Qualls on the So-called "rollback"

There has been a lot of political posturing and rhetoric about the so-called property tax "rollback." I think a few facts might help citizens understand the reality versus the politics.

Since 2001, Cincinnati City Council has frozen the property tax so that it does not rise with the increase in valuation of property. This rise is not an additional tax, it is the equivalent of the revenues from the tax increasing as a result of inflation and an increase in real value of property. Some of the increase (and unfortunately some of the decrease at times) is the result of the quality and amount of public investment in streets, services, parks, recreation, social services. The very public investments that can determine the quality of life in a neighborhood and a city.

Holding the revenues constant at 2000 levels means the actual purchasing power of the revenues decreases due to inflation. The Council's actions have resulted in a total of $49 million being unavailable to invest in neighborhood improvements, infrastructure, safety programs, parks, etc. since 2001. If this policy were not in effect, the city would collect approximately $9 million more per year than it does today.

Those who argue in favor of the so-called "rollback" emphasize the benefit to the homeowner even if it is only $1.39 for an average home owner in the city. It is true that many homeowners do feel overburdened by their property tax bills. However, of the total effective property tax bill a homeowner receives, the City of Cincinnati's share of it is about 17%.

A few facts might dispel the myths about the benefits of the so-called "rollback."
1. Cincinnati's homeownership rate according to the 2006 Census estimate is approximately 42%. Some council members link the increase in Cincinnati's home ownership rate to the so called "rollback." It is probably more likely due to the expansion of the subprime lending market that occurred during the early 2000's, and the city in all probability will see a severe correction as a result of foreclosures and the collapse of the subprime market.
2. Even assuming the 42% rate is accurate, that means that 58% of the beneficiaries of the so-called "rollback" are individuals who own rental property. Some of those owners are absentee landlords who own significant amounts of property and allow their properties to blight many of our neighborhoods. This so-called "rollback" rewards their behavior.
3. The major beneficiaries of the so-called "rollback" are not individual home owners. The major beneficiaries are the largest commercial real estate owners in the city. These include Duke Energy, Procter and Gamble, Cincinnati Bell, Carew Realty, Emery Realty, the Ohio Teachers Retirement System, Prudential Insurance, Fifth Third Bank, Columbia Development, Kroger, Unova Industries, HK New Plan Exchange Property, Fifth Third Center Association, Jewish Health System, Children's Hospital medical Center, Western Southern Life Insurance. The list goes on.
4. The unintended consequence of the so-called "rollback" is that it negatively impacts one of the most powerful development tools the city has-the use of tax increment financing. Tax increment financing (TIF) is based upon taking the increase in value of a property as a result of investment and using what would have been the tax receipts on the increased value to pay for public improvements associated with the development. By freezing the tax, city council undercuts its ability to capture the fruits of public and private investment and use them to invest in further development.
5. Some supporters of the so-called "rollback" argue that the city can make up the loss in revenues by becoming more efficient. The city has decreased its staffing levels by 700 employees over the last 9 years. The number will increase by the end of this year as a result of the early retirements offered to employees.
6. Among the city services impacted by the lack of sufficient revenues to support them are building inspectors, park maintenance personnel, recreation centers and swimming pools, economic and neighborhood development, and infrastructure improvements.

As an homeowner, I would prefer to keep my taxes as low as possible. But, I know that every time I take a walk in any Cincinnati park, or drive my car on any Cincinnati street, or see Public Service workers picking up trash, or call on a building inspector to help solve a major blight problem in a neighborhood, or enjoy the murals of Artworks I only do so because the city in investing in these and many other projects that drive the quality of life in this city and in our neighborhoods.

Can city services become even more efficient? Of course, they can. We can improve services, decrease costs, and fulfill our duty to provide high quality services by heavily investing in technology and training. If we do so, we can over time keep service quality high and costs under control. But, it will require significant investment.