Tax Rules: Final: 5703-25
5703-25-45 Tax reduction factor; computation; minimum
for schools
(A) As used in rules 5703-25-45 to 5703-25-49 of the
Administrative Code:
(1) "Tax reduction factor" means the percentage reduction in
each real property tax levy of each taxing unit for each
class of real property for which a reduction is required and
computed under section 319.301 of the Revised Code and this
rule.
(2) "Emergency school levy" means a tax authorized under
section 5705.194 of the Revised Code.
(3) "Taxes charged and payable" means the amounts for the
current year remaining after the reduction required under
section 319.301 of the Revised Code but prior to any
reduction required under section 319.302 of the Revised Code.
It does not include assessments, recoupment charges imposed
under section 5713.34 of the Revised Code, taxes charged for
a prior year, or penalties and interest on delinquent taxes.
(4) "Carryover property" means all real property on the
current year's tax list except:
(a) Land and improvements that were not taxed by the district
in both the preceding year and the current year;
(b) Land and improvements that were not taxed in the same
class in both the preceding year and the current year;
(c) Land and improvements that were exempt from taxation
under a statute granting exemption or abatement from taxation
in the preceding year and which are included on the tax list
in the current year.
(5) "Real property" means real property as defined in section
5701.02 of the Revised Code and includes real property owned
by a railroad or other public utility.
(6) "Taxing unit" means a political subdivision of the state
authorized by statute to levy taxes on real property.
(7) "Taxing district" means a municipal corporation or
township, or part thereof, in which the aggregate rate of
taxation, as expressed in mills, is uniform.
(8) "Net taxes" means the taxes charged and payable for a tax
year. In the case of a school district or a joint vocational
school district, the net taxes of a prior year equal the
taxes charged and payable for that year after the reductions
required under section 319.301 of the Revised Code, including
any adjustment required for the district under division (E)
of that section and paragraph (E) or (F) of this rule. In the
case of a tax levy for which an estimated tax reduction
factor is used pursuant to division (H) of section 319.301 of
the Revised Code and paragraph (A) of rule 5703-25-48 of the
Administrative Code, the net taxes of a prior year excludes
the amount of taxes attributable to any portion of the tax
reduction factors used in that year to adjust for an
overpayment or underpayment of taxes in the second preceding
year caused by the use of such
estimated factors.
(9) "Replacement levy" means a tax levied by a joint
vocational school district under section 3311.21 of the
Revised Code or a tax levied for emergency medical service
under section 5705.191 of the Revised Code and designated as
a replacement levy in the ballot language used to submit the
levy for voter approval. A replacement levy cannot be
submitted for any other purpose.
(B)
(1) A tax reduction factor shall be applied to reduce each
voted tax levy on each class of real property except those
taxes excluded in paragraph (B)(2) of this rule.
(2) Tax reduction factors shall not be computed for and used
to reduce:
(a) Taxes levied within the ten-mill limitation provided by
section 5705.02 of the Revised Code;
(b) Taxes authorized to be levied by the provisions of a
charter adopted by a municipal corporation;
(c) Taxes levied at whatever rate is necessary to pay the
interest on and principal of indebtedness;
(d) Taxes levied as an emergency school levy.
(C) Each year the tax commissioner shall make the annual
determinations required under section 319.301 of the Revised
Code. A separate determination shall be made for each tax
levy for each class of property within each taxing unit.
Determinations shall be made for a taxing unit regardless
whether it contains territory located in a county whose
property is subject to an assessment reviewed by the tax
commissioner in that year under section 5715.24 of the
Revised Code. The two classes of property for which a
separate determination is made are:
(1) Lands and improvements thereon used for residential or
agricultural purposes which shall be called
"residential/agricultural real property"
(2) All other land and improvements thereon and minerals and
mineral rights which shall be called
"nonresidential/agricultural real property."
(D)
(1) The tax commissioner shall compute a tax reduction factor
for each tax levied by each taxing unit on each class of real
property for each tax except taxes described in paragraph
(B)(2) of this rule. The tax reduction factor shall equal the
per cent by which the sums levied by each tax against the
carryover property in each class of real property would have
to be reduced so that the current year's taxes on carryover
property equals the prior year's net taxes.
