In the State of Ohio there is a basic 'floor' of up to TEN mils of property tax that can be imposed by the County Commissioners WITHOUT a vote of the people. Most counties, including Montgomery, impose the full ten mils. This tax is called 'inside millage' and can be used for any legal purpose deemed necessary by the County Commission.

Any property taxes in EXCESS of the inside millage must be voted upon by the registered voters residing in the area to be taxed. So, if the tax were proposed to be enacted in a village, the registered voters in that village would be voting on it. Likewise, in the case of a school district, the registered voters residing within that district are entitled to vote.

All property tax levies must be for a specific period of time as established by the Ohio Legislature. This period of time is usually up to 8 years, but can be longer in certain circumstances.

When a property tax levy is first proposed, it must be for a certain number of dollars. That amount is divided into the assessed valuation of all taxable property located within the area to be taxes. For example, if Northmont Schools wanted $1,000,000 per year for five years in new taxes that amount would be divided into the total of taxable property within the district. The result would be a cost of a certain number of dollars and cents per thousand dollars of taxable property valuation. In our example, this would be about 2 mils. That is, a cost of $2 per thousand would generate $1,000,000 each year.

Thus a property owner with a house valued at $100,000 would pay an additional $200 per year in higher property taxes. All property taxes are imposed a year in arrears in two semi-annual billings, one in February and one in July. That is taxes for 2002 are collected in 2003.

During the course of a levy (in our case an imaginary five years) the property tax valuation creeps upward. This is because of reassessments, new property entering the tax rolls, and an upward inflation of the automatic adjustment of the ten mils of inside millage. At our example rate of 2 mils, the amount of money collected in the second year would be more than in the first and creep progressively upward. However, to avoid this creeping tax increase, Ohio Law limits the amount to be collected by recalculating the millage rate in every subsequent year. Thus the effective millage rate is adjusted downward slightly to correct for the increased valuation. This correction is called the 'reduction factor'.

Valuation on taxable property is reassessed about once every three years.

Our imaginary property tax levy continues to generate $1,000,000 per year over its life with the reduction factor increasing each year. So, what started out as a 2 mil levy might be down to 1.8 mils after 3 years and 1.5 mils after 5 years. The levy is still generating the same $1,000,000 per year. It's just being spread across a higher valued tax base.

In reality our imaginary levy produces a bit MORE than $1,000,000 because the revaluation is done annually in arrears. So during any given year the collections are a bit higher until they are adjusted at the end of the year. As a result property tax levies still generate a little bit more each year.

After the term of the levy is completed, the tax expires. That is, it is removed from your property taxes and goes away. That is unless it is RENEWED, REPLACED, or a NEW TAX is added. Let's talk about each one in turn.

RENEWAL LEVY: The renewal of an existing levy merely continues the same tax amount for an additional period of time. So, for example, if you consider our original $1,000,000 levy at 2 mils ... the millage is reset to a value that would continue to produce that same $1,000,000, say about 1.5 mils, and the reduction factor for that year is reduced to zero. Because of the factors mentioned previously, a RENEWAL levy will still generate a slight increase each year over its extended term.

REPLACEMENT LEVY: The replacement of an existing levy revalues upward previously approved millage, for an additional period of time. So, for example, if you consider our original $1,000,000 levy at 2 mils ... the millage is kept constant at 2 mils and taxes shoot up to produce $1,500,000 with the reduction factor for that year is reduced to zero. Remember that 2 mils generated $1,000,000 five years ago. Today that same $1,000,000 (five years later) can be generated by only 1.5 mils. A REPLACEMENT levy imposed today in this example, would increase tax to be collected by 50% to $1,500,000. The elimination of the reduction factor (back to zero) will raise your taxes, in this case by 50%, when they had been going down. That is because new amounts to be taxed are inflated by previous property revaluations which had previously been cancelled by the reduction factor. Now they are applied in full.

NEW TAX LEVY: The imposition of a new levy raises your taxes for a certain period of time. So, for example, if you consider our original $1,000,000 levy at 2 mils (five years ago) ... it would take 1.5 mils today to generate the same $1,000,000 and 2 mils would generate $1,500,000. As valuations keep going up, it takes less millage to generate the same number of dollars.