Budget Commission Special Meeting – October 24, 2023
Meeting Details: The Geauga County Budget Commission met in Special Session on Tuesday, October 24, 2023 at 9:30 am at the County Administration Building, 12611 Ravenwood Drive, Room B303, Chardon, Ohio. This meeting was in person only with no virtual attendance option. Observer Note: This Budget Commission meeting occurred during the Board of County Commissioners (BOCC) Meeting. The BOCC meeting continued both before and after the Budget Commission meeting. Reviewer Note: See the Observer Corps Report for the Oct 24, 2023 BOCC meeting for information on what transpired during the non-Budget Commission items on the BOCC meeting agenda. The LWV Observer Report on this BOCC meeting was not posted yet on the LWV Geauga site when this Budget Commission Report was published, but it is anticipated that the BOCC Report will be posted in the very near future.
Meeting Attendance: Prosecutor Jim Flaiz, Treasurer Chris Hitchcock, and Auditor Chuck Walder.
Staff Attendance: Chief Deputy Auditor Ron Leyde and Fiscal Office Manager Pam McMahan.
County/Township Staff: County Commissioners James Dvorak, Timothy Lennon, and Ralph Spidalieri, Commissioners' Clerk Christine Blair, County Administrator Gerald Morgan, Assistant County Administrator Linda Burhenne, County Budget and Finance Manager Adrian Gorton, County Job and Family Services (JFS) Director Craig Swenson, and County JFS Financial Administrator Alyssa Steinhoff.
Other County Staff and Others in Attendance: Geauga Public Health Board President Carolyn Brakey, Sheriff Scott Hildenbrand, Chief Deputy Thomas Rowan, Kathy Johnson of Chardon Township, LWV Geauga Observers Gail Roussey, Sarah McGlone, and Candy VanDercar, and Reporters from the Geauga Maple Leaf and Chagrin Valley Times.
The meeting was called to order at 9:49 am.
Observer Note: The property revaluation (“reval”) and its effect on Geauga taxpayers was discussed at length at both the October 2 Budget Commission meeting and the October 16 Budget Commission meeting. The stated purpose of this Budget Commission Special Meeting was to discuss the 2023 Revaluation Inside Millage Increase with the Geauga County Board of Commissioners. This discussion is summarized below.
Auditor Walder began the meeting by reviewing why the Budget Commissioners wanted to meet with the Board of County Commissioners (BOCC). He noted that, at his BOCC Departmental Budget Hearing in September, the County Commissioners asked him what could be done to offset the increase in inside millage taxes that Geauga citizens would be facing due to the approximately 30% average increase in home valuations effective January 1, 2024. The Budget Commission has been examining potential solutions as requested by the BOCC, and the purpose of their appearance at this meeting was to present the County Commissioners with their recommendations on how best to ease the financial burden on Geauga taxpayers as a result of the inside millage increase. Mr. Walder disclosed that potential solutions to fix the tax burden caused by the direct correlation between inside millage and property valuation are being considered at the Statehouse in Columbus, but he stated that solutions from the State are likely to be long-term and unlikely to take effect before the end of the year. He went on to say that “short-term, the ball is in our court.” Observer Note: More detailed information on average property valuation increases by specific locality can be found on the County Auditor’s website. This document also explains how inside millage works, how inside millage is affected by the recently completed property revaluation, and the expected tax dollar windfall County entities that receive inside millage will receive as a result of the reval. Mr. Walder provided copies of the document at this link to the County Commissioners as well as to members of the public attending the meeting.
Mr. Walder explained that one solution that the County Commissioners could implement would be to reduce their collection of the County’s share of inside millage. He said that nearly all of Geauga County is at the 10Mill inside millage cap, with 25% going to the County, 30% going to local government entities, and 45% going to school districts. Prosecutor Jim Flaiz stated that the County forgoing collection of its 25% of inside millage is a suboptimal resolution to the issue because other entities that are entitled to inside millage would then be able to claim the relinquished inside millage. He noted that the Budget Commission has a role in determining if the entity claiming the available inside millage has a need for that much money, but, if that entity can demonstrate that they have need of the additional tax dollars, the Budget Commission is “powerless” to stop them. Mr. Flaiz warned that there is an “inherent risk” that any inside millage given up by the County would be gone, potentially forever, once it is claimed by another entity. Therefore, the Budget Commission does not recommend this solution.
