AUSTINTOWN District to seek state aid to offset unexpected $1.35M loss

Without additional money, the district could be in debt earlier than expected.
By IAN HILL
VINDICATOR STAFF WRITER
AUSTINTOWN -- School officials here are asking the state to help cover an unexpected $1.35 million loss stemming from a tax refund slated to be paid to Phar-Mor.
On Monday, the school board voted to ask the Ohio Department of Education for a grant from the state School District Solvency Fund. The board's resolution states that the fund is available for "compensating the district for revenue lost or expenses incurred as a result of the catastrophic event."
"I definitely think this is a catastrophic event," said board Treasurer Barbara Kliner.
Phar-Mor, a bankrupt pharmacy chain that had been based in Youngstown, is slated to receive a total of $1.9 million in personal property tax refunds in coming weeks. The refund is for inventory shipped from the Tamco Distributors Co. warehouse in Austintown in 1994 and 1995. Tamco was owned by Phar-Mor.
The rest of the money is slated to be paid by Mahoning County, Austintown Township, Mill Creek Park, and the Mahoning County Career and Technical Center.
Phar-Mor's assets were sold in bankruptcy proceedings. The Mahoning County Prosecutor's office is working to determine who should receive the money from the refund.
Tax appeal board decision
The refund was a result of a decision by the Ohio Board of Tax Appeals to reduce the taxable value of the inventory shipped from the Tamco warehouse on Victoria Road for 1994 and 1995. During those years, Tamco shipped inventory to Phar-Mor pharmacies around the country.
State law requires companies to pay taxes on inventory they ship to customers.
Phar-Mor, however, had purchased Tamco from Giant Eagle in 1992, and was not a customer of the warehouse. Tamco argued that since Phar-Mor was not its customer, its tax value should not include inventory it shipped to Phar-Mor stores.
The board of tax appeals agreed and in November 2001 reduced the value of Tamco's taxable inventory for 1994 and 1995.
After the board's decision, Phar-Mor representatives began calling county Auditor George Tablack asking for a refund of taxes they paid on property shipped from Tamco in 1994 and 1995. Tablack then asked the county prosecutor for an opinion on the refund.
A letter from the prosecutor's office states that Tablack's office "has no choice but to provide for the return of funds."
Austintown school officials were told about the refund last week. On Monday, school officials received a share of the proceeds from the most-recent personal property tax collections in the county, minus $1.35 million.
Without the money, the district is slated to be in debt by about $62,000 by the end of the 2003-2004 school year. School officials had not expected to be in debt until after the 2004-2005 school year.
Superintendent Richard Denamen said he hopes a grant from the solvency fund will cover the loss. He added that he may ask the department of education to revise its funding formula for the district based on the reduced property value.
The state may then provide the district with additional funding.
Denamen said school officials haven't discussed what would be done if they do not receive any additional money to cover the loss.
hill@vindy.com