Fiscal Note & Local Impact Statement

124 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43266-0342 ˛ Phone: (614) 466-3615

˛ Internet Web Site: http://www.lsc.state.oh.us/

 

BILL:

Sub. H.B. 198

DATE:

December 5, 2002

STATUS:

As Enacted – Effective March 31, 2003

SPONSOR:

Rep. Peterson

LOCAL IMPACT STATEMENT REQUIRED:

Yes

 

 


CONTENTS:

Requires delinquent property tax collections to be distributed among taxing districts in proportion to current tax rates, rather than the rates in effect while the taxes were outstanding and makes slight changes regarding county auditor’s tax valuation certifications

 

State Fiscal Highlights

 

·        No direct fiscal effect on the state.

Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2003

FY 2004

FUTURE YEARS

Counties, School Districts, Municipalities, Townships, Special Districts

     Revenues

- 0 -

Potential Gain or Loss of up to many thousands of dollars

Potential Gain or Loss of up to many thousands of dollars

     Expenditures

- 0 -

Minimal increase or decrease

Minimal increase or decrease

Note:  For most local governments, the fiscal year is the calendar year.  The school district fiscal year is July 1 through June 30.

 

·        The bill requires delinquent property tax collections to be distributed among taxing districts in proportion to current tax rates, rather than the rates in effect, while the taxes were outstanding.  Due to the change in the distribution requirements of delinquent property taxes county auditors will have a minimal decrease in expenditures. 

·        Statewide, the effect of the distribution changes will be close to revenue neutral due to the relatively constant statewide effective millage rate.  But, at the individual tax district level, a significant revenue gain or loss could occur if current tax rates are substantially different than the tax rate during the delinquency period.  Due to the very complex nature of Ohio’s tax districts and the unavailability of data, LSC did not forecast the possible district-by-district revenue losses.

·        The bill requires county auditors to issue a tax valuation certification within ten days from receiving a request from local taxing authorities.  The bill also requires a copy of this certification to accompany the taxing authority’s resolution or ordinance to the county board of elections.  The short, ten-day window for county auditors to issue a certification could result in a minimal increase in county expenditures.

 


 

Detailed Fiscal Analysis

 

Delinquent Property Tax Distributions

 

Under current law, each taxing district is entitled to its proportionate share of that year’s delinquent property tax collection, minus a five percent county administration cost.  The proportionate share is determined in the year the taxes were due and is the percentage of the total tax collections that the district is entitled to relative to all other taxing districts that tax the same property.  H.B. 198 proposes to distribute delinquent tax collections based on the current year’s proportionate share of tax collections instead of the proportion in the year of delinquency.

 

The fiscal impact of the bill will result in some tax districts receiving more or less revenue in comparison to the current distribution system.  The State of Ohio has approximately 4,100 tax districts.  These tax districts are not unique and therefore overlap, creating a much higher permutation of tax rates on individual parcels of property.

 

According to the Department of Taxation, total delinquencies in calendar year 2000 were $985.0 million, a 10.9% increase from the 1999 total of $888.0 million.  Real and public utility personal property delinquencies comprised $598.7 million of the CY 2000 delinquencies while tangible personal property delinquencies amounted to $309.4 million.  Special assessment delinquencies totaled $76.9 million.  The table below lists total property tax delinquencies by county.

 

