Ohio sales tax proposal could affect amusement park ticket prices

Posted Tuesday, February 19, 2013 9:28 AM | Contributed by Mike Gallagher

Ohio Gov. John Kasich wants to cut the state’s overall sales-tax rate while also putting the lower 5 percent sales tax on a long list of new items that include circuses, arcade games and carnival rides.

Read more from The Akron Beacon Journal.

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Tuesday, February 19, 2013 7:07 PM

I'm confused by what exactly this bill does (I initially thought it was reducing taxes but then I thought it was raising them...), but my opinion is: most other stuff is taxed, why wouldn't theme park tickets be?

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Tuesday, February 19, 2013 8:18 PM

It's the old lower the tax rate but tax everything plan. Spreading the joy such as it is.

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Wednesday, February 20, 2013 3:11 AM

What Dutchman said. They want to lower the overall sales tax, but subject more things to being taxed. Which probably still results in a net loss for the state, which is stupid when they're already strapped for tax. Perhaps instead of messing with the sales tax, the governor could simply leave it alone, and then not give absurd tax breaks to his wealthy friends?

Last edited by CP Chris, Wednesday, February 20, 2013 3:11 AM
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Wednesday, February 20, 2013 8:28 AM

Ohio's local and state income taxes are already ridiculous. Not a fan of the tax situation in Ohio.

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Wednesday, February 20, 2013 10:47 AM

Property taxes, too. It puts school districts in a really difficult position.

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Wednesday, February 20, 2013 11:28 AM

I don't think they're fundamentally a bad idea, I just think they do it wrong in Ohio.

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Wednesday, February 20, 2013 1:00 PM

The whole system of using levies (and how they work) to fund schools is so weird to me. It doesn't make sense.

How many states do it the way Ohio does?

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Wednesday, February 20, 2013 2:41 PM

Or did they every satisfy the courts that indicated the system was unconstitutional?

In Washington, I believe most of the funding came from the state, augmented by local property tax primarily for building and maintenance. That was interesting to me because there is no state or local income tax. Sales tax is way higher, as is the cost of a house in general, but the millage on property tax is significantly lower. And the weird thing is people didn't seem to complain there. Of course, they're mostly tree-hugging, gay marriage loving, legal pot promoting socialists, too, if you believe what you hear. :)

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Wednesday, February 20, 2013 2:49 PM

My thing isn't that it comes from property taxes (that makes sense to me), it's that we use levies to give them that money by establishing an amount and splitting the tax among residents with the amount paid going down as population grows. And the schools have to come back and ask for more.

It's such a bizarre system.

I don't understand why a baseline property tax isn't established that everyone pays. As a community grows, the additional funding to handle the growth comes from the growth itself. It's self-sustaining.

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Wednesday, February 20, 2013 2:54 PM

Jeff said:
Of course, they're mostly tree-hugging, gay marriage loving, legal pot promoting socialists, too, if you believe what you hear. :)

I thought that was P-town (Portland)... ;~)

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Wednesday, February 20, 2013 3:46 PM

Ohio's may be bizarre, but at least the voters get a say. Here in Wisconsin, the school board sets a rate annually, and the public really doesn't get a say on what level is to be expected. Same thing (in general) happened in MI.

As for this tax, I wonder what impact this would have on the parks? I know many municipalities already have "entertainment taxes" or similar charged against theaters, etc. Would the parks be able to deal with a 5% increase and not have problems with attendance?

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Wednesday, February 20, 2013 4:13 PM

Walt S said:

Ohio's may be bizarre, but at least the voters get a say.

That seems to be the pro-levy argument (and the idea behind implementing such a system). I think it just mucks things up.

In the case of what you're talking in Wisconsin, are there no checks or limits in place as to how much the increases can be?

Even if there isn't, I still think it makes more sense than the levies.

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Wednesday, February 20, 2013 4:51 PM

In WI, the only check is that districts can have a "maximum" levy that they assess against the homeowners. Thus, as a voter, my only control is who I elect to the school board. If the board wants to issue bonds, they can. Yep, they need to ask for public input, and that can end up with some acrimonious board meetings, but beyond that, there really isn't a binding say from the voters. (Except for a recall, which opens a whole additional can of worms...)

Originally being from Ohio, the levy system gave voters a lot of input into how the schools were going to run. In many cases, the school board might put a levy up to fund new school construction. Local voters then could voice their opinion either for or against the improvements spelled out in the levy. I can think of many times in which districts decided to either do things or not do things based on the outcome of a levy. Ohio's concept of never allowing the levy to collect more money than was promised is strange in its effects, I'll admit that.

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Wednesday, February 20, 2013 5:38 PM

Gonch: I haven't worked for an Ohio school district in 13 years, but the way I recall it, both operating levies and bond issues, are intended to prevent the opposite problem, that being unintended underfunding. So the millage is set and the burden is spread across whatever the pooled property value is. If they counted on a million dollars, they'll get a million dollars regardless of a booming or depressed housing market.

