Lakewood March Levy
Every time the Lakewood School System announces a new levy to appear on an upcoming ballot, numerous articles surface supporting the position that funding is necessary to "keep Lakewood City schools strong" and "continue to provide the educational excellence that residents expect." Reference the Lakewood Observer article by Christine Gordillo, Volume 16, Issue 01, page 6.
The article assures land owners the upcoming March levy will "have a minimum financial impact of less then $2.00 per $100,000 of fair market property value, with no increase in tax rate, due in part to responsible refinancing, sound financial practices and property value growth." Listed are many reasonable spending outcomes for the 3.9 mill operating and 1.0 mill permanent improvement levies, although most are not for emergency spending issues, but instead for "adding, expanding, providing, and protecting" programs. It's important to note that Treasurer/CFO Kent Zeman recently stated in a Sun News article dated August 15, 2019 that he anticipates a $2.7 million deficit in 2020, $4.6 million deficit in 2021 and $9.2 million deficit in 2023!
It's appropriate that everyone evaluate all information at hand so that they can make sound decisions at the polls. However, simply evaluating program necessity and program wishlists is only a part of this process. It is imperative we also look at tax rate mill growth, home fair market value growth, and subsequently, the growth in actual property tax dollars paid, the real out-of-pocket impact! Case in point: In my 20 years of Lakewood residency and property ownership, tax rate mills have increased 37%, home value 54%, and most importantly, annual property taxes have increased 93%. These are the true key indicators we must evaluate!
Another key metric is to evaluate where Lakewood stands educationally as compared to the schools having higher performance results, and then to evaluate our year-to-year improvememt statistics. Many of us have reviewed recent annual results published in Crain's which indicate our need for improvement, over school districts which include Hudson, Rocky River, Solon and Orange.
Suprisingly, performance is not just about adequate funding. Lakewood's property tax as a percentage of fair market property value is 2.93%, while Orange's is 2.17%, Rocky River's 2.39% and Solon's 2.45%.
At some point, the cost of education cannot continue to be funded by property taxes or by the ever changing allowance we get from the State of Ohio. Many school districts have realized this and have established supplemental funding sources. In Florida, in addition to property taxes, some districts charge a flat or percentage fees for each real estate sale transaction, whether commercial property or private home transactions. Other districts are considering a minimal income tax adder for helping fund education. This provides a much more level playing field by shifting some of the expense burden from property owners to all residents. This would be especially advantageous in Lakewood, where at present everyone can vote on tax issues, but 45% of residents do not own, but instead rent their residences.
Considering the history of annual growth in our property taxes, the taxes we pay based on market value vs. other major U.S. cities, and more importantly, the forthcoming deficit spending projections not yet funded by present millage, our elected school board officials must focus on alternative funding options.
Robert Bade is Managing Partner-Edgewater Financial Services, Lakewood, Ohio. Retired VP Finance & CFO AGA/Linde Healthcare Region, North America.
Managing Partner-Edgewater Financial Services Lakewood Ohio Retired VP Finance & CFO AGA/Linde Healthcare Region North America