Understanding Property
Taxes in Ohio
DAVID A. GRAHAM
GREENE COUNTY AUDITOR
DGRAHAM@CO.GREENE.OH.US
Items to Discuss
General Comments
Terminology
Types of Levies
Why are we always seeing new levies
Exceptions to the rules
Myths
General Comments
Property taxes are not fair:
◦ Based on value of what you own not what you can afford to pay
◦ You cannot control always control you property value
Property taxes produce a stable source of income that does not fluctuate as
dramatically with the economy as sales and income taxes
Property taxes are confusing it’s not just: value * rate = tax
Basic Terminology
Appraised/Market Value – What the property is expected to sell for at a given point in time
Assessed/Taxable Value – 35% of the appraised/market value for real property
Full/Voted Tax Rate – rate established by law or by voters
Effective Tax Rate – the rate actually paid by the tax payer
Rollbacks/Credits – portion of property tax paid by state on behalf of property owners
Millage – term used to express tax rate (equals $1 per $1000 of assessed value)
So a one mill levy would cost the owner of a home appraised for $100,000, $35 per year
($100,000 * 35% * 1 mill / $1000)
Types of Ballot Issues
Additional – new levy generates additional revenue
Replacement – replaces an existing levy so that the effective rate of the levy reverts back to the
voted rate
Renewal – continues an existing levy at its current effective tax rate
Note: Any additional levy passed or replaced after August 2013 does not qualify for the Non-
business or Owner Occupancy Credit
Types of Levies
Inside
Fixed Sum
Fixed Rate
Substitute
Types of Levies – Inside Millage
Unvoted
Maximum of 10 mills within a taxing district
Can only be adjusted by the Budget Commission or the Courts
Makes up a relatively small portion of the total millage in a taxing district
As value changes, regardless of why, revenue changes by an equal percentage
The rate is constant; the revenue and value are variable
Types of Levies – Fixed Sum Levies
Levy voted to generate a specific amount of revenue
Limited to Bond and Emergency levies
Rate set each year by the Budget Commission to generate required revenue
A change in value, regardless of the reason, has an inverse effect on the rate
If values increase 10% the rate will decrease so the levy generates the same revenue
The revenue is constant; the value and rate are variable
Types of Levies – Fixed Rate Levies
Most popular type of levy
Why value changes determines the impact on revenue and the tax rate:
Reappraisal value changes – revaluing something that previously existed
◦ Rate is adjusted to generate the same amount of revenue as the prior year
◦ Revenue remains constant; value and rate are variable
Non-Reappraisal changes – valuing something that has changed (new construction)
◦ As new construction occurs additional revenue is received
◦ Rate remains constant; value and revenue are variable
Theory
Just because the value of something increased does not mean it costs more to provide services
New construction generally results in increased demand for services and thus generate more revenue
Types of Levies – Substitute/Incremental
Levies
Only applicable to school district
Like a Fixed Sum Levy
- guaranteed to generate at least the amount of money it did in the
previous year regardless of value change
Like a Fixed Rate Levy - allows for additional revenue to be realized
Incremental Levy – incremental increases are established in ballot language to provide
guaranteed growth
Substitute Levy – allows revenue growth for non-reappraisal changes (new construction)
Summary of Types of Tax Levies
Levy Type Description Impact of Value Change
Inside – Unvoted • 10 mill limit
• shared among political subdivisions
• Moves in direct proportion to value change
• Value up 10% taxes up 10%
Voted Fixed Sum Levies –
Voted
• Bond & Emergency levies
• Rate set to produce a specific dollar
amount
• As values increase rate decreases resulting
in no tax impact
Fixed Rate Levies – Voted • Specific rate approved by the voters
