Nineteen Ohio counties will finalize sexennial reappraisals in December that will result in new assessed valuations for governmental entities in those counties for tax year 2012. In the recent past, such reappraisals in other counties have resulted in lower, sometimes significantly lower, assessed valuations.
The most obvious consequences of lower assessed valuations are reduced tax collections or higher effective tax rates, or both. However, for many governmental entities, including counties, cities, school districts and many special purpose districts, lower assessed valuations also negatively affect legal debt limits – the amount of notes or bonds that may be issued within both direct debt limitations that are a function of assessed valuation and the ten-mill indirect debt limit applicable to unvoted general obligation debt are reduced by lower valuation.
In some instances, a governmental entity intending to refund outstanding debt or fund new projects must look to different financing structures that are not governed by debt limits tied to assessed valuation. These include issuing debt secured only from income taxes, sales taxes or utility revenues, or utilizing lease financing for facilities.