It's a little tricky to figure out… and often comes as a surprise, or at least a mystery, to some homeowners. Their home is worth less but their taxes don’t go down.
Who designed that system? Well, the Ohio legislature did back in 1976 …a time when home values and taxes were rising, sometimes rapidly. Homeowners needed a hedge against tax inflation but local governments needed a stable revenue stream. House Bill 920 was seen as the solution.
As Cuyahoga County’s Fiscal Officer, Wade Steen, explains, "HB 920 went into place which kinda capped the revenue that a local government would get."
The flip side of that deal is that when home values drop, taxes don’t. Steen says in 1976, no one really expected that there would be such a dramatic drop in home values as the county and nation have seen in recent years. Nor did anyone imagine the slew of home foreclosures and shuttered commercial properties in the last three years. That translates into no taxes being paid on a lot of property. So many municipalities find themselves in a bind.
"You can't collect anymore," says Steen. "There's not enough property to tax, you just can't get as much revenue now, so that's where you're going to see a real reduction in collections."
Some local governments around the region are looking to voters to approve additional levies to maintain equilibrium while some homeowners have begun the process of contesting their new home values.