Tangible Personal Property Tax:
Tax Replacement Payments, Fiscal Year 2013
Ohio’s tangible personal property (TPP) tax was phased out between 2006 and 2010 as part of the tax changes contained in Am. Sub. HB 66, the two-year state budget bill for Fiscal Years 2006-2007. The phase-out was accomplished by lowering the assessment percentage for all tangible personal property, including inventories.
Schools and local governments are reimbursed for the loss of tax revenue due to the elimination of the tax. The commercial activity tax is the primary revenue source for the tax replacement payments although the state General Revenue Fund is used as a funding source if commercial activity tax revenues are insufficient to make the mandated replacement payments. For more details on the phase-out and replacement payments see www.tax.ohio.gov/personal_property/phaseout.aspx.
In 2006, reimbursements were calculated based on each local government’s TPP revenue. In 2011, the reimbursement formula was altered so that reimbursement, for the majority of political units and levies, depends on each local government’s reliance on the reimbursement. In calendar year 2013, replacement payments for the fixed-rate levies of counties, townships, and special districts as well as municipal operating levies were equal to the sum of 2010 reimbursement less 6 percent of the local government’s calculated 2010 total resources. Reimbursement for municipal non-operating levies, including pension and capital improvement levies, for calendar year 2013 was equal to 25 percent of the levy’s 2010 reimbursement.
In fiscal year 2013, replacement payments to schools and joint vocational districts for fixed-rate operating levies were equal to fiscal year 2011 reimbursement less 4 percent of the district’s total resources. Reimbursement for non-operating fixed-rate levies, including permanent improvement and classroom facilities levies, was equal to 50 percent of the fiscal year 2011 reimbursement. In fiscal year 2013, payments to school and joint vocational districts include an “indirect” replacement payment made through the school funding formula.
The amounts displayed are for the November 2012 and May 2013 distributions. The amounts reflect the Local Government Property Tax Replacement Fund distributions (Fund 7081) and the School District Property Tax Replacement Fund (Fund 7047). Fund 7081 is administered by the Ohio Department of Taxation and monies are sent by Taxation to the respective county auditors for the crediting of county, municipal, township, and special district levies only. The Ohio Department of Education administers the School District Property Tax Replacement Fund (Fund 7047). For fiscal year 2013, a total of $783.0 million was distributed to each county.
The figures shown have been compiled from records of Ohio Department of Taxation.