The purpose of this Glossary is to assist with the common terms that are most confusing in the attempt of the Citizens to really understand their Property Taxes and Levies. The definitions here will be cross referenced with links to examples of term commonly used and other points which can be clarifying to the Citizens.
Primary Reference is the Ohio Revised Code: 5705.01 Tax levy law definitions.
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Real Estate Taxes
This is a tax levied on land and buildings located within the school district. Individuals and businesses pay this tax on the property they own. Two key components in calculating real estate taxes are the taxable or assessed value (market value x 35%) of the property and the millage rate.
Market Value
The market value is the estimated sales value of the property. For purposes of real estate taxes, the county auditor determines the market value of all of the property in the county. The county auditor then calculates the taxable/assessed value for each property.
Taxable/Assessed Value
Taxable value and assessed value are different terminologies for the same thing.
The taxable value is determined by taking 35% of the market value of the property. For example, a home that would have a market value of $100,000 would have a taxable value of $35,000.
Re-appraisal and Triennial Update
The county auditor is responsible for assigning a market value for all of the individual properties in the county. Every six years the county auditor appraises all of the properties to determine their market value. This is re-appraisal. Every three years, the county auditor does an update of the market values based on home sales. This is Triennial update.
Mills
Property tax rates are computed in mills. A mill is 1/1000 or .001. One mill cost a property owner $1.00 for every $1,000 of taxable value.
Inside Millage
In Ohio, millage is referred to as “inside” millage and “outside” millage. Inside millage is millage provided by the Constitution of the State of Ohio and is levied without a vote of the people. It is called inside millage because it is “inside” the law. Another name would be un-voted millage.
Put in another way, property taxes shall be assessed at no more than 1 percent of value, unless otherwise approved by the electorate or provided for in a city charter. This means that the Ohio Constitution allows for the first 10 mills (or 1 percent) of property taxes on your tax bill without any prior approval or restrictions. Public schools, counties, townships, and other local governments are allocated a portion if the 10 inside mills.
Great article for Reference Purposes: Inside Inside Millage – A Close-Up View by John Varanese, Esq.
Outside Millage
Outside millage is any millage “outside” the 10 mills that is provided by the Constitution of the State of Ohio. This millage is voted in by the public. Another name for outside millage is voted millage.
Effective Millage
Effective millage is the millage rate that is actually levied on property. Once a levy is voted in, a school district cannot collect any additional money due to valuation increases from reappraisal or triennial update on that levy. As property values increase, the millage rate on that voted levy is decreased so that the levy generates the same amount of money. This reduced millage rate is referred to as effective millage.
House Bill 920
During the 1970’s property values were increasing at a very high rate. In 1976 the Ohio Legislature enacted House Bill 920. This bill effectively freezes all voted real estate millage at the dollar amount collected the first year the millage went into effect. As property values rise through reappraisal or triennial update, the outside millage is reduced. In simple terms, the amount of money a school district collects from a levy does not increase as property values increase.
20 Mill Floor
As property values increase, voted millage rates are decreased so that school districts don’t collect any additional money on voted millage due to inflation. Over time, millage rates could be reduced to near zero. To keep this from happening, Ohio law establishes a minimum millage level, or floor, that millage rates cannot fall below. This minimum level is 20 mills. Once a district’s total millage is reduced to 20 mills, it cannot be reduced any further, hence the 20 mill floor.
Homestead Exemption
The homestead exemption allows senior citizens and permanently and totally disabled Ohioans to reduce their property taxes by exempting $25,000 of the market value of their home from all local property taxes.
To qualify, an Ohio resident must be at least 65 years old or be totally and permanently disabled and own and occupy a home as their principal place of residence. For individuals who own more than one home, the principal place of residence is the home where the person is registered to vote and the person’s place of residence for income tax purposes.
Applications for the exemptions are available at the county auditor’s office.
Bond Levy
A bond levy is a levy that allows the district to issue debt to build or improve buildings. It is a “bricks and mortar” levy. Bond levies cannot be used to pay staff or utilities or any other operating expenses. Bond levies are used to build buildings but cannot be used to operate the new buildings.
CONTINUING LEVY
Any time at Continuing Levy is seen on the ballot it simply means “Forever”. This does mean that the levy has no end to it and is designated as ‘Permanent’. The tax never has to be renewed.
With a continuing levy when the value of the homes goes up, so does the amount of the money collected from you, the taxpayer. That is without your opinion or vote on it.
Regular Operating Levy
An operating levy funds the day to day operations of the district. It can be used for salaries, instructional supplies, textbooks, transportation costs, maintenance and upkeep, etc. The millage rate is submitted to voters for approval, not the dollar amount. The millage rate is adjusted down as property values increase. It can be for a limited amount of time or continuing.
Emergency Levy
An emergency levy funds the day to day operations of the district. It can be used for salaries, instructional supplies, textbooks, transportation costs, maintenance and upkeep, etc. This type of levy is submitted to the voters as a dollar amount. An emergency levy can only be voted in for a period of one to ten years.
Permanent Improvement Levy
Permanent improvement levies are for projects and equipment that have a useful life of five years or more. New roofs, renovations, and school busses are assets that fall into this category.
Who Can Tax You?
In every state it may be different Yet there are many commonalities in ‘taxing subdivisions’ nationally. In Ohio, according to the Ohio Revised Code it is the following laundry list of twenty-six (26) taxing subdivisions:
“Subdivision” means any county; municipal corporation; township; township police district; joint police district; township fire district; joint fire district; joint ambulance district; joint emergency medical services district; fire and ambulance district; joint recreation district; township waste disposal district; township road district; community college district; technical college district; detention facility district; a district organized under section 2151.65 of the Revised Code; a combined district organized under sections 2152.41 and 2151.65 of the Revised Code; a joint-county alcohol, drug addiction, and mental health service district; a drainage improvement district created under section 6131.52 of the Revised Code; a lake facilities authority created under Chapter 353. of the Revised Code; a union cemetery district; a county school financing district; a city, local, exempted village, cooperative education, or joint vocational school district; or a regional student education district created under section 3313.83 of the Revised Code.