Property Tax

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A property tax is a tax on privately-owned property. All types of personal property can be taxed, whether it be a car, tools, livestock, land, or any other type of property. In the case of Ohio, the major type of property taxed is real estate.

Ohio’s first constitution, the Ohio Constitution of 1803, gave the state government the power to tax the state’s citizens. As a general rule, Ohio state officials avoided implementing property or income taxes. However, in 1825, the Ohio legislature did implement a tax on real estate to help support public schools in the state. At this time, the state government financed public education with a half-mil property tax.

Since the creation of public schools in 1825, Ohioans have debated how best to fund public education in the state. Property taxes have been the major means to finance public schools, but many people claim that such a system is not fair to all students in Ohio. Not only does the State of Ohio utilize property taxes, among other means, to finance schools, but local school boards are also allowed to implement property taxes, with voter approval, to supplement funds from the state government. In 1991, more than five hundred school districts in Ohio filed suit in the Perry County courts against the state government for failing to provide them with adequate funding to educate the state’s students. The case was known as DeRolph v. State of Ohio and was named for Nathan DeRolph, a student in the Sheridan Public School System in 1991. The districts claimed that the state government failed to provide an “efficient” educational system, as dictated by the Ohio Constitution of 1851, by relying so heavily upon local property taxes to fund schools. The districts contended that school systems in areas with higher property values could much more easily meet the needs of and provide more opportunities for their students, while students in poorer areas suffered.

In 1994, Perry County Court Judge Linton Lewis, Jr., ruled that “public education is a fundamental right in the state of Ohio” and that the state legislature had to provide a better and more equitable means of financing education. Lewis’ decision overturned an earlier Ohio Supreme Court ruling from 1979.

The state government appealed the decision to the Fifth District Court of Appeals, which overturned Lewis’ decision, stating that he did not have the power to overturn an Ohio Supreme Court decision. The school districts then filed an appeal with the Ohio Supreme Court, which agreed to consider the case in 1996. The next year, the court ruled that Ohio’s current way of funding schools violated the Ohio Constitution. The justices ordered that the state government “enact a constitutional school-funding system.”

Unfortunately for state officials, the Ohio Supreme Court provided no real guidance on how to create a constitutional school-funding program. The legislature, instead of implementing an entire overhaul of the system, simply authorized more state funds to schools. In 2000, 2001, and 2002, the Ohio Supreme Court ruled again that the school-funding process in Ohio remained unconstitutional, but the court eventually determined that the Ohio government had made a good-faith effort to change public school funding, and the justices overturned their earlier rulings. Critics of school funding in Ohio remain active in calling for a complete overhaul of the system and an end to the heavy reliance upon property taxes.

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