Delinquent Property Taxes Due and Payable in CY 2000

County

Delinquent Taxes

County

Delinquent Taxes

Adams

$1,077,408

Licking

$5,991,914

Allen

6,597,883

Logan

3,689,274

Ashland

2,012,741

Lorain

15,074,857

Ashtabula

6,690,224

Lucas

37,435,568

Athens

2,238,324

Madison

1,116,372

Auglaize

1,442,714

Mahoning

71,254,015

Belmont

4,038,437

Marion

3,707,980

Brown

1,820,464

Medina

7,465,315

Butler

11,948,794

Meigs

2,055,506

Carroll

984,543

Mercer

749,092

Champaign

2,633,985

Miami

4,233,452

Clark

8,600,157

Monroe

651,601

Clermont

9,926,535

Montgomery

59,259,985

Clinton

1,878,316

Morgan

470,396

Columbiana

5,695,116

Morrow

2,280,485

Coshocton

5,047,066

Muskingum

7,852,426

Crawford

2,155,596

Noble

971,930

Cuyahoga

211,885,862

Ottawa

2,513,952

Darke

1,203,836

Paulding

649,955

Defiance

1,128,526

Perry

3,562,965

Delaware

6,586,814

Pickaway

3,271,199

Erie

5,731,324

Pike

1,958,068

Fairfield

4,868,089

Portage

6,702,390

Fayette

1,149,899

Preble

1,544,055

Franklin

76,481,683

Putnum

457,677

Fulton

926,234

Richland

11,068,617

Gallia

970,656

Ross

2,188,065

Geauga

6,401,754

Sandusky

2,059,123

Greene

7,690,086

Scioto

4,548,663

Guernsey

3,635,633

Seneca

1,059,644

Hamilton

70,798,056

Shelby

1,643,521

Hancock

2,699,394

Stark

29,504,609

Hardin

1,056,516

Summit

36,653,822

Harrison

1,528,478

Trumbull

23,295,212

Henry

3,746,975

Tuscarawas

4,554,903

Highland

1,082,326

Union

2,839,316

Hocking

1,345,395

Van Wert

971,364

Holmes

1,042,846

Vinton

543,402

Huron

2,236,290

Warren

7,186,753

Jackson

2,544,590

Washington

2,173,448

Jefferson

15,218,219

Wayne

4,910,330

Knox

2,452,788

Williams

1,018,948

Lake

83,999,425

Wood

5,814,086

Lawrence

4,295,851

Wyandot

504,487

 

Given the cumulative history of the reported delinquent property tax data and the thousands of possible tax rates, LSC did not estimate the potential future fiscal impacts of redistributing delinquent property tax collections. The table below illustrates how various taxing districts could be affected by this change.  In this example, a fire district had a 3-mill levy that was in effect when the taxes were charged, but not in effect in the year the taxes were collected.

 

Tax District

Delinquency Amount Accumulated Over 4 Years

Original Tax Rate

Original Proportion

Original Revenue

Current Proportion

Current Revenue

Revenue Difference

Fire District

$1,000,000

3 Mills

5.000%

$50,000

0.000%

$0

-$50,000

School District

$1,000,000

43 Mills

71.667%

$716,667

75.439%

$754,386

$37,719

Other Local Governments

$1,000,000

14 Mills

23.333%

$233,333

24.561%

$245,614

$12,281

 

 

The overall statewide impact will be close to revenue neutral due to the fact that the overall effective state millage rate has been fairly constant over the last several years.  But, at the individual tax district level, revenue gains or losses could be more significant if the effective tax rates are significantly different from the period covered by the delinquency.  Contingent on the amount of delinquent tax revenue, historical tax rates, and when a collection occurs, an individual tax district could experience an insignificant or significant delinquent property tax revenue gain or loss.  A district with a relatively higher tax rate currently than during the delinquency period would receive more revenue and other districts would receive less.  If a district had a relatively lower tax rate than now during the delinquency period, then the district would receive less revenue than it would under the current system and other districts would receive more revenues.

 

Delinquent property often has several years’ worth of delinquencies that are settled at one time.  The proposed change would result in a slight decrease in administrative costs for county officials because of the need for less complex calculations than under the current method.

 

County Auditor Tax Valuation Certifications

 

            Under current law when a local taxing authority determines it is necessary to levy a tax outside the ten-mill limit, the taxing authority must inform the county auditor by issuing a resolution or ordinance.  The resolution or ordinance must request that the county auditor certify to the taxing authority the total current taxable value of the subdivision and the tax rate required to generate a specified amount of revenue or the amount of revenue that would be generated by a specified number of mills.  If the taxing authority would like to continue with their levy request after receiving the county auditor’s certification, they must certify a resolution or ordinance to the county board of elections.

 

The bill requires the county auditor to issue a tax valuation certification to the local taxing authority within ten days after receiving the resolution or ordinance.  It further requires a copy of the certification to accompany the taxing authority’s resolution or ordinance submitted to the board of elections.  Under the bill, the county board of elections is prohibited from submitting the question of the tax levy to the voters without a copy of the certification.

 

The ten-day window for county auditors to issue a valuation certification may be problematic for some counties especially so for less populous counties where the county auditor’s office typically employs a relatively small staff.  It is also important to note that there are no penalties for auditors who fail to issue a certification.

 

 

LSC fiscal staff:  Nickie Evans, Economist

 

FN124\HB0198EN.doc