Taxes affect all our lives and levies are the way many taxing districts choose to raise the money to support the services their taxpayers demand. Let’s take a brief look at how levies operate.
First, let’s define the basic terms:
- Mill: A unit of measure, 1/1,000 milligram, milliliter, millimeter, etc. When talking about taxes, a mill is $1.00 in taxes for every $1,000 of assessed value.
- Assessed Value: In Ohio, the assessed value of real estate is 35% of the property’s estimated market value.
- Market Value: The sale price of real estate as agreed upon between a willing buyer and a willing seller, with neither being under any duress to either buy or sell.
WHO SETS THE REAL ESTATE MARKET VALUE?
The County Auditor has the responsibility of determining the market value of all real estate in the county. The county auditor then calculates the assessed value for each property.
HOW IS MARKET VALUE DETERMINED?
The County Auditor uses real estate sales in the county, specific property characteristics about each property, neighborhood characteristics and statistical analysis to arrive at the market value for every property in the county. The market value is determined as of January 1st of the year of the assessment.
HOW OFTEN DOES THE COUNTY AUDITOR UPDATE MARKET VALUES?
Every six years the County Auditor does a field inspection of all real estate in the county, called a revaluation.
If ordered by the Department of Tax Equalization, the Auditor also performs an update of property values three years after the six-year evaluation.
Seneca County’s valuation cycle is:
- 1993 Previous Revaluation
- 1996 Previous Value Update
- 1999 Previous Revaluation
- 2002 Previous Value Update
- 2005 Previous Revaluation
- 2008 Previous Value Update
- 2011 Previous Revaluation
- 2014 Previous Value Update
- 2017 Revaluation
Also, if a new house is built, or improvements, such as a deck, garage, porch or building addition are made to a property, the property’s market value could increase annually until the improvement is completed.
How much can I expect to pay in taxes for a 1.00 mill levy?
First, let’s assume the market value of your home is $100,000 and that it is your primary residence. Your tax bill for a 1.00 mill levy is calculated as shown below.
$100,000.00 Market value of your home
$35,000.00 Assessed value of your home
$35.00 Gross taxes of 1.00 mill
-$3.50 State of Ohio Non Business Credit
-$.88 State pays an additional Owner Occupied Credit as an exemption for the primary resident.
$30.62 Net taxes for 1.00 Mill
Used to raise funds for any legal expenditure
Most often used for day-to-day operation of school districts (books, salaries, supplies, equipment, building maintenance, etc.)
May be either for a limited period or an indefinite period
Revenue does not increase as market values increase
Personal property and public utility valuation increases and decreases will produce more, or less, income respectively
Levy renewal is at same effective tax rate
Replacement levy is at original millage.
Similar in function to an Operating Levy
Brings in a fixed (specific) amount of money for use for purposes of operation only
Can run no more than five years
An emergency resolution must be approved by voters
Does not effect the county’s reduction factor
Personal property and public utility valuation increases and decreases will not produce more, or less income respectively.
Revenue does not increase as market values increase
Levy renewal is at the same dollar amount.
A replacement levy is not permitted
Is exempt from the 20 mil floor limit
In the strict sense of the word, this levy does not actually replace a current levy.
The reduction factor/millage is brought back to the original amount.
Uses current market values to determine/set tax rates.
Keeps a current levy on the books
The same amount of money will be collected as when the levy first took effect (was originally voted in)
Permanent Improvement Levy
Raises funds for a specific permanent improvement(s) (construction & repair of buildings, sidewalks, parking garages, etc.)
Money is generated as it’s collected from taxpayers, therefore, no interest is paid on the money
Limited to a period of five years or less.
Levy renewal is at the same effective tax rate.
A replacement levy is at the original millage.
Raises funds for permanent improvements (structures) to a district’s buildings & grounds or for immediate construction of a new building(s)
Used to pay off debts
Money can only be used for the purpose stated on the ballot (not for operating expenses)
Bonds are sold in the amount approved, then money is used to pay for improvements
Money is paid back with interest, usually over 20 or more years
Exempt from the 20 mil floor limit.
What is inside and outside millage, rollback, owner occupied credit and homestead exemption? Levy passes, now what?
Inside Millage is limited by law to 10 mills for any taxing district. Because they are inside mills, these 10 mills can be collected as a levy without being voted on by the people in the taxing district.
Outside millage is all other millage requested that is over the 10-mill limit. Outside mills must be voted upon and approved by the majority of the voters in the taxing district where the tax will be levied. Because of H.B. 920 (passed in 1976) there is a cap on the amount of money a levy can collect. That means a levy can collect no more in the future than it collects during the first year it's enacted.
Rollback: The State of Ohio pays each subdivision (school, township, village, county board or district) for the portion of the taxes that are either “rolled back” or exempted. The rollback reduces the property taxes due by 10%. House Bill 66 eliminated the 10% discount for commercial property.
The owner occupied credit exemption reduces the property’s taxes by that amount only if it is the person's primary residence. A homestead exemption is available to those 65 and older (income limit of $32,200 in 2018) or permanently disabled.
WHAT HAPPENS AFTER A TAX LEVY IS PASSED BY THE VOTERS?
Every levy ballot must contain language showing the year the levy commences (begins). For example, “...commencing tax year 2006”; taxpayers within the district where the levy’s been approved will begin paying what they owe on the tax levy in the year of collection. The amount of millage they will pay ($1.00/$1,000 of assessed value of their real estate’s value) is based on the amount of money the levy must collect.
REASONS TAXES CHANGE
Tax levies: When voters pass new levies, taxes will increase according to the specific millage voted. This the principal reason property taxes increase.
CAUV value adjustments: CAUV Values are established by the State of Ohio Department of Tax Equalization.
New Construction: When a new building is added to or an old building is removed, taxes will increase or decrease accordingly. When changes, such as interior or exterior remodeling, or interior finish, are completed, the value of a property and therefore its taxes, can change
Special Assessment: Special assessments include costs for area-specific items such as installing a new sidewalk in a subdivision, road repairs, sewer or water line replacement, etc.
Homestead: If an owner is currently eligible for the Homestead Exemption program, there could be differences in the income allowances reported from the previous year.
Other Reasons: Change in property use, state mandated revaluations and triennial updates.