(upbeat music) (graphic pops) (upbeat piano music continues) - Hello, and welcome to "The Journal," I'm Steve Kendall.

Property taxes are in the news locally and in Columbus.

How do they actually work?

Are there alternatives, and if so, what could those alternatives be?

Joining us to explain that will be Wood County Auditor Matthew Oestreich.

Matt, welcome to "The Journal," thank you for agreeing to do this.

First of all, talk about what the auditor's office does, because people probably have some misconceptions about what you're responsible for and what you're not responsible, so talk about what your group does because there's a wide range of activities.

- [Matthew] It's a wide range of activities, for sure, the assessment piece is just one portion of the office, that's, I think, what makes the office one of the great ones and why I enjoy it so much, and we serve as a fiscal office for the county, so we'll process all kinds of accounts-payable payments, we'll pay all the county's bills, about 25,000 checks annually processed to pay for anything from office supplies to police cruisers, you know, for the sheriff, and then, we'll process payroll for 1,200 employees as well, so as the fiscal agent for the county, we do those functions, also annual reporting, we'll take the county's cash figures and turn 'em into accrual accounting at the end of the year to prepare a report to show the financial state of the county, that's a function.

Vendors' licenses, cigarette-dealers' licenses, dog licenses, and also junkyard operating licenses, we sell all of those in the county, so we're the licensing agent for the state of Ohio to sell those, then we also...

Weights and measures, a job that I actually started with... - [Steve] You'll see that sticker on the gas pump that says, "Certified by..." Yeah, yeah, you guys have checked it, yeah.

- [Matthew] We've checked it, and once a year, we'll check all of the 1,300 gas pumps of Wood County and the other 600-plus commercial scales, anything from the small deli scale to vehicle scale that you'll weigh grain or aggregate on at a stone quarry, so all those get certified by my office as well, GIS, another function, we'll take that, we'll create maps and different layers on maps, anything you see on my website to ones used by other county agencies as well, we'll, you know, fly low-altitude, high-resolution photography often to get an update of what's on the ground, and then, all of that leads into the assessment piece of the office, where every six years, the county auditor's charged with value in every piece of property in the county.

There's 75,000 different parcels in Wood County, some residential, some agricultural, some commercial, some industrial, and then, some public utility parcels, the state of Ohio will value the public utility ones, but everything else gets valued by the county.

- [Steve] Now, you mentioned the state, I know that we're probably jumping ahead a little bit, you collect all that information, you come up with numbers for each of those individual land-usage things and individual parcels, the state has a role in that too, you're not the sole arbiter of that, they weigh in on what you've done, to some degree.

- [Matthew] They definitely do, we'll submit all of our sales to the state of Ohio, they'll review our sales, they'll determine what are valid arms-length transactions, as will the county, there's a little back and forth sometimes on that to determine what arms-length transactions did occur, and then, with that, that's the barometer, that's what the... You know, your reappraisal looks at to see if you hit the mark or not, and then, there's parameters you have to hit, we've gotta hit between 90% and 110% of recent sales to prove that we have accurate full-market values.

- [Steve] Yeah, so you don't just arbitrarily set the numbers, I... because some people think, "Well, the auditor..." "I mean, the numbers they came up with are just totally wrong," but you have to... You base those on it, and talk a little about the criteria because there's a number of factors that go into determining what my property evaluation is, so kind of go step through that just a little bit more.

- [Matthew] Yeah, so we're looking at data to start with... To know, square-footage of your home, bathroom count, number of fixtures, those all add value, number of bedrooms, not really a huge determiner of value, just the raw square-footage is a bigger... Is the main part, and then, the quality of construction, and then, the year built or effective year built, if it's an older home that's been remodeled, the effective year is actually closer to new and the depreciation is less than what it might show if it has a different effective age.

- [Steve] And the number of buildings you have on your parcel too, because you may have accessory buildings or out buildings, those are all evaluated, as well.

