If all eight petitions for territory transfers are approved next month, Bowling Green City Schools will lose all its pipeline revenue.
That is just an added consequence to the school district in addition to the expected loss of income and property taxes as residents leave for adjoining school districts.
Financial adviser David Conley, with Rockmill Financial, attended Tuesday’s online board of education meeting to provide updates from the county auditor regarding pipeline revenue changes related to the property transfers.
“The big punch in the gut is that Bowling Green would lose 100% of your pipeline revenue. The properties that are slated to be transferred to other districts include 100% of the pipeline that runs through the Bowling Green school district,” he said.
The loss of income, property and pipeline taxes totals $5.62 million, nearly twice as much as originally estimated.
Conley is still estimating a loss of $2 million in property taxes and $260,000 in income taxes.
However, with the entire length of the pipeline within the territories that may leave the district, that is an annual loss of $3.36 million, up from the $675,000 he earlier estimated.
The increase is due in part to the Rover pipeline appeal, which would have accounted for the smaller number. But with the appeal almost done and the Ohio Department of Taxation ruling in favor of school districts, the number is the full amount.
“In essence, they are obligated to pay Bowling Green schools up to $3.36 million in property taxes associated with the pipeline,” Conley said.
That total loss is a significant increase over what was previously talked about, he said. His previous total loss was around $3 million.
That equates to 8.54 mills that may be required to be paid by the remaining taxpayers to restore the lost revenue, up from the 4.50 mill previously estimated.
For a median home value of $162,900, the annual taxes may go up to $487, substantially more than the $257 originally estimated.
Board member Norm Geer wanted to know what moved the pipeline loss to 100%.
Conley said it was the last petition that went through the court process to be on the August ballot that included the remaining properties with a pipeline running through. That property, the bottom part of Milton Township, would go to Patrick Henry, Conley said.
In November, Treasurer Cathy Schuller will update any revenue losses incurred after the Aug. 4 vote. In May, she had estimated $1.8 million in pipeline money to be put into the capital improvement fund.
Conley said, assuming Rover pays, the district would be entitled to receive $3.36 million for calendar year 2020. If the petitions are successful, that money would be redirected in calendar year 2021.
Conley also pointed out the effects of what is known as the 20-mill floor.
The 20-mill floor is a fixed tax rate. The state tax structure protects taxpayers from paying more on their homes as the homes appreciate — as long as the district remains above 20 mills.
For Bowling Green residents, as their property goes up in value by 10%, the amount they pay toward the school district’s operational taxes go down by 10%, Conley said.
The reduction is in place until a school district drops to 20 mills. Once it hits 20, as values go up, taxes will go up as well.
Several of the surrounding districts are very close to that rate and that could impact taxpayers who will be forced to pay higher taxes under a different tax structure.
Bowling Green City Schools is currently at almost 23 mills.
Geer also pointed out the income tax in several of the surrounding districts is more.
Superintendent Francis Scruci commended the school board for not following suggestions to use the pipeline money to build new schools.
“Fortunately, the board didn’t go in that direction or we would have really been in a mess if this goes through,” he said.
Parents who currently benefit from EdChoice scholarships also must be careful if the territory in which they live transfers.
If a Bowling Green City Schools resident using the scholarship moves to another school district, they will lose that scholarship money, Conley said. The scholarship is attached to a building that has been designated EdChoice; none of the surrounding districts have a building that is eligible.
“That means those residents – those children that are receiving EdChoice scholarship – will lose those scholarships,” he said.
Currently there are 46 families that benefit from EdChoice. The scholarships pay parents of children in grades K-8 $4,650 a year; and children in grades 9-12 $6,000 per year.
Scruci said 18 kindergarten families took the scholarship last year. If they remain part of the district and use the scholarship until their child graduates, that is $65,850, he said. He initially said $84,000 but later corrected the amount.
“That’s something those residents need to be aware of,” he said. “That’s a big chunk of change.”
“The property transfers impact everyone,” Conley said.
Nowhere else can a minority number of voters impact the majority, he said, adding that 513 voters could impact 10,000.
Only the registered voters in the territories who filed will have the option of voting on their respective transfer issue. Other residents affected by the move – including residents in the school district losing the territory and residents in the school district gaining the territory – do not have a say in the decision.
The eight approved petitions for annexation are Center Township to Elmwood; Jackson Township to McComb; Liberty Township to Elmwood; Milton Township to Patrick Henry (two); Plain Township to Otsego; Richfield Township to Patrick Henry in Henry County; and Center Township to Eastwood.
Conley said that is why he recommended a law change that, for 10 years, would continue to tax the territories that are leaving.
“You can’t just lose $5.6 million and pretend it never happened,” he said.
Ten years give the district time to
shrink its operating structure.
“This situation is unusual, it’s incredibly impactful in a negative way to the Bowling Green schools, to the remaining taxpayers and to the children,” he said.
“It’s important for the board and the rest of the community to understand that with the property transfers, the revenues that are associated with those properties – both income taxes and property taxes that are currently coming to the Bowling Green school district – would be shifted
to go to one of the five receiving school districts,” he said.