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Ohio lawmakers seem committed to delivering property tax relief in the current session, but they’re still zeroing in on their approach. They’ve introduced at least seven measures tweaking the homestead exemption — for disabled vets, military spouses, the elderly — and a handful more changing how counties calculate what homeowners owe.
Most notably, however, House lawmakers have proposed an automatic rollback in the state budget that triggers if a school district carries over any more than 30% of their operating revenue.
An organization backed by realtors, county auditors, and the Ohio Chamber of Commerce is wading into that debate. The Ohio Taxpayer Protection Coalition is urging lawmakers to avoid “unvoted” property tax increases.
“Our point isn’t to take away revenue from school districts,” coalition chair and former state tax commissioner Tom Zaino explained. “Our point is to reduce the rate of increase of revenue without a vote of school district residents.”
House Bill 920
Zaino argued that state lawmakers need to revisit a measure passed in the 1970s meant to insulate homeowners from rising home values. Property taxes are calculated in mills — one mill is one thousandth of a dollar, or one tenth of a percent.
In every county, taxing authorities like local governments, schools, and parks, can levy a total of 10 mills that will grow as home values increase. Any share beyond those 10 mills has to get approval from voters. Meanwhile, to receive state funding, school districts must levy at least 20 mills, or 2% of assessed property value.
House Bill 920 placed a check on those voted levies to ensure rising home prices don’t result in a taxing authority raising extra money. In effect, if your home value goes up, that slice of your property tax rate would decrease to keep your tax bill steady.
“What’s happened, though, over the last 50 years,” Zaino said, “is that these protections have been eroded by many changes made by the General Assembly, which has effectively created loopholes.”
The tax reductions in HB 920 apply to most levies beyond a school district’s 20 mill floor. So, school districts have been resourceful and looked to other sources of funding like emergency levies or local income taxes. That way they can meet immediate funding needs and still benefit from rising property values.
Zaino argued that amounts to an increase in taxes that voters didn’t approve, and lawmakers should prevent that strategy. To that end, the Ohio Taxpayer Protection Coalition is supporting legislation that would recalculate the 20 mill floor to include those other funding sources.
Bailey Williams, from the liberal think tank Policy Matters Ohio argued Zaino’s coalition is blowing the problem out of proportion. “While property values across the state have seen significant growth coming out of the pandemic,” he argued, “property tax revenues have only grown at a fraction of that rate.”
Making the changes Zaino wants “will harm schools, put more levies on the ballot, and will not fix the fact residential taxpayers are overburdened,” Williams argued.
School districts’ view
School leaders argue the problem isn’t just districts making clever use of the system. As property values rise, HB 920 will reduce a homeowner’s rate — but there’s a hard stop at 20 mills. That means if property values rise high enough, the reductions stop working.
Paul Imhoff from the Buckeye Association of School Administrators told lawmakers in 2019, there were 168 districts at the 20 mill floor. By 2023, that figure had ballooned to 409.
“Eighty-nine percent of the new floor districts went through reappraisal or update in 2023,” he explained, “which indicates that the driving force in 20 mill floor districts clearly is rising property values.”
He warned adding new levies to the calculation to generate more reductions won’t help homeowners in the 203 districts that don’t have those extra levies. In the end the bill would “force the affected school districts to either cut essential services or place more levies on the ballot in response, or both,” he argued.
In a written statement, Jennifer Hogue from the Ohio School Boards Association explained the group supports “thoughtful, targeted property tax relief that helps those most in need without undermining the essential funding public schools rely on.” She argued any property tax discussion relies on a “clear recognition of the vital role local taxes play” in funding public schools.
“While we are open to reform, we cannot support measures that limit local control or compromise a district’s ability to meet the needs of their students,” Hogue added. “Any changes must protect the stability and predictability of school funding.”
A different proposal would allow revenue increases from rising property values, but they wouldn’t be able to exceed the general inflation rate over the past three years. In his testimony, Imhoff noted his organization is still reviewing the bill.
Zaino allowed that it would be an improvement and address some of the school funding concerns. Still, he grumbled districts “can’t rely on unvoted tax increases,” and insisted lawmakers shouldn’t give up on closing the loopholes districts have been taking advantage of for years. “There’s not any one bill that is the silver bullet here,” he said.
Other legislation
Zaino offered a tempered response to the various homestead and other property tax exemptions lawmakers have proposed. Those changes are relatively easy to understand and offer immediate relief, but that targeted approach usually winds up shifting the tax burden to others.
“Somebody’s paying for this, Zaino said, “so it’s not like taxpayers are completely saving on that.”
Williams argued instead of rejiggering the property tax calculation or providing new exemptions, lawmakers should employ a circuit breaker, like the one proposed by state Sen. Louis Blessing, R-Colerain Twp. That approach makes tax reductions based on a share of the homeowner’s income rather than the amount of funding a school district is expecting.
Williams explained one group regularly cited for property tax exemptions is seniors.
“There are some seniors who do not need property tax relief,” he said. “The best way to tell is by how much of their income is consumed by property taxes, not looking at their age. The circuit breaker is targeted enough to get those seniors who need the most help, while asking those who can afford it to pay their fair share.”
As for the budget proposal capping school district carryover balances, Zaino said they’re still considering their position. He noted it might encourage districts to allocate that funding or just spend it down to avoid the reduction.
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by Julie Watson