- [Matthew] They are, as soon as they're greater than 150 square-feet, we'll actually pick up that auxiliary building.

- [Steve] Ah, okay, so yeah, people... because I know people look and say, "Well, I don't know where they're coming up with..." "Why are there four buildings under...?"

Well, if you've got a little small garage or you've got an accessory building where you park your lawnmower, or store your garden tools, or something, if it's over that number of square-feet, it's gonna show up on there.

- [Matthew] Yes, and then, we'll pick up that value, all those, you know, ancillary buildings do add value to your parcel, you know, another...

If you go to sell that property, it might drive a buyer to pay a little bit more.

- [Steve] Yeah, and frontage on a road, is that impacted as well, or is that just a misconception that that's a big factor?

- Not really a factor, we look for uniformity, so the number of acres of your lot is gonna be... - [Steve] More of a determinant.

- More of a determinant, a lot of townships are gonna have their own zoning that's set at minimum frontage, so most of them are gonna have... - [Steve] At least standard.

- Some sort of standard, and the lots will look very similar.

- Yeah.

Now, of course, one of the things that happens is you go through that process, you send out the new...

The new tax bill, then there's a process where I, as a homeowner or a property-owner, can come to you and say, "Gee, I think you might be wrong about this," what's my appeals process, and how does that...?

What are the steps through that?

- Well, and actually, before the tax bill gets there, we'll even let you know online ahead of then, so that hopefully, you're not shocked when you get the tax bill.

(Steve laughing) - [Steve] Well, okay, hopefully not.

- But when the values are sent to the state and approved, we'll have a window between the fall that... Every three years, that we will have those values posted online, it will show your old value and your new value, if you disagree, you can appeal to my office up through the end of the year, and then, after that, up through the end of March, you can actually file a formal appeal.

That formal appeal will be heard by the county auditor, the county treasurer, and a county commissioner.

- [Steve] Yeah, okay, that's sort of like...

I think in Lucas County, it's, like, called the BOR, the Board of Revision.

- You've got it, yep, exactly.

- Okay, so you have the same thing, basically.

- [Matthew] Same thing, fortunately for us, we have less complaints here in Wood County just due to the... You know, the less number of parcels, you know, we've got less parcels than Lucas County, so actually in Wood County, it's myself and the county treasurer and the commissioner on the board, where Lucas County has to run multiple boards to just... - [Steve] To know... To deal with the volume, yeah.

When you look at that evaluation process, and you talked about the timeline, when people purchase a house, they can see the property taxes online, they can see what the existing numbers are, correct?

- [Matthew] Correct, the only thing to keep in mind there is if you're buying from somebody that might qualify for the homestead exemption, and you don't qualify yourself... - [Steve] Then that's going to...

The number's gonna change.

- [Matthew] That's gonna roll off... Actually an increase then, the homestead exemption will exempt a portion of the value for seniors or permanently-disabled folks.

- [Steve] Okay, and there are criteria underneath that as well, not everybody qualifies for homestead, there's qualifications.

Talk a little bit about the CAUV with agricultural land, because ag land has gone up in value considerably over the last 10 years.

Talk about how that works, and if I purchase land that has been to the CUV and I'm not going to use it for that purpose, what happens then?

- [Matthew] Okay, CAUV, "current agricultural use value" is what that acronym stands for.

Essentially, that assesses anything that's been production agriculture at its production value rather than its market value.

- [Steve] It's development value or whatever.

- Market or development of it, yeah, yeah, because a farm might sell for $10,000, $12,000 as a farm, or if it's gonna be developed into a subdivision, now, it's worth $40,000 or $50,000, and then, if it's assessed and it's Hoytville clay, like two-thirds of our county is right now, it's assessed... - [Steve] Ah, soil type.