• Rate is adjusted for reappraisal changes
• As value increases due to reappraisal; rate is
reduced resulting in no tax impact
• Value increases due to new construction
taxes increase
Substitute Levies • Combination of Fixed Rate & Fixed Sum
Levies
• Guaranteed the amount received in the
prior year
• As value increases due to reappraisal; rate is
reduced resulting in no tax impact
• Value increases due to new construction
taxes increase
11
Example With Value Increases
Inside
Levies
Fixed Sum
Levies
Substitute
Levies
Fixed Rate
Levies Total
Assessed Value
$ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000
Effective Tax Rate
10.00 8.00 4.00 50.00 72.00
Tax Revenue
$ 1,000 $ 800 $ 400 $ 5,000 $ 7,200
Reappraisal Change (10%)
$ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000
New Construction (2%)
$ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000
New Value (12% Higher)
$ 112,000 $ 112,000 $ 112,000 $ 112,000 $ 112,000
New Effective Tax Rate
10.00 7.14 3.64 45.45 66.23
New Taxes
$ 1,120 $ 800 $ 407 $ 5,091 $ 7,418
Analysis of Changes
% Change in Value
12% 12% 12% 12%
12%
% Change in Taxes
12% 0% 2% 2%
3%
% Change in Tax Rate
0% -11% -9% -9% -
8%
Example With Value Decreases
Inside
Levies
Fixed Sum
Levies
Substitute
Levies
Fixed Rate
Levies Total
Assessed Value
$100,000
$100,000
$100,000
$100,000
$100,000
Effective Tax Rate
10.00
8.00
4.00
50.00
72.00
Tax Revenue
$1,000
$800
$400
$5,000
$7,200
Reappraisal Change (
-10%) ($10,000) ($10,000) ($10,000) ($10,000) ($10,000)
Demolition (
-2%) ($2,000)
($2,000)
($2,000)
($2,000)
($2,000)
New Value (8% Lower)
$88,000
$88,000
$88,000
$88,000
$88,000
New Effective Tax Rate
10.00
9.1 4.55 55.68 79.33
New Taxes
$880
$800
$400
$4,900
$6,981
Analysis of Changes
% Change in Value
-12% -12% -12% -12% -
12%
% Change in Taxes
-12% 0% 0% -2% -
3%
% Change in Tax Rate
0% 14% 14% 11%
10%
Why are we constantly seeing additional
levies?
The largest portion of valuation changes are reappraisal changes
Property valuations are only updated every three years
Reappraisal occur once every six years
Triennial updates at the mid point of the reappraisal cycle
Most levies supporting government operations do not allow for revenue growth from
reappraisal changes
Revenue growth occurring due to new construction generally result in an increase in demand for
services
Value Changes from our 2020
Reappraisal
Prior Year Value 561,845,680
Reappraisal Change 59,519,570 10%
Non-Reappraisal Changes 14,729,260 3%
New Value 636,094,510 13%
Watch what occurs to the rates and revenue
Levy Type
PY
Rate
CY
Rate Change
%
Change
PY Revenue CY Revenue $ Change % Change
Inside 4.5 4.5 0 0% 2,622,837 2,957,432 334,595 13%
Fixed Rate 31.05 27.99 (3.06) (10%) 18,829,641 19,258,563 428,922 2%
Total 35.55 32.49 (3.06) (9%) 21,452,478 22,215,995 763,517 4%
Analyzing These Changes
Overall revenues up 4%
◦ Values up 13%
◦ Inside Millage only makes up 13% of their operating levies
This was an update year which only occurs once every three years
◦ Based on these numbers, if there were no reappraisal change revenue would have increased 2-3%
◦ Would this keep up with inflation
New construction generally results in an increased demand for services
◦ Does the revenue produced from new construction keep up with the cost for the additional services
Exceptions to the Fixed Rate Levy Rules -
When Voted Rate Equals the Effective Rate
The effective tax rate cannot exceed the voted rate for a fixed rate levy
If a levy has an effective tax rate equal to the voted rate the effective rate cannot increase which
results in a loss of revenue
Example – Exceptions for Fixed Rate Levies -
Effective Rate Equals Voted Rate
Previous
Example
When Voted Rate =
Effective Rate
Assessed Value
$100,000
$100,000
Voted/Effective Rate 50
50
Tax Revenue
$5,000
$5,000
Reappraisal Change (-10%) ($10,000)
($10,000)
Demolition (-2%) ($2,000)
($2,000)
New Value
$88,000
$88,000
New Effective Tax Rate 55.68
50
New Taxes
$4,900
$4,400
Analysis of Changes
% Change in Value -12%
-
12%
% Change in Taxes -2% -
14%
% Change in Tax Rate 11%
0%