Treasurer Chris Hitchcock observed that the current property revaluation increase is the largest he’s ever seen and represents “a 9.6 million dollar tax increase without a single person voting for it. That is inherently wrong.” He urged the County Commissioners “to show continued leadership by taking this unvoted increase off the table, and doing it appropriately and justly, to show all of the other taxing entities that there is daylight at the end of the tunnel.” Mr. Hitchcock stressed that the BOCC would need to act quickly- by approximately November 15- to implement a solution, as after that point tax bills going out in January 2024 would already be in the preparation process and therefore unable to be changed. He emphasized that this is the first time that the Budget Commission has appeared before the County Commissioners as a group with all members attending to make a presentation, and that their appearance at this BOCC meeting is an indication of the “singular importance” of this matter.
At this point, Commissioner Spidalieri asked the Budget Commissioners to lay out their plan. Mr. Walder explained that there are two other potential solutions to the problem not yet discussed. One would be a reduction in County sales tax. However, he noted that many individuals paying Geauga County sales tax do not live here, so a County sales tax reduction would have a muted mitigation effect for Geauga County residents. Hence, this option was not preferred by the Budget Commissioners. The solution they did recommend was to give 85-90% of the County’s $2.4 million inside millage windfall to entities under the County Commissioners’ authority that have levies in effect, leaving a 10-15% buffer in place to ensure that the County does not end up receiving less tax money than before any changes were made. So, 85-90% of the County’s $2.4 million inside millage windfall would be distributed to these entities. The levy collection of these entities would then be suspended or reduced (that is, not collected) by an amount equal to the amount that the County would contribute to them. The net result would be a decrease in total tax dollars paid by Geauga citizens.
Mr. Walder went on to state that there are two entities under the authority of the BOCC that have current levies on the books affecting every Geauga property owner: Job and Family Services (JFS) and the Department on Aging. He explained that the Budget Commission is recommending completely suppressing collection on JFS’ 0.5Mill non-qualified levy (valued at approximately $1.6 million) and reducing collection of JFS’ 0.7Mill qualified levy to 0.52Mills (saving taxpayers about $600,000); these funds would be replaced as needed via a general fund transfer from BOCC made possible by the County’s $2.4 million inside millage windfall. The result would be no change in the funding of JFS, though Mr. Flaiz noted that JFS has a cash carryover amount of approximately $12 million and therefore may not need the full amount that is suppressed/reduced returned to them. Mr. Walder stated that suppressing the non-qualified JFS levy is most advantageous to Geauga taxpayers because they are the ones fully funding it, so they would get 100% of the financial benefit of collection suspension. Qualified levies have 12.5% of their funding provided by the State of Ohio, meaning Geauga taxpayers would have only 87.5% of the levy collection amount returned to them. He further explained that it was simpler from a paperwork perspective to only draw down levy collection from a single entity, so the Budget Commission recommended not reducing the Department of Aging’s levy at this time.
Mr. Spidalieri asked how the inside millage increase affects levies on the November ballot. Mr. Walder explained that most are renewal levies that are unaffected by the reval due to the anti-inflationary measures delineated in HB 920. However, new and replacement levies are affected by the increased property values, though Mr. Walder noted that the HB 920 reduction factor would be used to ensure that new and replacement levies collect only the amount they claimed they would on the ballot.
Commissioner Lennon stated that he was in favor of the Budget Commission’s proposed solution and asked for confirmation that in effect it would be a 25% reduction of the overall increase in inside millage. Reviewer Note: Geauga County is still getting their 25% of inside millage, but due to the suppression of the JFS levies, the overall increase that taxpayers will experience will be reduced by 25%. Mr. Walder affirmed this, and went on to explain that if all inside millage beneficiaries implemented a similar solution, there would be no inside millage tax increase at all. Mr. Lennon gave his opinion that many of these beneficiaries do not need the inside millage windfall but stated he was worried about the school districts being unwilling to give up their windfall. He voiced support for the BOCC sending a letter to the school districts encouraging them to implement a solution like the one Budget Commission suggested at this meeting to corroborate the letter the Budget Commission has already sent them to this effect.