- Soil type, it's assessed by the soil type, there's 3,500 different soil types in the state of Ohio, all of those are assessed based on their soil type by the Department of Taxation, we talked about them, so Hoytville clay in Wood County or in Henry County, wherever it's at, will have the same value statewide, and the more productive soil types, at least in Wood County, like a Millgrove, will be a higher value, something like an Nappenee is gonna be quite a bit less than Hoytville clay, but that'll be assessed at $3,500, so rather than the... Maybe the $10,000 or $12,000 it's bringing, it...

They're assessed at $3,500 because that is essentially the cost approach... Not the cost approach, the income approach to value.

- [Steve] The income approach, okay.

Now, we come back, let's talk about what happens if I purchase that ag land, one of the types you've talked about, and I decide I'm not gonna farm it, let's... We'll find an answer to that question, what happens at that process?

Because somewhere, that has to be recaptured, that value is picked up, okay.

Back in just a moment with Wood County Auditor Matthew Oestreich here on "The Journal."

Thank you for staying with us on "The Journal, our guest is Wood County Auditor Matthew Oestreich, we were talking about CAUV and what happens if I purchase what has been a tillable farm with a... Maybe with a house on it, but tillable acres, and I decide that I'm not going to keep it in ag production.

The CAUV has been in effect for the previous owner, what happens now?

Because I'm not farming it now, it's not being taxed at its income value, it's being...

It'll be assessed at a different...

In a different way.

- [Matthew] More at the market value, and then, those savings between the market value and the income producing value are what will be recouped, and we'll go back three years and bill that, and it'll be attached to your tax bill as an ag recoupment.

- [Steve] Yeah, and generally, the purchaser, that's what will show up on the new owner, not the previous owner, depending on...

They may negotiate that, maybe?

- [Matthew] That's what... That's something that we talk to figure that out at closing time, who wants to pay that recoupment?

- [Steve] Who's gonna pay that recoupment, yeah.

- The savings were actually realized by the former owner.

- [Steve] Right, so theoretically, they're... Be the ones that should make up the... - Yes, but that can be contingent on the sale, you know, all different... You know, they could figure it out, you know... - [Steve] Yeah, 'cause it could add up to a decent amount of money depending on the number of acres we're talking, so... - Yes, for sure, yeah, and depending on where that's located, if it's near a prime development, the market value's probably gonna be higher... - [Steve] Than if it's not... Yeah, distant from... Yeah, it's interesting, because I know people... That's another one of those things that confuses people, especially if you're not familiar with agricultural land, and how it's assessed, and that kinda thing.

Shift gears just a little bit and talk about how millage works, because let's say that where you live, they put a one-mill levy on the ballot, and the one-mill levy can bring in a certain amount of money in one jurisdiction and a totally different amount in the other because it's based on property evaluation in that whole jurisdiction, so talk about what a mill is and how that sort of works, and feel free to use an example, I mean, name some names, you know?

- [Matthew] Okay, we have some examples that we could do that, one mill is one dollar per thousand of assessed value, and so, we've got... Market value is 100% value, assessed value in the state of Ohio is 35% of the market, so we take our... And a $100,000 home is whatever everybody uses, so $100,000 home, the assessed value of that $100,000 home is $35,000, one dollar per thousand, that mill costs 35 dollars for that $100,000 home, so yeah, one-1,000th out of that $35,000... - [Steve] Okay, and... Go ahead, sorry, go ahead.

- Oh, then...

So then you talk different taxing districts, there's always uniform taxation across the whole district, so everybody in that district pays the same tax rate, so if you look at a... Otsego school district let's say, of around a $400-million value, one mill there is gonna bring in $400,000, Bowling Green School District, almost a billion-dollar value, one mill is gonna bring in more like the million dollars.

- [Steve] Million dollars, okay, yeah, because that confuses people too, because they'll look at it and say, "Well, why on the other side of the road, the township boundary and the county boundary, totally different millage costs?"

And things like that, and the other thing too, when you look at mills, there's something called inside millage, so jurisdiction passes a levy... Well, let's back up just a second, so we pass a levy, it's for one mill, equaling, let's say, $100,000... - [Matthew] Okay.

