New levy concept raises questions in Niles

By Ed Runyan

runyan@vndy.com

NILES

The phones at the Trumbull County auditor’s office and Niles schools treasurer’s office have been ringing this week with calls seeking clarification about a new type of levy Niles City Schools has on the Nov. 6 ballot.

It’s called a substitute levy, and it’s the first time one has been proposed in Trumbull County.

Because of that, Christy Sostaric, accountant with the county auditor’s office, admits she doesn’t fully know how it will work.

But she has read guidance provided by the Ohio Department of Taxation and can say one thing with confidence: A substitute levy does have a provision that could raise additional revenue for the school district.

The guidance says a school district can replace its two existing “emergency” levies, as proposed, for a substitute levy “for a specified amount of money with a built-in growth factor.”

Sostaric says the “growth factor” pertains to the ability of the school district to earn revenue from new construction that takes place in the school district.

“It has a benefit to the school district in that the district would get the benefit of real estate money from new construction,” Sostaric said.

The district has scheduled a public informational meeting on the substitute levy for 7 p.m. Monday at Niles McKinley High School.

A couple of weeks ago, Niles Superintendent Ann Marie Thigpen told The Vindicator the levy is a way to reduce “voter fatigue by not having to keep coming back again and again for separate renewals.” She said the school district is not “getting any extra money.”

And a “Frequently Asked Questions” document on the school district website says: “The substitute levy will not generate any additional dollars for the school district.”

But when asked about the new construction provision, Thigpen and Niles Schools Treasurer Lori Hudzik agreed that it would allow the district to receive extra money.

Hudzik said the amount of money the district is likely to receive is minimal because “Niles doesn’t have areas for new construction,” though “we could have some new homes.” Hudzik said people may think there’s new Niles construction near Eastwood Mall, but that’s mostly in Howland.

The school district would get additional revenue on new construction only in the year it took place. The equalizing mechanisms in state law ensure that – aside from the one-time boost from new construction – the levy will raise only the $2.6 million previously approved by voters, Hudzik said.

Thigpen says school officials “never even thought about” the new construction money the district will get when writing the FAQs. She said she will modify the wording online.

Voters in several school districts in the Dayton area have approved substitute levies, according to the Dayton Daily News.

The Monroe school district raised annual collections by about $500,000, from about $3.5 million to $4 million, from its substitute levy, the newspaper reported in May 2017.

“With substitute levies, bills on existing properties stay the same but grow for those improved by new development,” the Daily News reported. Thigpen agreed.

Niles’ proposed substitute levy would be permanent, meaning voters won’t be asked every 10 years anymore for permission to keep the levy.

As for how much additional revenue the school district will get from new construction, Sostaric and Thigpen said that would be dependent on how much new construction takes place.

Many Niles voters are asking Hudzik and Sostaric whether their taxes will go up if they approve the levy. One who spoke with The Vindicator cited the millage being higher for the new levy as evidence their taxes will rise.

Sostaric, who set the millage, said she raised it about 2.5 mills because it is unclear whether the school district will still get reimbursement for a former funding source called tangible personal property taxes if the levy is converted to a substitute levy.

However, Gary Gudmundson, spokesman for the Ohio Department of Taxation, said Thursday the reimbursement will still take place. He also said two property tax credits also will apply to the substitute levy if approved. They are called the nonbusiness credit and the owner-occupancy credit, formerly known as the 10 percent credit and the 21/2 percent credit, respectively.

Sostaric said another thing that will still apply is the homestead exemption. The Ohio homestead exemption is a tax credit that allows elderly and disabled homeowners to reduce their home’s market value by $25,000 for property tax purposes.

“Lots of people are asking, ‘Will mine [taxes] go up? Will mine go up?’” Hudzik said.

She and Sosteric say they don’t know because there are a lot of factors involved, such as whether a taxpayer’s property has risen or fallen in value. Changes in a person’s property value are established when the county auditor’s office conducts a property re-valuation every six years with a less comprehensive every-three-year update.

The county conducted its six-year property revaluation in 2017, Hudzik noted, saying that means it will be a while before changes in property values will affect how much people will pay in property taxes.

A caller to The Vindicator said there are too many unanswered questions for school officials to claim the substitute levy won’t cost voters more money.