Tangible Personal Property Tax

17106975-mmmainLike all public school districts across Ohio, Worthington is watching the state budget process very carefully.  One important aspect of this process for Worthington residents is how the Tangible Personal Property Tax is treated.

On Sunday May 17th The Columbus Dispatch printed an article “Ohio’s phaseout of tax still hitting schools’ finances” on the Tangible Personal Property Tax or TPP and I want to take a moment to provide the information as it pertains to our school district.

Tangible Personal Property Tax was a local tax on businesses which represented 11% of our total district valuation in 2005 and each new mill passed since 2005 would have provided almost $200,000 in additional tax revenue.  Today this would have provided additional annual revenue of $2.7 million per year for Worthington Schools when we factor in the 2009 and 2012 operating levies that were passed.  The elimination of this taxing authority, by a four year phase-out starting in 2006, increased the impact of tax levies on district taxpayers.

In 2005 the State of Ohio developed a new tax to replace the TPP.  This tax called the Commercial Activity Tax (CAT), is collected on business income and remitted to the state.  The state used this revenue to reimburse school districts and other governmental entities for the full amount of losses due to the TPP being taken away.  The intent of the change was to increase the State Foundation aid provided to school districts over the course of the past decade in such a way as to replace at least 70% of this loss to the local school district.

Governor Kasich reduced the reimbursement for Worthington Schools from $15 million annually in fiscal year 2011 to $10.6 million by the end of fiscal year 2013.  His current budget proposal will reduce this funding to $0 by fiscal year 2019 while increasing our foundation aid by a total of $4.3 million from 2005.  This increase in foundation aid is not even close to a 70% reimbursement for our loss and thus it will further increase the burden of real estate taxes on our homeowners.

While we are similarly affected as other districts mentioned in the article Sunday, we have prepared for this scenario and have had it included in our financial planning forecast for a significant period of time.  We do not appreciate the state decreasing our revenue nor breaking its promise to increase funding to account for the change in tax policy, but proper planning on our part will avert any dire scenarios as may occur in other districts throughout the state.

As a school district we will continue to speak with our representatives and will watch the budget process very carefully.  How the state chooses to handle Tangible Personal Property reimbursement will have a significant impact on the budget in Worthington and in many other districts across Ohio.

Trent Bowers, Assistant Superintendent


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