Mr. Spidalieri asked if the schools have reached out to the Budget Commissioners about the inside millage windfall, and Mr. Walder replied that they have not, though the school districts have all received the Budget Commission’s letter and he is now going “door to door” to communicate with the school districts himself. Mr. Walder said that “schools are trying to minimize this for a lot of reasons,” including the unconstitutional nature of school funding and the schools’ struggle to figure out how to fund themselves. Mr. Walder expounded that the schools are relying on Ohio HB 187 to fix the inside millage problem. Observer Note: At publication, HB 187 had passed the House but had not yet been voted upon by the Senate. Mr. Walder said that HB 187 would require going back and revaluing all county properties for each of the last three years and then averaging those three values. In his opinion, that would not change the revaluation increases much since housing prices have been high the whole time; Mr. Flaiz noted a three-year average could actually make the revaluation increases even greater. Mr. Walder opined that HB 187 is a “knee-jerk reaction, it’s not a good solution,” and he said that he has it “... on pretty good authority from the Senate side that the Senate is not really interested in a knee-jerk solution. They want a long-term solution.” He went on to say that “I think that the right solution would be to take inside millage and roll it into HB 920. That’s the long-term solution, which means that people would have a vote any time their taxes go up.” Mr. Walder expressed the opinion that getting school districts on board with the Budget Commission’s solution will be the “hardest sell,” but he anticipates getting better buy-in from local government entities. Mr. Lennon noted that some school districts have healthy carryovers. Mr. Flaiz said that will be examined at the School Districts Budget Hearings in 2024, along with whether or not the school districts have demonstrated need for the funds provided by the inside millage windfall. However, any action taken by the Budget Commission to reduce taxpayer burden at the 2024 School Districts Budget Hearings would not take effect until 2025 and could be appealed by the school districts.
Commissioner Lennon asked if there would be any negative effect on JFS or Aging if the BOCC reduces and/or suppresses their levies in accordance with the Budget Commission’s plan. Mr. Walder replied that the levies of these entities will not be eliminated, and their suppression/reduction would be evaluated from year to year with changes being made if necessary.
Prosecutor Flaiz pointed out that the Budget Commission has drawn down levy collection in the past for entities that haven’t demonstrated need for the amount of funding they were receiving. He stated that among the Budget Commissioners, “it’s always been our view that when people do it (reduce/suppress levy collection) voluntarily and we’re not forcing them to do it, you’re building trust with taxpayers.” Mr. Flaiz went on to voice the opinion that “If you build that trust with taxpayers, I actually think it will have a positive effect on levies going forward.”
Mr. Spidalieri asked if there was any way to give people a credit on their tax bills as a potential solution. Mr. Hitchcock stated that would have to be taken to the Tax Equalization Office, which he called a “giant bureaucracy” that would not be able to make that type of change in time to help Geauga taxpayers. Mr. Flaiz said that as long as the BOCC passed a Resolution enacting the Budget Commission’s proposed plan before November 15, there would be enough time to make the necessary tax collection adjustments. Mr. Lennon proposed moving forward immediately with preparing this Resolution for the BOCC to vote on so the word can start getting out for other taxing authorities to follow suit. Mr. Flaiz agreed to draft the Resolution and also asked for and received confirmation that the County Commissioners will send a letter to the school districts advocating that they implement a similar solution.
Commissioner Dvorak stated that the Budget Commissioners’ plan is “exactly what we were looking for” and commended them for it. He said that Geauga County will be “trendsetters in the State of Ohio and other counties will follow suit rapidly if they really care about their taxpayers” by implementing this plan.
Auditor Walder assured the BOCC that if the Statehouse is somehow able to craft a solution by mid-November, the Budget Commission’s plan can be revisited and then adjustments can be made as needed. Regarding HB 187, Mr. Walder said that “people are hanging their hats on it, particularly schools,” and noted that numbers may need to be adjusted should this bill pass. Mr. Flaiz added “I just don’t see how it’s possible (that HB 187 would pass)… it’d have to go through as an emergency, otherwise it takes 90 days to take effect and it mandates him (the Auditor) doing the reval two more times of the three years. How is that going to be accomplished by January 1st?” Mr. Lennon responded “It’s impossible,” and Mr. Flaiz agreed that it was indeed impossible.