(2) A tax is levied for the first time in the year for which
it is first authorized by the voters to be extended on the
tax list and duplicate. In the case of taxes levied for the
first time, the tax commissioner shall compute the tax
reduction factor as follows:
(a) In the first year of a tax authorized to be levied as a
renewal of a tax that has expired, the tax reduction factor
for that tax shall equal the per cent by which the sums
levied by the renewed tax against the carryover property in
each class of real property would have to be reduced so that
the current year's net taxes on carryover property equals the
prior year's net taxes on that class of property. If a tax is
renewed at a rate that is less than the rate at which the tax
expired, the tax reduction factor for the first year in which
the tax is levied as a renewal shall equal the per cent by
which the sums levied by the renewed tax would have to be
reduced so that the net taxes on carryover property derived
in the current year from the renewed rate equals the net
taxes that would have been derived in the prior year from the
same rate.
(b) In the first year of a tax authorized to be levied as an
additional tax or as a tax designated as a replacement levy,
the tax reduction factor shall equal the per cent by which
the sums levied by the additional tax or replacement levy
against the carryover property in each class of real property
would have to be reduced so that the current year's net taxes
on carryover property equals the net taxes that would have
been levied on that class of property in the preceding year,
if such tax had been in effect in that year without any
reduction under section 319.301 of the Revised Code.
(c) In the first year of a tax authorized to be levied both
as a renewal of a levy that has expired and as an additional
tax, the portion of the tax that is a renewal shall have a
tax reduction factor computed in accordance with paragraph
(D)(2)(a) of this rule, and the portion of the tax that is an
additional tax shall have a tax reduction factor computed in
accordance with paragraph (D)(2)(b) of this rule.
(3) A tax is a renewal of an existing tax, an additional tax,
or a replacement levy according to its designation in the
actual ballot language submitted to the voters unless such
designation is deceptive or contrary to law.
(4) If a taxing unit has elected not to impose a tax
authorized by the voters for one or more years and then
elects to impose it in the current year, the tax reduction
factor for that year shall be computed as though the tax had
been levied and adjusted under section 319.301 of the Revised
Code in each year it was authorized at the rate used in the
current year.
(E) Each school district is guaranteed an effective tax rate
for current expenses equal to two per cent of the taxable
value of each class of real property in the district. In the
case of a school district whose total tax rate for current
expenses as authorized, is less than two per cent, the
guarantee equals only the maximum effective rate so
authorized by the voters of the district.
Example: A school district is authorized to levy five unvoted
mills for current expenses. The voters have approved an
additional ten mills. The district's guaranteed effective
rate is one and one-half per cent (fifteen mills) because
that is the maximum authorized rate.
Annually, for each class of property for each school
district, the commissioner shall determine whether
adjustments to the tax reduction factors of the district's
taxes are necessary to guarantee that the district levies its
guaranteed effective tax rate for current expenses. This
determination shall be made as follows:
(1) Using the tax reduction factor determined under division
(D) of section 319.301 of the Revised Code and paragraph (D)
of this rule, the commissioner shall compute the sum of the
taxes charged and payable for current expenses by the voted
tax levies of that district;
(2) The commissioner shall determine the total taxes charged
and payable within the ten-mill limitation for the current
expenses of the district;
(3) The commissioner shall determine the difference between
the amount in paragraphs (E)(3)(a) and (E)(3)(b) of this
rule. However, if the difference obtained by subtracting the
amount in paragraph (E)(3)(b) of this rule from the amount in
paragraph (E)(3)(a) of this rule is a negative number, then
the amount determined under this paragraph is zero.
(a) From the total taxes charged and payable on the tax list
against the property of that school district for tax year
1981, after making any reduction required in that year under
section 319.301 of the Revised Code, but prior to making any
reduction under section 319.302 of the Revised Code, for the
current expenses of a joint vocational school district of
which the school district is a part in the current year;
subtract,
(b) The following percentage of the taxable value of all real
property in the appropriate class of real property:
(i) In 1987, five one-hundredths of one per cent (.0005);
(ii) In 1988, one-tenth of one per cent (.001);
(iii) In 1989, fifteen one-hundredths of one per cent
(.0015);
(iv) In 1990 and each subsequent year, two-tenths of one per
cent (.002).
(4) The sum of the amounts determined in paragraphs (E)(1),
(E)(2), and (E)(3) of this rule equals the unadjusted total
taxes of the school district for current expenses in the
current year. This total should always exclude emergency
school levies and debt levies, except as provided in rule
5703-25-49 of the Administrative Code.
(5) The commissioner shall compare the amount shown as the
unadjusted total taxes of the school district for current
expenses in paragraph (E)(4) of this rule to the amount
obtained by multiplying the total taxable value of all real
property in the same class of real property by two per cent.