Or $400,000, like you're talking Otsego... Will that levy ever bring in more than that $400,000, even if during its length, the evaluations go up in the taxing district?

- The only way it'll bring in more than that, say, $400,000 is if there's new construction.

- [Steve] Okay.

All right, okay.

- When there's new construction added, that will actually generate more additional dollars, so...

But property that was assessed in the year prior and the year after, no, what that will do... Actually do is lower the effective rate.

- [Steve] Lower it because it'll spread it over more payers, basically, okay.

- [Matthew] Yes, so that... And that's the difference between the full... Or the voted rate and the effective rate.

- [Steve] Okay.

Because people will see a valuation, say, "Oh, my gosh, you know, this jurisdiction, the township government will be making a huge amount more money now because their valuations in their district went up," and that's not necessarily the case.

- [Matthew] That's not necessarily the case.

- [Steve] Depends on the...

The newer construction will affect that, but nothing else.

- [Matthew] Nothing else, House Bill 920 that was put into effect in 1976 is what actually causes the difference in value, so once again, the Department of Taxation will take all of our values, look at what that levy was voted in, what it was generating then, allow for the new construction to generate more dollars, but any appreciation and value recognized during a reappraisal, that'll actually lower the effective rate, so values go up 10%, the effective rate's gonna come down 10%.

- Yeah, and people think the opposite, think, "Oh, every..." You know, "The evaluation up 10%, the collection goes up 10%."

Now, let's talk about inside millage, because that's one of those terms, like, what is that and why is it there?

But let's talk about that.

- The inside millage, the first 10 mills of assessment were set into effect back in the 1920s, I believe, but they never factor down, so they're always collecting 10 mills, they're always collecting the full rate, as values go up with appreciation, they will generate more money, and they're divided up between the county, in Wood County, it's 2.4 mills to the county, the school district has a share, whatever school district you're in will have a share of that, and then, either the township or the municipality will have a little bit, and together, they can collectively make up up to 10 mills.

- [Steve] Yeah.

And so, that's the one place where valuations could actually... Will raise more money for a jurisdiction.

- That's one of the two places.

- [Steve] Okay, what's the other one?

- The other place is the 20-mill floor for school districts.

- [Steve] Okay, okay.

Got my next question, thank you, yeah.

Another very simple, easy-to-explain... - [Matthew] Oh, yeah!

- [Steve] So go right ahead.

- Well, I mean, the inside mills, we talked about, the value goes up, the effective rate stays the same, it generates more money, I mean, it's that equation.

With the 20-mill floor, it's all operational levies for a school district for operating funds, it does not include bond levies, it does not include permanent improvement levies, it does not include emergency levies, all these other ones are not counted towards that, but the Department of Taxation, once again, will add up the effective rate of mills, values go up, that effective rate would ordinarily come down like it does... House Bill 920 is supposed to do, it gets below 20 mills... - [Steve] Ah, and now, something happens.

- [Matthew] The state will push that value back up to 20 mills, they'll adjust all those levies to get them back to this 20-mill floor... To keep the school district operating at a 20-mill floor, so in essence, those 20 mills operate just as inside millage.

- [Steve] Ah, okay, now, does it change depending on the property's usage?

Is residential...?

Does the rate change for them versus the rate for a commercial under the 20-mill floor discussion?

- Yeah, there's actually three different classes of rates, we've got class one, which is...

The agricultural and residential property-owners are put together, they'll have one rate that...

They could be on the 20-mill floor there, but commercial-industrial are assessed together, and then, public utility is assessed always at the full rate.

There's no reduction factors for public utilities, so a school district might be on the floor for res-ag, but not on commercial-industrial.

- [Steve] Ah.

Because there was an instance just in the...

In the November election where the 20-mill floor came into play, and I know there was a discussion, people were saying, "Look, if you vote no on the levy, you'll actually pay more than if you vote yes," and that, of course, seems a little counterintuitive to people... - Oh, yeah, the Anthony Wayne School District did that.

