF LEVY FAILS: The district will ask voters to renew and increase the expiring operating levy in 2002. Or, they will ask voters again next year to pass the income tax.
Our recommendation: Facing huge growth projections for the next five years, this district is looking for a surer, more stable way to finance schools than with property taxes alone. They want to join 123 of Ohio's 611 school districts that have convinced voters to supplement school property taxes with a local school income tax.
School leaders love the idea of income taxes over property taxes, particularly in growing districts such as Little Miami where there's little industry to help homeowners and farmers pay for schools.
Unlike school property taxes, income taxes grow with inflation. When incomes go up, so does school revenue. With property taxes for operations, voters approve only a fixed amount of dollars a year for schools ($1.2 million, for example) and the tax rate is rolled back (as values increase or new homes come on the tax rolls) to deliver only what voters approved. School districts return to voters every three to six years for money.
Little Miami has more than 4,000 new homes approved for building in the next five years. Schools are braced for up to 5,000 students, doubling enrollment this decade.
New property tax money and state aid (which caps increases at 10 percent despite growth) don't cover the extra costs.
Little Miami's new superintendent Ralph Shell is making passing an income tax a priority. Five area districts have income taxes; several others have tried and failed.
An income tax saves district officials from time-consuming levy campaigns. And they typically generate more money for schools than average-size property levies. This one would raise the equivalent of 8 or 9 mills.
But an income tax does not wipe out all school property taxes; residents still pay a state-required minimum and usually the continuing levies on the books.
Residents should make sure they understand the trade-offs, and figure out what they'll pay in total school taxes. (To calculate what the income tax would cost you, multiply your Ohio Adjusted Gross Income (income minus exemptions) by 0.0075.)
These are good, soundly managed schools that still spend below state average. No doubt they'll get better (and cost more) as parental pressure increases to compete academically with high-performing neighbors like Mason and Kings.
But we're grading the levy, not the schools.
An income tax can weaken the public's already-limited ability to hold schools accountable for spending and more. Levy campaigns compel schools to build trust with the public that pays. Income taxes are tough to repeal and can put homeowners at a competitive disadvantage compared to home sales in neighboring districts that don't have a school income tax atop property taxes.
The timing is worrisome, too. No one knows what other taxes are in the Ohio pipeline under the court-ordered school funding overhaul due next summer from the General Assembly.
Our levy grade is simply a big caution flag for residents to be wary and well informed before they leap.