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Treasurer warns House Bill 335 could cut district property tax revenue; board told income‑tax backup would take time to close gap
Summary
Treasurer Kyle Klingler told the board that proposed state legislation removing 10 inside mills would sharply reduce local property tax revenue and showed scenarios using an earned-income tax to replace part of the loss, but cautioned collections would lag.
Kyle Klingler, the district treasurer, told the board that proposed state legislation known in testimony as House Bill 335 could eliminate 10 inside mills statewide and sharply reduce local property-tax revenue for cities, counties and school districts.
Klingler said his updated five-year forecast shows Ashland’s effective inside mills falling from about 22 mills this year to roughly 18 and 16 in subsequent years — and, if the district only relied on current responses, the forecasted cash balance would end year five about $4.7 million negative under one scenario.
Klingler presented four scenarios to the board, including replacement by an earned‑income tax. He said a 0.5% earned‑income tax placed on the November ballot and enacted for calendar year 2026 would produce a small first-year payment — $136,000 for the partial first calendar quarter — because the state collects and remits the revenue on a lag. He said that collection would grow in subsequent years (his forecast showed roughly $1.8 million and then about $3.0 million as collections normalized) but would still not fully replace an estimated $3.2 million loss in inside millage under the model he presented.
Klingler also noted the state’s homestead rollback and other statewide credits would reduce district state-shared revenue as inside millage is removed. He told the board the legislature was expected to finish a conference submission and that the governor would then have line-item veto authority.
If the board wanted to pursue an earned‑income tax on the November ballot, Klingler said the district must run two hearings: an initial hearing to request information from the Department of Taxation and a second hearing to certify the levy, and the certification deadline would fall on or before Aug. 6 for a November ballot. He warned that meeting the timeline would require multiple extra board meetings in July.
Klingler told the board he had built assumptions into the forecast, including that any new income tax would pass and that the district’s other levies (the PI levy renewal and an operating-levy renewal in 2028) would be approved by voters. “We’re trying to prepare for the worst, hoping for the best,” he said.
Ending: Board members asked clarifying questions about veto authority, levy thresholds and local impacts such as mental-health‑board funding. Klingler said he would keep the board updated as the legislature moved quickly on the bill.
