Solon Continues to Lead Fight to Retain TPP Funding
$8.3 MILLION IN ANNUAL REVENUE IN JEOPARDY
SOLON SCHOOLS CONTINUE THE FIGHT TO REVERSE STATE PHASE OUT OF TANGIBLE PERSONAL PROPERTY TAX FUNDING
Together with other heavily impacted districts statewide, the Solon Schools are engaged in legislative advocacy aimed at reversing the onerous impact of a rapid phase out of Tangible Personal Property tax funding from the state. 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 is not new. The Solon Schools and other high TPP loss districts have been working together through the Coalition for Fiscal Fairness in Ohio for more than a decade to retain the critical revenues.
Within the past week, 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, Solon Schools Treasurer and CFFO President Tim Pickana 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 slow down and reassess the dire impact current law regarding the TPP phase out will have on our communities,” Mr. Pickana said. “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.”
At the same time, Mr. Pickana noted, the highly impacted districts renewed their pledge to lawmakers to help craft a solution to continue this critical state revenue.
“Our districts have made significant expenditure cuts to deal with TPP funding losses already enacted. These include reductions in staffing and employee benefits such as health care coverage, as well as pay freezes,” he 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. These 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.”
The school districts like Solon 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.
“The purpose of eliminating the TPP a decade ago was revising the tax structure, not reducing revenues to schools,” Mr. Pickana explained. “Yet as current law stands, our schools and communities face a devastating TPP funding phase out that will leave gaping budget holes in its wake. We ask the legislature to work with us in changing the phase out in law to solve the TPP problem without sacrificing the financial solvency of our districts.”
Without a change in state law enacted this budget session, Solon will lose more than $8.3 million a year, or $1,800 per student, because of the TPP phase out. This amounts to 13 percent of the district’s annual budget and is already reduced from the $10.7 million in TPP replacement funding the district received annually two years ago.
“If allowed to stand, current state law enacted in 2015 as part of the last biennial budget, creates a “fiscal cliff” on July 1 this year,” said Solon Superintendent Joseph Regano. “The Solon Schools will lose an additional $3.5 million in TPP funding. In real terms, this means the Solon Schools will receive only $4.825 million in TPP funding next year – a staggering loss for us of $5.875 million a year since 2011.”
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.