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Tax and Spin- Part 8: Eliminating Confusion-Step 3

This entry is part 8 of 11 in the series Understanding Property Tax Levies

taxBallot Example No. 3

The third ballot example, proposed in November 2003, is for a “replacement and decrease.” It is even more deceptive than the first two examples because it appears to provide a tax reduction. Instead, it produced a 267% increase. It reads as follows:


A Majority Affirmative Vote Is Necessary for Passage.

A replacement of a portion of an existing levy, being a reduction of 0.02 mill, to constitute a tax for the benefit of Greene Memorial Hospital for the purpose of CURRENT OPERATING EXPENSES OF GREENE MEMORIAL HOSPITAL, INC. FOR THE SUPPORT OF HOME HEALTH SERVICES AND FOR THE PURCHASING OF EQUIPMENT SERVING THE EMERGENCY DEPARTMENT, NURSING SERVICES, CANCER SERVICES, BIRTHING CENTER AND OTHER DEPARTMENTS OF THE HOSPITAL at a rate not exceeding 0.5 mill for each one dollar of valuation, which amounts to $0.05 for each one hundred dollars of valuation, for a period of five years, commencing in 2004, first due in calendar year 2005.”

The words “decrease,” “portion of an existing levy,” and “reduction of 0.02 mill” appear to indicate a decrease in tax. Nothing in the wording on the ballot in any way indicates a tax increase.

The misleading ballot language is explained as follows: Although the ballot does not show it, the existing levy that was to be replaced by this issue is called a 0.52-mill levy. That, unfortunately, refers to the millage that was voted at least as far back as 1976.

The ballot language compares the proposed levy of 0.5 (or 0.50) mill with the old, no-longer-in-effect 0.52 mill. The proposed levy was indeed 0.02 mill less than the old voted millage, but that old millage had nothing to do with one’s then-current tax.

The so-called 0.52-mill levy had been renewed a number of times over the years and, consequently, by 2003, the effective millage – the millage that determines one’s current tax – had decreased to 0.136028 mill. Therefore, instead of the tax being reduced from 0.52 mill down to 0.50 mill, as the ballot wording seems to imply, it was actually increased from 0.136028 mill to 0.50 mill.

The cost of this replacement levy was this amount: 35% X $100,000 X $0.0005 X 87.5% = $15.31.

Had the proposal been for a renewal levy, the tax would have been this amount: 35% X $100,000 X $0.000136028 X 87.5% = $4.17.

Therefore, the replacement levy cost 3⅔ times the existing levy – with no clue of the increase on the ballot.

In the case of another election and a similar “replacement and decrease” levy, this writer asked a number of people afterward what their thinking was about the tax issue. Every one of them said that he voted for the levy because he thought he was voting for a tax cut. Although the “replacement and decrease” is the most deceptive tax, none of the replacement levy issues gives any indication of a tax increase in the replacement portion of the ballot.

The reader should realize that although the dollar size of these countywide levies might seem small, each property owner pays on many such levies. Also, a large increase in the percentage of tax on individual properties is reflected in a large increase in revenue for the government because so many property owners are paying on the levies. To be informed, a voter needs to know the true effect of these levies so that he can question why such a large increase in revenue is suddenly necessary.

Next-Part 9: Some solutions

Series NavigationTax and Spin–Part 7: Eliminating confusion-Step 2

Posted in Economics, Education, Private Property, Public Policy Principles News, Public Policy Radar, Taxation.