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School officials will frequently lament the loss of revenue due to HB920, or Phantom Revenue. What is this law, and how does it affect the schools? HB920 is simply a law passed in 1972 which says that the school district doesn't automatically get more money just because your house gets reappraised for a higher value. It was sponsored by then State Senator George Voinovich, when a building boom in the Cleveland area caused real estate values to skyrocket. Some of his constituents were being forced out of their homes because they could not longer pay the real estate taxes due after the reappraisal. Here's a simple example of the theory*: Year 1: Your home is appraised for $100,000, and the tax rate is 30 mils. You will pay $3,000 per year in property taxes. Year 2: Your home is reappraised for $120,000. At the rate of 30 mils, you property taxes would be $3,600. However, HB920 requires the county auditor to adjust the tax rate on your property so that your property taxes remain at $3,000. In this example, your tax rate would be adjusted to 25 mils. School officials think it is horrible that your school taxes don't go up with your property values. They think the taxes you pay should go up with "inflation" automatically, even though there is no economic link between changes in property values and changes in the cost of running the schools. Property values don't change because of inflation -- they change because of the relationship between the supply of and the demand for housing. And in fast-growing districts like Hilliard, costs don't go up simply because of inflation, they go up because of growth. The best thing about HB920? It forces the school officials to periodically justify why they need more money, instead of just getting it automatically. But that would require an effective community communications program, wouldn't it? * note that the actual algorithm for calculating the reduction factor is a bit more complicated because it takes into account how much a particular piece of property changes in value compared to the average for the whole area. Every parcel of land has its own reduction factor, which you can find by going to the website of the Franklin County Auditor. |
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