Vandalia-Butler Schools, City reach compensation agreement on tax revenue dispute

VANDALIA — Vandalia-Butler City Schools and the City of Vandalia have reached an agreement in their tax revenue dispute.

News Center 7 previously reported that the school district filed a lawsuit against the city in April seeking up to 30 years of funding the district said it’s never received but it was entitled to.

With the agreement, the school district will dismiss the lawsuit against the city.

According to a joint release, the dispute centers on “applicability and the amount of income tax revenues to be shared when generated in a Community Reinvestment Area, an economic development tool that abates property taxes as an incentive for a company to locate to a specific area.”

Property taxes are an important source of revenue for school districts, and the state of Ohio generally requires municipalities to share some of that income tax revenue with an impacted school district.

>> PREVIOUS COVERAGE: Vandalia-Butler Schools sues city, claims decades of tax funding wasn’t distributed correctly

The agreement, reached after dialogue and negotiation between representatives of the city council and the board of education, ensures a “fair and mutually beneficial arrangement for both parties,” according to the release.

“It represents a commitment to the ongoing partnership and shared goal of supporting both education and community development,” a spokesperson said.

The total agreed-upon settlement is $4.35 million, which will be paid in installments over two years. In April the district received a portion of the settlement of $1.35 million.

$500,000 will be paid by July 1, 2024, and the remaining $2.5 million will be paid in two equal installments on $1.25 million by April 1, 2025, and April 1, 2026.

The agreement marks the beginning of tax sharing between the two entities.

“The city and school district have a long-standing partnership serving the citizens of Vandalia and look forward to continuing and strengthening their partnership moving forward,” A spokesperson said.

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