25,432 / 39.31% Yes votes ...... 39,270 / 60.69% No votes

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No

What the Amendment Would Do: This issue proposes to amend the Taxation and Finance article (Article VIII - Section 3) of the Charter of the City of Cincinnati. If passed, the amendment would, over the next nine years, reduce and phase out the property tax that the City Council levies for current operating expenses of the City of Cincinnati, its boards, departments and institutions.

Explanation and Background: This proposed Charter amendment, beginning with the 2006 tax year, would reduce the maximum allowable property tax rate for general operating purposes to 4.00 mills. In succeeding years, the maximum allowable rate of the property tax would be reduced by five tenths (0.50) mill per year until the property tax rate has been reduced to zero (0) in the 2014 tax year. The City property tax on real and personal property would be eliminated over the coming decade and thereafter Council would be prohibited from levying any property tax for current operating expenses.

At the present time, the Charter of the City of Cincinnati authorizes a property tax levy up to 6.1 mills on the dollar of assessed valuation for current operating expenses. The City Council sets the rate annually in the fall. Currently the rate is 4.98 mills on the dollar of assessed valuation. The property tax along with City income tax, state shared revenues, and investment earnings are the major components of the City General Fund providing approximately 86% of General Fund revenues. The General Fund property taxes, accounting for approximately 9% of the General Fund, are levied on real property, public utilities and tangible personal property. Real property consists of residential, agricultural, commercial and industrial land and buildings. Personal property is equipment, machinery and inventory of businesses. The General Fund provides for general government operations such as police and fire services, health clinics, solid waste collection, parks and recreation, and building code enforcement among other operations.

In 2005, General Fund Revenues are estimated to be $318 million and Property Tax revenues for current operating expenses are estimated to be $29 million. The City Property Tax millage for current operating expenses amounts to approximately 7.8% of the total property tax paid by City residents.

The city property tax is collected by Hamilton County along with all the other county and school property taxes. The City property tax portion is returned to the City. If passed, this amendment would affect only the portion of property taxes which a city resident pays to the city for current operating expenses. A city resident would continue paying property taxes to the City for debt service and related costs on bonds and notes and to the School District and to the County for special levies and general purposes.

A similar amendment was proposed by initiative petition, voted on in November, 2004, and did not prevail.

Those in favor say:

• This amendment would impose fiscal discipline on City Council so that Council would not spend too much money.
• People are leaving the City because property taxes are too high.

Those opposed say:

• It is fiscally imprudent to roll back property taxes to zero without any plan to replace the lost revenue from the property tax.
• This Charter amendment would take away the flexibility of City Council to set property tax rates according to budget revenue needs.

This information was prepared by the League of Women Voters of the Cincinnati Area. September 2005.

City of Cincinnati