- [Steve] But it was actually true, and that's what happened, and then, afterwards, people were saying, "What do you mean?

I voted no and it went up," and they said, "Well, we tried to explain that," but it is...

I mean, that is sort of a tough thing to explain to people that voting no means the rate will go up versus voting yes will make it lower, or... Or not the rate less, but the amount less in a way, so yeah.

- [Matthew] Very counterintuitive to think... - Yeah, yeah, and it's one of the things too, when people look at how the state... And you being in government understand too, that people look at how the state manages its money and the systems it uses, and it's not like your household budget, because things have... Are encumbered for certain purposes, so if you pass a road levy, you can't use that to work in the cemetery, you can't use that to pay general fund things, there are specific things, unlike your home budget where you decide, "Well, this..." "I just won't buy as much of that and move the money over here," so the whole accounting system is a little different than people are used to.

When we come back, I'd like to ask you a couple of questions about some of the different types of levies that are available, because I know the state's looking at doing away with one, the replacement levy package, but we can talk about that and what that means to property-owners, as well.

- [Matthew] Okay.

- All right, back in just a moment with Matthew Oestreich, the Auditor from Wood County here on "The Journal."

You're with us on "The Journal," our guest is Matthew Oestreich, the Auditor from Wood County, Ohio.

Talk a little bit about the different types of levies, because there are renewal levies, there are replacement levies, there are continuing levies, there are emergency levies, kinda just give us the brief description of each of those.

- So when an entity has their levy come up, and it's not a continuing levy, continuing levy would be placed on the voters for a continuing length of time until... - [Steve] Now, is that different?

Is that, like, a permanent levy or...?

- [Steve] That is a permanent levy...

So those are the same thing, okay.

- Those are the permanent levy, you'd have to have a referendum to actually decide to take that off.

The other levies, a renewal levy will renew the levy at its current effective rate, continue to collect it the same, no additional dollars to the entity.

Taxpayers should see... - [Steve] Minimal change, if any.

- Minimal change, if any, almost no change, we estimated a zero change.

A replacement levy, that is actually talked about not being allowed after this year, that's part of the budget bill potentially, will take the effective rate back to the full voted, so we've got a one-mill-voted levy, now, it's collecting at 0.7, when the replacement comes on, it'll actually go back to the one-mill, so like a...

In that instance a three-tenths of a 30% increase.

- Increase, yeah, and there's... As you said in Columbus, there's some discussion in that budget bill to not allow entities to use the replacement levy element again.

- [Matthew] Yes.

Yeah, there's some trying to create more transparency to the voter, they...

I think the state has done that a little bit with $100,000 rather than talking cents per $100 of valuation, somebody can correlate that a little easier, if they've got a $350,000 house, they know, "Well, that impact times 3.5 is what my impact's gonna be."

- [Steve] Yeah, yeah, and also kicking around down there too is House Bill 335, so talk a little about that because that could have... That'll have impact as well if...

Depending on how it flows through those.

- [Matthew] The big thing with 335 is it would eliminate the inside millage.

That would directly affect Wood County, right now, 2.4 mills go to Wood County, five-hundredths of a mill, they use to help fund the historical center out on Route 6 there on County Home Road, and then, the other 2.35 provide about $11.5 million to the county commissioners every year.

- [Steve] Their sort of general fund, kind of... - [Matthew] General fund dollars, with the...

The biggest recipient of those is probably the sheriff, it takes a lot to run a jail, takes a lot to put deputies on the road, and then, the courts would be probably next as far as... - [Steve] Yeah, where they would... Money they would get from the inside.

- Oh, yeah, and also, the auditor's office... - [Steve] Well, you know, there's... Costs are what they are.

Now, and I know we wanna get to one other part of this too, but...

So what happens...?

Where...?

What would make up that money if it goes away?

Where...?

How would you recoup that or find a way to replace it?

- [Matthew] Talking to the bill sponsors, they would look for the counties to...

