Taxpayers cheated by Indian Hill School District’s “Inside Millage Move” by raising taxes without public vote
This decision rebuffs Ohio school districts’ efforts to take advantage of a legal loophole created in 1998, which appeared to allow such tax increases in limited circumstances, though not to collect tax revenue that the districts do not need or use, as they run considerable budget surpluses and stockpile cash reserves.
The 1851 Center for Constitutional Law asserted, on behalf of the taxpayers and homeowners of the Indian Hill School District, that the District violated state law in 2009 when it raised property taxes by 1.25 mills ($400 per year, on average, for Indian Hill households), without voter permission, while already, without the tax increase, running multi-million dollar budget surpluses and maintaining a free and clear cash reserve of over $25 million.
The case centered around Ohio Revised Code Section 5705.341, which provides “no tax rate shall be levied above that necessary to produce the revenue needed by the taxing district or political subdivision for the ensuing fiscal year,” and “Nothing . . . shall permit . . . the levying of any rate of taxation . . . unless such rate of taxation for the ensuing fiscal year is clearly required by a budget of the taxing district.”
The case also drew upon Section 2, Article XII of the Ohio Constitution, which forbids property taxation “in excess of one per cent of its true value in money for all state and local purposes,” except by approval of the voters.
Indian Hill raised taxes despite carrying an unencumbered surplus of over $25 million in its bank account at the time.
The Court’s decision, authored by Justice O’Neill, explains “far from defraying current operating expenses, the increased revenue from the outside mills padded the district’s surplus. To permit a tax increase that performs no function other than to increase the amount of budget surplus would deprive the ‘clearly required’ standard of all meaning.”
“The Court’s decision means that already-wealthy Ohio school districts cannot continue to use public budgeting gimmicks to raise property taxes without a vote. This decision protects taxpayers here and also in many other districts,” said Maurice Thompson, Executive Director of the 1851 Center for Constitutional Law.
“While running exorbitant budget surpluses and maintaining a thick bank account may echo fiscal responsibility to some, this means the school district is taking from taxpayers money that it does not need – – over-taxing them rather than allowing them to keep and use their own money for their families’ betterment.”
The 1851 Center will now litigate to recoup for the taxpayers the roughly six million dollars that Indian Hill School District wrongfully charged them between 2010 and 2014.
The Court’s Decision can be found HERE.
Oral Arguments from the case can be viewed HERE.
1851 Center for Constitutional Law is a non-profit, non-partisan legal center dedicated to protecting the constitutional rights of Ohioans from government abuse. The 1851 Center litigates constitutional issues related to property rights, voting rights, regulation, taxation, and search and seizures.