Another tax aberration which you will hear school administrators complaining about is the so-called "Phantom Revenue."

This is simply a technical flaw in the State funding formula.  Each school district is expected to raise a portion of its funding requirements through local property taxes. The amount they raise is deducted from the total Aid the district receives from the State.

Right now, this deduction assumes that the amount of tax collected locally is the full appraised value at the full millage rate. However, because of the HB920 correction, the actual amount collected by the district is somewhat less. The difference between the assumed amount collected and the actual amount collected is what people call Phantom Revenue.

So while this does indeed reduce the amount of tax collected by a school district, the amount is insignificant compared to the shortfall caused when residential growth occurs faster than commercial growth in a community (read this presentation if you haven't already).

It is foolish to think that correcting this technical flaw will be a windfall for suburban districts such as Hilliard. The Legislature thinks we have the capacity in our community to financially support our schools AND subsidize the poorer districts around the state. If they get around to fixing this flaw, don't you think they'll simply adjust the rest of the formula to keep our State Aid the same?  My guess is that we would be lucky if we kept what we already have.

Update  April 8, 2006:

The Ohio House of Representatives has passed HB530, a complex bill addressing many areas of school funding. Among those is authorization for a school district to institute a new kind of levy which offsets the impact of HB920. Here is an illustration of what this means:

• Your property is assessed a value $100,000, and your current effective tax rate is 40 mils. That makes your tax bill $4,000 per year.
• During the periodic reassessment cycle, your property is valued at $110,000. That should mean your property tax would increase to $4,400 per year, but the HB920 reduction factor would automatically reduce your millage rate to 36.36 mills so that your tax remains $4,000.
• If we voters in the district have approved an HB530 levy, then that levy would automatically kick in for 3.63 mills (36.36 + 3.63 = 40), bringing your tax bill back to $4,400.

In other words, HB530 allows the voters of a school district to cancel out the HB530 reduction factor.

As I said above, it would be foolish to think the Ohio Legislator would try to solve this problem by giving more money to so-called wealthy districts such as Hilliard. They have come up with an answer all right: we can tax ourselves even more.

We can be sure that such a levy will be proposed at some point by our school board. It will be interesting to hear how it is presented.

Other links to information on HB530:

• Architects like it because it has money for new schools
• April 11 Dispatch Editorial criticizing the new type of levy

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