(a) If the unadjusted total taxes for current expenses of the
district charged against the class of real property is more
than two per cent of the taxable value of real property in
that class, the tax reduction factors for that class are the
percentage determined in paragraph (D) of this rule. No
adjustment is required.
(b) If the unadjusted total taxes for current expenses of the
district charged against that class of real property are less
than two per cent of the taxable value of real property in
that class, the commissioner shall adjust the tax reduction
factors for that class determined under paragraph (D) of this
rule by a uniform percentage so that the total taxes for
current expenses of the district prior to the reduction under
section 319.302 of the Revised Code shall equal exactly two
per cent of the taxable value of real property in that class.
(c) In the case of a school district whose total authorized
tax rate for current expenses is less than two per cent, if
the unadjusted total taxes for current expenses of the
district charged against that class of real property are less
than the total authorized rate for current expenses
multiplied by the taxable value of real property in that
class, the commissioner shall adjust the tax reduction
factors for that class determined under paragraph (D) of this
rule by a uniform percentage so that the total taxes charged
and payable for current expenses of the district produce an
effective tax rate equal to the district's authorized tax
rate for current expenses.
(6) If the commissioner is required to make the adjustment
specified under paragraph (E)(5)(b) or (E)(5)(c) of this
rule, the commissioner shall certify the tax reduction
factors computed under the appropriate paragraph to the
county auditor, and the factors certified shall replace the
tax reduction factors determined under paragraph (D) of this
rule, and the adjusted percentages so certified shall be the
tax reduction factors for that class of property for all
purposes.
(7) When the tax reduction factors for a school district's
taxes are factors certified under paragraph (E)(6) of this
rule, the taxes charged and payable after making the
reductions required by such factors equals the net taxes of
the school district for that year.
(F) Each joint vocational school district is guaranteed a
minimum amount of taxes. This guaranteed amount of taxes is
called the "designated amount."
(1) The designated amount for each class of real property in
a joint vocational school district equals the taxable value
of all real property in that class subject to taxation by the
district multiplied by the lowest of the following:
(a) Two-tenths of one per cent;
(b) The district's effective tax rate plus the following
percentage:
Taxes Charged For Add The Following Percentage
1987 0.025% (0.00025)
1988 0.050% (0.00050)
1989 0.075% (0.00075)
1990 0.100% (0.00100)
1991 0.125% (0.00125)
1992 0.150% (0.00150)
1993 0.175% (0.00175)
1994 and thereafter 0.200% (0.00200)
(c) The district's authorized tax rate.
(2) Annually, for each class of property for each joint
vocational school district, the commissioner shall determine
whether adjustments to the tax reduction 5703-25-45 6 factors
of the district's taxes are necessary to guarantee that the
district levies its designated amount of taxes. This
determination shall be made for each class of property as
follows:
(a) Using the tax reduction factor determined under division
(D) of section 319.301 for the Revised Code and paragraph (D)
of this rule, the commissioner shall compute the sum of the
taxes charged and payable by the levies of that district.
This sum equals the district's total unadjusted taxes.
(b) The commissioner shall compare the unadjusted taxes of
the district determined in paragraph (F)(2)(a) of this rule
to the designated amount for that district for the current
year.
(i) If the unadjusted total taxes charged against the real
property in that class for the district are more than the
designated amount, then the tax reduction factors for that
class are the percentage determined under paragraph (D) of
this rule. No adjustment is required.
(ii) If the unadjusted total taxes of the district charged
against that class of real property are less than the
designated amount for that class in the district, the
commissioner shall adjust the tax reduction factors for that
class determined under paragraph (D) of this rule by a
uniform percentage so that the total taxes charged and
payable against that class of property shall exactly equal
the designated amount for that class in that district.
(3) If the commissioner is required to make the adjustment
specified in paragraph (F)(2)(b)(ii) of this rule, the
commissioner shall certify the tax reduction factors computed
under that paragraph to the county auditor, and the factors
certified shall replace the tax reduction factors determined
under paragraph (D) of this rule, and the adjusted
percentages so certified shall be the tax reduction factors
for that class of property for all purposes.
(G) No reduction shall be made under this rule in the rate at
which any tax is levied.
(H) No tax reduction factor certified under paragraph (E)(6)
of this rule shall cause a tax to be imposed at an effective
rate greater than that originally authorized for that tax by
the voters of a school district.
Effective: 9-18-03
Promulgated under: 5703.14
Authorized by: 5703.05
Amplifies: 319.301
Prior effective dates: 3-20-88 as 5705-7-01