Mr. Lennon addressed JFS Director Craig Swenson directly to affirm the BOCC’s support for JFS and promised that JFS will have the funds they need to operate. Mr. Flaiz stated that he planned to draft the Resolution to suppress collection on JFS’ 0.5Mill levy and reduce collection on JFS’ 0.7Mill levy, but noted that adjustments can be made if necessary, particularly if County Budget and Finance Manager Adrian Gorton thinks that they are needed.
Mr. Spidalieri said that the County has a large surplus that is continuing to grow each year. He asked the Budget Commissioners if there was a legal option to establish a cap past which any more tax revenue would be returned to Geauga taxpayers. Mr. Hitchcock replied that the BOCC can return monies to taxpayers by pre-funding levies that are already on the books, which would reduce or even eliminate tax collection on those levies. Mr. Flaiz mentioned the Undivided Government Fund formula could be altered, with some or all of the County’s portion being changed to go to the local government entities. He indicated that the County’s biggest impact can be made by drawing down collection of County-wide levies for entities that the BOCC has control over, and then the BOCC can fund those entities’ expenses out of their general fund. This is the approach taken by the Budget Commission’s proposed plan. Mr. Walder also said that the County can suppress or reduce the amount of rent collected from County entities for their space in the County Office Building, theoretically saving taxpayer dollars by preventing those entities from asking for larger levies to pay for that expense. He noted this had been the case with Geauga Public Health. Mr. Flaiz observed that the County built the new office building without raising taxes at all, which is almost unheard of and is an important tax savings for Geauga residents.
Treasurer Hitchcock said that “I do believe, without this leadership (the BOCC ameliorating the inside millage increase), no levy would pass in the County for the next three years. Imagine the impact that would have.” Mr. Lennon agreed with this assessment. Mr. Hitchcock noted that things would be revisited during Budget Hearings next year, which start with School Districts Budget Hearings in the spring. Mr. Lennon said that some schools have large carryovers, which Mr. Flaiz confirmed. Mr. Walder indicated that the Budget Commission can reduce the revenue of school districts at their Budget Hearings, but noted that the schools have appellate rights. Mr. Spidalieri requested that a list of the school district carryover amounts be provided to the BOCC in order to perhaps create a fact sheet that would be available to the public; Mr. Walder agreed to have Deputy County Auditor Ron Leyde create this list and send it to the BOCC. Observer Note: A copy of this list was emailed to this observer later in the day on 10/24/23. The unencumbered cash balances of Geauga County school districts as of 7/1/23 are provided below:
School District Cash Balance as of 7/1/23
Berkshire LSD $6,757,623.73
Cardinal LSD $5,376,296.17
Chardon LSD $29,773,211.38
Kenston LSD $15,478,675.33
West Geauga LSD $28,911,817.71
The Budget Commission meeting was adjourned at 10:32 am.
Public Comment:
Just after the Budget Commission meeting was adjourned, Commissioner Spidalieri asked if anyone had any questions before the Budget Commissioners departed. County JFS Financial Administrator Alyssa Steinhoff asked if the JFS levy suppression/reduction was for one year only or longer term than that. Mr. Walder replied that the proposed solution is temporary and only in effect for one year. It would need to be reviewed each year. He referred to it as a “stopgap measure” until a long-term solution is worked out by the State Legislature.
Commissioner Lennon said that the BOCC would begin work on sending out letters to all County taxing authorities benefiting from the inside millage windfall that day.
Reviewer Note: At the end of the BOCC meeting, JFS Director Craig Swenson and Financial Administrator Alyssa Steinhoff asked to speak to the County Commissioners. Mr. Swenson expressed his concern about the proposed solution and that he was not informed about it prior to the meeting. There was no change to the direction chosen by the County Commissioners to reduce the JFS levies. See the Observer Corps Report for the Oct 24, 2023 BOCC meeting for additional details. The LWV Observer Report on this BOCC meeting was not posted yet on the LWV Geauga site when this Budget Commission Report was published, but it is anticipated that the BOCC Report will be posted in the very near future.
More Information and Posted Minutes: Available on Auditor website
Next Meeting: November 6, 2023 at 10:00 am in the Auditor’s Conference Room at 215 Main Street, Chardon, Ohio.
Observer: Sarah McGlone
Reviewer: Gail Roussey
Submitted 10/25/23
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