A provision recently slipped into the Ohio Senate’s proposed budget for the upcoming fiscal year includes a provision that may not only be cutting funding for Manchester schools, but may be raising utility bills as well.
The provision within the Senate’s budget would eliminate the public utility personal property tax on generation equipment. This would mean the Stuart Generating Station and Killen Station, both of which are owned by Dayton Power and Light, which paid $5,379,317 in taxes to MLSD in 2013, would not be taxed on that equipment anymore.
Instead, power companies would be taxed on “transmission and distribution property” as well as energy conversion equipment, however, a stipulation is included that may allow power companies to recover any increase in that tax by passing that along to their customers.
“It appears they would not tax the generation equipment,” said Karen Ballengee, treasurer of the Manchester Local School District. “But they would increase the taxes on transmission and distribution property. Then it’ll be considered a normal expense incurred by the electric company and then the electric company will be able to recover it and put it on everyone’s electric bill.”
The budget also states the Public Utilities Commission of Ohio will “promptly approve” any electric company who is required to pay an increase tax and that the commission will permit a full recovery of the amount of any resultant increased tax payments.
This version failed to pass the Ohio House of Representatives after all 82 voting representatives voted “nay” and a six-member House and Senate joint committee has been established to look into the budget, headed by State Rep. Ryan Smith, R-Bidwell.
According to Ballengee, these provisions will affect 20 school districts in the state. The Adams County/Ohio Valley Local School District would not be affected by this provision.
The personal property tax MLSD collects accounts for 42 percent of MLSD’s revenue base, and while the state, in theory, could make up for that with an increase in state funding, Ballengee isn’t holding her breath saying the school district is “in a state of limbo” right now.
The state allocates about $1.5 million to MLSD and gets about $2.2 million from local property taxes, but now Ballengee isn’t sure if it is going away, what, if anything, will make it up.
There is a “hold-harmless” provision within the budget that may allow for a stop-gap for the time being, but Ballengee says the definition of “hold-harmless” is up in the air.
“Hold harmless isn’t really defined,” Ballengee said. “Over the past 10 years, the average increase for tangible personal property tax revenue has been 3.85 percent. So, I’m pretty sure hold-harmless doesn’t mean they’ll get us the increases we’ve been receiving. It’s ambiguous. The law doesn’t really say one way or the other.
AJ Wagner, Ohio Department of Education board member and former auditor of Montgomery County from 1991-2000, said he fought against eliminations of taxes like what has been proposed during his tenure.
“They tried to implement the elimination of the public utility tangible property tax during the end of my tenure as county auditor,” Wagner said. “At the time I protested because of the impact it would have on schools.”
In addition to the $5.3 million DP&L paid in public utility tangible property taxes in 2013, Duke Energy paid local school districts $21.4 million, AEP paid more than $16 million and First Energy paid $13.3 million. If the provision goes through, those numbers would be zero.
A spokesperson with PUCO said, “We’ve not weighed in on that issue. We’re vaguely aware of it. It’s not something we’ve offered an opinion on.”
Press secretary for the Republican House Caucus, Brittany Warner, said the joint committee chaired by Smith is currently going over the budget line by line and has yet to get to the area of the budget concerning this provision.
“I do know that some of our members spoke this morning about the financial impact from the Senate’s amendment,” Warner said. “It’s something that is being examined. There’s a lot of differences that we are going line by line through, but the committee will meet again (Wednesday) or Thursday to have a final report.”
Ballengee said she believes the reason this provision was put into the Senate’s budget at the last minute was to prevent debate from taking place on the subject.
“I believe it was put in this late so that we could not testify against it,” Ballengee said. “This process started back in February and they’ve been hearing testimony on lots of things about how schools are funded. We’ve had the opportunity and our lobby groups have been allowed to testify on the good and the bad of what was being proposed but when this was put in at the last minute, we can’t even respond. They take no testimony once it’s at this phase.”
Ballengee doesn’t know what the impact could be to MLSD until she would know how much increase in state funding the school would get outside of tax revenue.
The Manchester Educational and Activity Center would remain open because the school has paid for that in full, but hours on the facility could be affected and the board may have to hold off on projects for their athletic fields, like the plans to move their baseball field or put turf on their football field.
“This may stop some of those additional projects,” Ballengee said. “This could have an effect on all of them.”
The Adams County commissioners deferred the question on the topic of possible rate increases to David Gifford, the county’s auditor, who is on vacation until Thursday.
Calls to American Electric Power’s media relations department could not be returned before deadline and Duke Energy referred a call seeking comment to PUCO.