There are two side benefits to this. The first is that they never have to face voters with the issue of, "Yay, we have more money than we need, but we're not giving it back!" The second is that in growing communities, the millage steadily decreases as the tax burden is distributed.

The bigger problem in Ohio, especially in growing, slightly affluent communities, is that voters are too stupid to understand or care to understand that there is a difference between bond issues to make permanent capital expenditures, and levies that are intended for general operating costs. There are reasons and consequences that are different for passing or not passing both flavors. But this is the state where moron voters wrote the address of casinos into the state constitution and banned same-sex marriage, so I can't say I'm surprised.

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Wednesday, February 20, 2013 5:57 PM

Jeff said:

The second is that in growing communities, the millage steadily decreases as the tax burden is distributed.

I don't see this as a benefit. In fact, it's my main problem with the system.

If the schools pass a levy that raises X number of dollars, that number never increases as the population grows. That makes ZERO sense.

When the population grows, more money is needed to handle the growth. The schools then have to get another levy to pass. Whereas if a set tax rate was set more money would be taken in by the nature of the growth itself.

It also works in the other direction - if things get smaller, less money is taken and you're not stuck with that "We have more money than we need" thing you mentioned.

I'm not going to pretend to understand it all, but we're closing in on our 7th year here.

I've never lived somewhere, nor do I know people in other states (anecdotal, but still) who pay as much as we do in taxes while also paying for school supplies and pay-to-play fees - complete nickle and diming - while still trying to push additional operating levies through.

Our district hasn't been able to get an operating levy approaved for 9 years now. The cuts are so ridiculous that the district doesn't even bus kids in middle or high school anymore.

The thing is, I don't necessarily disagree with the levies not being passed. I've never felt like I get so little in return for so much of my money. It's created a sort of standoff, with the community seemingly expecting the district to be more efficient and the district unable to do anything other than hold out their hands and ask, "More?"

The whole thing could be solved by determining a base rate that would cover the cost of schooling our kids. Include some checks so that tax hikes are kept in line (inflation, documented costs, whatever). Have everyone pay this. As a community grows or shrinks, the finances adjust accordingly and there's never a chance for something like we're dealing with right now.

I'd be really interested in how the different states fund their schools at the local level. Searching doesn't turn up too much for me, so either I suck at finding it or it's not easy to find. I never really paid much attention to it before we moved here, but this levy thing seems like a completely nonsensical system built around the idea of good intentions.

Last edited by Lord Gonchar, Wednesday, February 20, 2013 5:58 PM
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Wednesday, February 20, 2013 6:15 PM

Part of the problem is that the cost is not uniform with fluctuations in development and population. Oddly, it suffers from a reverse economy of scale, in that denser, more urban education costs more per student. But the real estate problem is the bigger one. You build a building that lasts 40 years, and hopefully not that often. But when you need it, you need it. Conversely, you may be left with vacant property if people flee your district due to poverty or nuclear spill.

I'm just saying the math isn't convenient.

I liked Washington because it was largely state funding, and you need a super-majority (60%) locally to raise a local bond issue. That made sense to me, as it addresses the operating cost at the state level, and the capital needs to the community that will live with it the longest.

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Wednesday, February 20, 2013 10:18 PM

Effective millage is the millage rate that is actually levied on property. Once a levy is voted in, a school district cannot collect any additional money due to valuation increases from reappraisal or triennial update on that levy. As property values increase, the millage rate on that voted levy is decreased so that the levy generates the same amount of money. This reduced millage rate is referred to as effective millage. The only way school districts get any additional money on voted millage is from new construction or from having their millage reduced to the minimum amount allowed by law (20 mill floor).

http://www.reyn.org/GlossaryofTerms.aspx

So there is a floor, and if your district is at that floor tax revenue goes up as property values go up. New construction also increases the tax.

The problem is that most districts find the floor too low, have voted a higher rate, and are left with only the increase due to new construction. Of course this ignores the school district income tax which some districts have--it's a flat percentage so does go up as incomes go up (or down).

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Thursday, February 21, 2013 5:50 AM

Granted I've never lived outside of Ohio, but I find the state income tax and sales tax levels to be pretty acceptable. Maybe even a little low in the case of the income tax, as I'd be willing to pay a little more if it meant preserving some of the services they have/want to cut. Property taxes where I live are a bit high, but that's mostly offset by the lack of a local income tax.

Am I the only one who believes a failure of a school levy should trigger the automatic termination of the superintendent and entire school board? If they get to the point where they need a levy to continue operations as is, and the public doesn't trust them enough to give them that increase, haven't they failed their jobs in a pretty spectacular fashion?

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Thursday, February 21, 2013 11:32 AM

When you pay zero state and local income tax, that means like five grand on 100k of household income. I'd rather pay zero.

Firing the super and the school board demonstrates how little you understand the funding process. That was my point about how details matter.

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