Mason Schools Continue the Fight to Reverse State Phase Out of TPP Funding

Mason Schools Continue the Fight to Reverse State Phase Out of TPP Funding
Posted on 06/07/2017

Business Advisory TeamToday, members of the Mason City Schools Business Advisory Team called on the Ohio Senate to reverse the onerous impact of a rapid phase out of Tangible Personal Property tax funding from the state.

"As a businessman creating jobs and contributing to our local community and our state, I am deeply concerned about the state phasing out TPP reimbursement to districts like Mason. If our schools are forced to go back on the ballot to recoup further TPP funding cuts, our businesses will in effect be double taxed – first with the CAT increase and then again with a local ballot issue. The result would be the exact opposite of the original goal of the 2005 tax reform. It is time to come up with a permanent solution to ensure that school districts like Mason finally get a permanent solution to a problem stemming from tax reform which was needed to make Ohio more competitive. My firm is now paying a sizable amount in the new CAT tax that is generating even more revenue than the previous TPP tax.  It is a mistake for Columbus to punish the very communities that helped turn Ohio around.  I strongly urge state lawmakers to not harm this momentum and keep their commitment to TPP reimbursement for school districts like Mason," said Steve Osborne, CEO of Top Gun Sales Performance and Business Advisory Team member.

These efforts to help state lawmakers understand the negative impact the loss of these once-local revenues will have on students, schools, local taxpayers and communities are not new. Mason City Schools and other high TPP loss districts have been working together through the Coalition for Fiscal Fairness in Ohio (CFFO) for more than a decade to retain the critical revenues. This spring, CFFO member districts testified at the Statehouse before the House Finance Committee to voice concerns about the continued phase out. In addition to outlining the scope and negative consequences of the TPP phase out funding to lawmakers, CFFO districts offered reasonable and commonsense solutions that could be enacted to stem the devastating losses for schools most impacted by the phase out.

“We emphasized to the legislators the need to reassess the dire impact current law regarding the TPP phase out will have on our communities,” explains Ronda Johnson, Mason City Schools Treasurer. “Our testimony to the House Finance Committee members provided important reminders and context about the significant losses the phase out creates and the impending increased tax exposure to our residents and businesses.”

Mason stands to lose over $1 million a year - in addition to the $7 million annual loss since 2011

“Our district has made significant expenditure cuts to deal with TPP funding losses already enacted. These include reductions in staffing, closing a school, as well as pay freezes,” she said. “We respectfully ask the legislators not to make the mistake of believing that the TPP loss districts are ‘rich’ and can easily absorb these crushing losses. We are talking about annual losses in the millions of dollars. Our highly impacted districts will not be able to simply make sufficient reductions or pass additional millage through levies to maintain the integrity and quality of their educational programs,” explained Ronda Johnson, Mason City Schools Treasurer.

The school districts like Mason that still receive TPP reimbursement funding are in communities that are economic drivers in Ohio and are home to large business communities, which is why they originally received the locally levied Tangible Personal Property taxes on business equipment and inventory.

The TPP tax was eliminated in 2005 and replaced with a broader-based Commercial Activities Tax (CAT) as a tax reform effort aimed at boosting the competitiveness of Ohio’s business climate. The CAT now generates on average $1.6 billion for the state of Ohio annually. Past legislative advocacy yielded changes in law that somewhat blunted the impact of the phase out to date, but those temporary measures did not solve the TPP problem for schools and students. Current law would totally eliminate these dollars, shifting the entire burden for recouping these lost revenues to the local communities.

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