Aug 24, 2022 - Business

The indirect cost of tax abatements

Illustration of a dollar made out of chalk on a chalkboard being erased
Illustration: Sarah Grillo/Axios

Columbus has doled out millions of dollars in tax breaks over the past decade that striking teachers contend have led to their district being underfunded.

Why it matters: The tax dispute shows how Ohio's school funding issue overlaps and often conflicts with other municipal priorities like housing and economic growth.

Flashback: Education spending has been hotly debated for decades, especially since the landmark Ohio Supreme Court ruling in 1997 that found our state's funding model to be unconstitutional.

Zoom in: Columbus City Council routinely approves tax abatements benefitting major companies and housing developers.

  • "Enterprise Zone" abatements are meant to encourage development by exempting most of a company's added property taxes resulting from renovated or newly constructed buildings.
  • Council agreed to eight such tax breaks in July alone. These projects will lead to a combined $190 million in property investments and create 218 full-time jobs, their respective ordinances state.

State of play: Property taxes remain a key component of local education funding.

  • The Columbus Education Association, which on Sunday voted to strike, has repeatedly condemned tax abatements as costing its school district money that could be better spent on classroom materials and building improvements.
  • A protest sign from earlier this year read: "End handouts to wealthy developers. Columbus students deserve fully resourced schools."

What they're saying: City leaders have defended the tax breaks as beneficial to the community without costing schools money long-term.

  • Development director Michael Stevels told the Columbus Dispatch that developers still pay taxes on their property's original value and ultimately contribute a larger sum after the abatement periods end.
  • This is "growth that might not otherwise occur without the city's initial investment," he told the newspaper.
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