Source: Jeff Robinson is a feature writer for My Communicator.
How would eliminating property taxes impact the services they help provide?
Taxes, to paraphrase Benjamin Franklin, are one of life’s two certainties.
However, how those taxes should be collected is a topic of seemingly endless debate. The latest debate concerns a proposal to put an amendment on the November ballot to eliminate property taxes in Ohio. While the thought of paying less in taxes appeals to many, eliminating property taxes altogether could mean an increase elsewhere – think income tax and/or sales tax – as well as a potentially negative impact on those local entities that receive funding from property tax dollars.
SourcePoint is one of those local organizations that derives much of its operating revenue from property taxes; the Senior Services Property Tax Levy provides between 75% and 80% of funding.
“The concept of state taxes is made up of income, sales, and property taxes, like three legs on a stool,” said Jodie Kaminsky, community aging planner at SourcePoint. “If you take one leg of the stool out, the need for what gets funded doesn’t go away, so you have to use one of the other legs to make up the difference.”
In Ohio, property taxes are determined by multiplying a property’s assessed value (which is 35 percent of its appraised value) by a local mill rate. For example, if a property is appraised at $200,000, its assessed value would be $70,000. A local mill rate of 2% (20 mills) would mean the property tax owed would be $1,400.
“Property taxes are the only taxes that are assessed locally, and that stay local, so as a community, we have more say in how that money is used.”
“Property taxes are the only taxes that are assessed locally, and that stay local, so as a community, we have more say in how that money is used,” Kaminsky said. Other entities that receive funding from property taxes include school districts, fire and police departments, EMS, 9-1-1 service, mental health, and developmental disabilities, just to name a few. While the majority of property tax revenue goes to fund school districts, eliminating property taxes entirely would also eliminate smaller levies that fund these essential local services. Kaminsky said that in Delaware County, there is a correlation between services funded by property taxes and the overall health of residents.
“People live longer and better partially because of the services they have access to here,” she said. Delaware County has repeatedly been named among the healthiest in the state and the country in the County Health Rankings & Roadmaps annual data release, and at 81.3 years, it is reported to have one of the highest predicted life expectancies.
In addition to being one of the healthiest counties, Delaware County continues to be among the fastest growing in the state. The county’s total population has grown by more than 35% since 2010, and the number of Delaware County residents age 60 and older is projected to nearly double between 2020 and 2050, according to the Scripps Gerontology Center analysis of Ohio Department of Development projections.
“Ohio is one of the older states in the country (in terms of population), and it’s only going to get older,” said SourcePoint CEO Fara Waugh.
As Delaware County’s older population grows, so does the need for many of the services SourcePoint provides, including Meals on Wheels and in-home care.
“We do get some federal funding for Meals on Wheels, but it doesn’t keep pace,” Waugh said. “The federal funding doesn’t cover 50% of the meals we serve.”
Waugh said much of SourcePoint’s property tax revenue supports other services that help keep Delaware County residents in their homes as they age.
“The property tax supports the case management services provided by our care consultants,” Waugh said. “We are trying to support people who want to stay in their homes. That is less expensive than being in a nursing home, and many times people don’t need all of the services that are provided in a nursing home.”
More than 90% of SourcePoint’s in-home care clients have said the services they receive have helped them to continue living in their home. Other SourcePoint services supported by the Senior Services Property Tax Levy include transportation to medical appointments, respite care, adult day care services, and insurance counseling.
“We have trained specialists who assist folks in selecting their Medicare Part D plan and getting enrolled in Medicare,” Waugh said. “A lot of the programming we do at the enrichment center is funded by fees, but not 100%. We are able to offer no or reduced fees because of the funding we get through the levy.”
Those proposing the amendment to eliminate the property tax haven’t announced an alternative tax plan to replace the funds typically collected from property taxes. Without a plan in place, critical services could be lost, Waugh said, but shifting the burden to the sales tax may not be the best solution.
“It’s important to learn what those property tax dollars are used for and what eliminating them would mean,” Waugh said. “A sales tax is disproportionately paid by those with lower incomes. You pay taxes on items you purchase; that isn’t based on your income, it is based on what you purchase, so those with lower incomes end up paying more. I know property taxes are a concern, but all of us would be impacted by their elimination.”
Kaminsky said thoughtful tax reform may be the best way to address the challenging issue of maintaining equitable taxes as the community continues to grow and evolve. “Maybe you have someone who has lived in their home for 40 years, and it’s gone up in value, and now they can’t keep up with property taxes while on a fixed income,” Kaminsky said. The question is how to implement reforms that help that population. “Targeted updates to existing programs like the Homestead Exemption could be one way to address that scenario.”
“When older residents can stay in their homes and communities—grandparents living near their grandchildren—those property taxes support multiple generations, and strengthen the entire community.”“
Property tax reform would also keep that revenue local, which Waugh said is a vital piece of the funding puzzle. “Keeping that funding local means you can support current programs and develop new ones that meet the needs of our community,” Waugh said. “When older residents can stay in their homes and communities—grandparents living near their grandchildren—those property taxes support multiple generations, and strengthen the entire community.”