If they needed a replacement, obviously, the state would like you to do more with less if you can.

- [Steve] Yeah, do it more with less, or do it locally, in other words, okay.

- Yes, and then, they would have the county replace it with some sales tax, they would have the municipalities or the school districts replace it with income tax, and the townships are gonna hold whole and let them keep their inside millage because they really have no means to generate revenue.

- [Steve] Yeah, we're not allowed to generate... To assess a sales tax or an income tax, and then, if we take that even one step larger, and I know you were at that group... That meeting that took place a few weeks ago, the discussion of the state saying, "You know, we may just eliminate all property tax, period, just zero it out," again, that money...

There has to be money to replace that because most entities, especially townships that... As you said, that's their only means of raising money, but all the jurisdictions use property tax to a great...

Some degree, some greater than others, but... - Some degree, so all the libraries will use it, we've got ambulance districts that use property tax.

Yeah, to what extent if property taxes were removed, in my rough calculations, it'll be about a 10% sales tax if that's the vehicle we'd use to replace it.

- [Steve] Here in Wood County, that would be the case, so in addition to what's already the sales tax... - In addition to the 6.75, so... - [Steve] So you'd be looking at 16.75% every time you purchase something.

- To replace dollar for dollar... - [Steve] The dollar for dollar, yeah, because on the surface, if somebody... And there is a ballot initiative, people are gathering signatures to put it on the ballot, that says, "Would you be in favor of eliminating the property tax?"

Well, not many people are gonna say no to that, because obviously, they say, "Well, sure," now...

But the devil is in what happens after that, and there has to be some mechanism, otherwise, most entities, things will kinda grind to a halt in a lot of ways.

If that was the case, I mean, I don't know... Obviously, that would change a lot of what the auditor does because you wouldn't be dealing with property tax, you would still be, though, responsible for the county's financial situation, all of that, and have to manage that without that alternative.

Yeah, that would be kind of interesting.

- It would be a big change in my office, I mean, as far as every six years, we do the full reappraisal, and then, three years in-between, we do an update based on sales, and that assessment wouldn't have to happen if there was no property tax.

- [Steve] Yeah, yeah, and, you know, I think it's interesting too when you talk about that, I know... And rolling back, when we were talking about appealing with property tax, people go out and look at properties online because the really good news is, especially with transparency, you guys have all that information up there, I can look at anybody's property tax in Lucas County if I want, now, it may not be a good thing for some people, they don't like the idea, but the reality is you can then compare what you're paying and your...

The summary of what your property is made up of, the number of bathrooms, et cetera, as you were talking about, and you can do comparisons and see, when it comes time to possibly appeal your property tax assessment or evaluation, what you can do, so that's been a big advance for people.

- A big advance, my website, you can actually choose your property, and it'll do a sales comparison for you and find similar properties, yeah, so you could do that.

- [Steve] Ah, really?

Okay, wow, that's really handy, because... - It'll find similar properties and give you the values of those, and you can compare attributes and see, you know, how you stack up.

- [Steve] Yeah, and if people have questions about any of the things we've talked about, I mean, it's very simple to get in touch with your office.

- Oh, absolutely, I mean, we have a robust website that is accessed by a lot of different people, and then, you can call the office anytime, 8:30 to 4:30, you know, 419-354-9150.

- [Steve] Great, great, well, thank you so much.

Wood County Auditor Matthew Oestreich, thank you so much for coming and clearing up a lot of this, because this is an area especially where people... A little knowledge could really be dangerous in a way, because you think you know and it's like, "Oh, you're totally..." You know, the average person thinks...

They think they understand this and it's a little convoluted, but that's why we have guys like you to... And your team there at the auditor's office to make sense of all of it, so we appreciate that very much, thanks for being with us.

- Absolutely, thanks a lot, Steve.

- Yep.

You can check us out at wbgu.org, and, of course, you can watch us every week Thursday at 8:00 PM on "The Journal."

We'll see you again next time, good night and good luck.

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