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Tax Abatements Cost Ohio Schools at Least $125 Million
New standard requires districts to report the
impact for the first time
From Policy Matters Ohio
Property tax abatements caused 180 school
districts across Ohio to forgo $125.6 million in revenue,
according to district financial reports issued for the 2017
fiscal year.
For the first time, under a new national
accounting standard, school districts in Ohio and across the
country had to report how much revenue they forgo to tax
abatement. Policy Matters Ohio, assisted by the national
nonprofit Good Jobs First, reviewed financial statements for
464 of the state's 608 school districts to produce the
numbers in a
report
released
today.
"With $43.8 million, or a little more than a
third of the losses reported, Ohio schools could refill the
positions of 662 librarians eliminated between the 2005-2006
school year and 2016-2017," noted Zach Schiller, Policy
Matters research director and lead author of the report.
"That shows that while the forgone revenue from tax
abatement is relatively small compared to total K-12
spending, it's still quite meaningful."
Tax abatement revenue losses were
concentrated in major school districts such as Cleveland,
which reported more than $34.2 million in forgone revenue,
and Cincinnati, which reported almost $18.4 million. School
districts in the state's eight largest metropolitan areas
accounted for nearly $120 million, or the overwhelming
majority of the total.
The total of $125.6 million reported in
forgone revenue does not include significant abatements that
are not required to be reported under the new accounting
standard. Most losses from tax increment financing, which
accounts for more than half of property tax abatement in the
state, don't have to be included.
The GASB standard requires too little—and the
state auditor should insist on consistent, uniform reporting
to add clarity. "Candidates for auditor in November's
state-wide election should describe specific commitments to
strengthen tax abatement disclosure," Schiller said. Policy
Matters' recommendations for action by the auditor are
included in the report.
"Too often, school boards face the unpleasant
choice of rubber-stamping new abatements or being perceived
as opposed to economic development if they exercise their
rights and demand the best possible deal," Schiller said.
"Greater transparency alone won't end this, but it will
improve accountability."
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