Exceptions to the Fixed Rate Levy Rules -
The 20/2 Mill Floor
• Applies to School Districts (20 mill floor) and JVS (2 mill floor)
• If you have general fund levies in excess of the floor the effective rate of the general fund
levies cannot go below the floor
• Excludes Emergency, Incremental, Substitute, Bond, Permanent Improvement and Class
Room Facilities Levies
• If reappraisal changes would cause your rate to decrease below the floor the rate is adjusted
upwards to reach the floor so you receive additional revenue from reappraisal changes
• The floor adjustment is annual and not cumulative
◦ Value increases from reappraisal changes increase the base revenue that the voted fixed rate
levies will produce
◦ If values decrease in the future due to reappraisal changes the base revenue will not decrease,
instead the effective tax rate will increase to produce that base revenue
20 Mill Floor Example
With Floor Without Floor
Inside Fixed Rate Total Inside Fixed Rate Total
Year 1 - Base Year
Effective Rate
4.00
20.00
4.00
16.00
20.00
Assessed Value
$ 100,000
$ 100,000
$ 100,000
$ 100,000
$ 100,000
Revenue
$ 400
$ 2,000
$ 400
$ 1,600
$ 2,000
Year 2 - 10% Reappraisal Increase
Reappraisal Change
$ 10,000
$ 10,000
$ 10,000
$ 10,000
$ 10,000
New Value
$ 110,000
$ 110,000
$ 110,000
$ 110,000
$ 110,000
Effective Tax Rate
4.00
20.00
4.00
14.55
18.55
New Revenue
$ 440
$ 2,200
$ 440
$ 1,600
$ 2,040
Year 3 - $10,000 Reappraisal Decrease
Reappraisal Change $ (10,000) $ (10,000) $ (10,000) $ (10,000) $ (10,000) $ (10,000)
New Value
$ 100,000
$ 100,000
$ 100,000
$ 100,000
$ 100,000
Effective Tax Rate
4.00
21.60
4.00
16.00
20.00
New Revenue
$ 400
$ 2,160
$ 400
$ 1,600
$ 2,000
Impact of the Floor on Revenue
Remember we said only inside millage moves directly with property value, but if
a school district is at the 20 mill floor the floor acts like inside millage resulting in
additional millage being subject to a direct correlation with property values.
Millage %
Inside Millage 10.000000 18%
Fixed Rate Levies Act Like Inside Millage
Xenia School District 15.700000 28%
Greene County Career Center 2.000000 3%
Total Millage Acts Like Inside Millage 27.700000 49%
Voted Millage Not Directly Correlated to Property Valuation Change 34.239644 51%
Total Effective Millage 56.906576
Why is the Floor Important
School District Floor Statistics
◦ 38% of school district are currently at the floor
◦ 23% of school district are within 5% of the floor
New levies may become increasingly more difficult to pass as more schools reach the floor
resulting in greater tax increases every three years
Common Myths #1
My 1984 fire levy still produces the same amount of money it did in
1984.
Most likely false. New construction generates additional revenue. If
your subdivision has not seen any new construction since 1984 it
could be true.
Common Myths #2
When new construction occurs there is only a one year increase in
the revenue.
◦ Not true. New construction comes on at the current effective tax
rate and continues to bring in additional money through the life of
the levy. This additional value increases the base revenue that the
levy generates.
◦ The converse is also true non-reappraisal decreases in value result
in a permanent loss in revenue.
Common Myth #3
If a levy is replaced it will continue to receive the rollback money
based on the old effective tax rate.
◦ Not true. Any replacement or additional levy approved after
August 2013 is not eligible for the owner occupancy or non-
business credit. This applies to the entire levy not just the
additional effective tax rate.
◦ Renewal of an existing levy that qualified for tax credits will
continue to qualify
◦ Homestead applies to all levies regardless of when they were
passed
Common Myth #4
When new construction is picked up it is taxed at the voted or full
rate.
False. New construction is picked up at the effective rate in place for
the tax year the new value was picked up. One effective rate applies
to all property in a given property class regardless of when the new
construction occurred.