After five months of testimony from experts and other stakeholders, the special committee that was convened to study and make recommendations for how to fix what many see as a broken property tax system, released a report but no favored fixes. There are 21 recommendations and several members on the Joint Committee on Property Tax Review and Reform have shared their preferred course of action.
After the 800-plus page report was released on New Years Eve, Democrats Rep. Bride Rose Sweeney of Cleveland and Rep. Dan Troy of Willowick issued a joint statement advocating for targeted relief for the most needy and state-paid solutions.
“In the last decade alone, Ohio lawmakers have eliminated the 12.5% rollback that used to lower all levies, allowed the homestead exemption to be eroded by inflation, and cut local government funding in half,” they wrote.
“When the state decides to pay less, it results in our communities either paying more or having to cut services. It is time for the state to pay its fair share of property tax relief instead of continuing to expand local levy reliance. The most impactful proposals would cost less than 1% of the state’s $95 billion dollar budget.”
The pair favor enacting legislation that is targeted to seniors on fixed incomes and the most needy, enhancing the homestead exemption. restoring the 12.5% rollback with a means test and adopting a “circuit breaker” income tax rebate to offset high property taxes.
Property tax crisis
The property tax crisis hit a crescendo in 2023 when local taxpayers saw huge property value hikes. In Butler County they jumped an average 37%, Greene County 30% and Montgomery County 34%.
How property taxes are calculated in Ohio is complicated, and a big boost in property value doesn’t always trigger large tax increases. Other factors that can fuel large increases include new taxes, charter millage, and whether a school district is at the 20-mill floor.
Credit: Alexis Larsen
Credit: Alexis Larsen
The highest Butler County tax bill increase was in Lemon Twp. within the Monroe School District with an average value increase of 62% and tax increase of 42%. The average value went from $137,000 to $221,000 and taxes jumped from $2,800 to $4,000 on average.
Former Greene County Auditor David Graham said previously the highest average tax bill increase was $1,400 in Miami Twp. in the Yellow Springs Exempted Village School District. He said the huge increase was due in part to the fact voters approved a 6.1-mill bond levy and it includes agricultural properties where increases were even higher than residential.
The highest average community tax increase in Montgomery County was $655 in Miami Twp. because of the 20-mill floor and a new police levy, according to the Montgomery County Auditor’s Office.
‘A spending problem’
Lawmakers on the committee don’t agree on the best way to tackle this issue.
State Rep. Tom Young, R-Washington Twp., told this media outlet he will never support a state bailout.
“The legislature is not going to pay the bill of local excessive spending,” Young said.
He said there are too many tax levies and voters often aren’t well informed on the ballot requests. He said increasing transparency where levies are concerned is key.
“We have local control on taxation of citizens and in a lot of cases you have appointed boards taxing our citizens,” Young said. “In the state of Ohio, local and county governments and schools included are addicted to property tax and they all need to go to rehab. That’s the truth, they all need to go to rehab, we do not have a funding problem, we have a spending problem.”
There are several recommendations that would make it more painstaking for local entities to get money requests to the ballot, such as requiring more notification and public hearings, plus putting more restrictions around economic development tax breaks and other measures.
The public rarely shows up for public hearings — or government meetings in general — unless there is a hot topic on the agenda. Young said he wants to introduce legislation that would require taxing bodies to send letters to their taxpayers to inform them a tax levy is being considered and how much it will cost.
Sen. George Lang, R-West Chester Twp., is also in the camp that believes local governments don’t have “a funding problem they have a spending problem” and tax relief needs to come locally not from state coffers.
Credit: Nick Graham
Credit: Nick Graham
He said all forms of government need to find ways to reduce not expand their budgets. He said “I’m rolling my eyes” over his hometown trustees funding a splash pad as an example of unnecessary government spending.
“A splash pad is not a core competency of government. Our roads, our first responders, stormwater management, those are our core competencies, not making sure our citizens are entertained,” Lang said. “The state should not pay for it and the taxpayers should not pay for it. I think every local government needs to take a good look at their budget and say hey, what can we eliminate, not what can we mitigate. We’re going to be doing that at the state because all the ARPA (federal pandemic relief) funds are drying up, we’re going to have to have a much more lean budget than we have had.”
In addition to state assistance, Troy agrees local government spending reforms are necessary, because many governments think they need to “stockpile” money for a rainy day. But he thinks the money should stay in taxpayers’ pockets until it is really needed. He said the recommendation to clarify or expand the powers of the county budget commissions could do the trick.
‘Circuit breaker’
The committee’s recommendations include several bills that were introduced during the last General Assembly but not passed. The most talked about is the aforementioned “circuit breaker” — which is based on a model by the progressive group Policy Matters Ohio — which was presented twice in bipartisan bills in each legislative chamber.
Sen. Bill Blessing, a Republican from Colerain Twp. — who is co-chair of the committee and sides with the Democrats regarding targeted, state-paid relief — and fellow committee member Sen. Hearcel Craig, D-Columbus, introduced Senate Bill 271 in May. The bill received two hearings in the Senate Ways and Means Committee, which Blessing chairs. The bill would give a refundable income tax credit of up to $1,000 for people earning less than $60,000 annually, if their housing costs exceed 5% of their gross income. It has an estimated price tag to the state of $819.6 million.
The House version was introduced by Republican Rep. Thomas Hall from Butler County and Democrat Dani Issacson from Cincinnati in July and had a first hearing in December. This version would give the tax credit to homeowners and renters earning $100,000 or less at an estimated cost to the state of $894.8 million. There were 23 Democrats and three Republican co-sponsors.
Young said he’ll fight any attempts to pass a circuit breaker: “It’s not going to happen.”
“It doesn’t make any sense, the circuit breaker in my opinion uses the GRF (general revenue fund) to pay local taxes,” Young said. “They can argue about the local government fund all they want but I will tell you cities, townships, villages and schools have received so much money, more money than buckets to put it in, in the last ten years, four years, six years just name it. It’s ridiculous how much money they’ve received. So the circuit breaker as far as I’m concerned, I will fight to block that any way I can.”
He said reform isn’t going to be done with one single solution; it has to be comprehensive, “it has to be a three-legged stool which includes income tax, property tax and sales tax and how many governments do we need.”
Troy told this new outlet he agrees there are too many local governments taxing the residents and while it’s not in the recommendations, it’s worth considering.
“I’ve always been a big believer in local government reform, we have too many local governments in Ohio, we have close to 800 cities, 1,300 townships and do we need all that governance,” he said. “If we cut down on the overhead by consolidating some of that, will the services not only be uninterrupted but maybe better because we’re not spending as much money. But everyone wants to keep their kingdoms.”
Targeted relief?
There are suggested reforms that address school funding — the schools get the lion’s share of property taxes — but Blessing cautioned that if the state goes after local entities to give taxpayers relief there will be unintended consequences.
“A lot of members do not want to spend state money on this, they’d rather move around local money and that causes a whole host of problems, some of which are constitutional depending on what we’re talking about, but most of them are practical,” Blessing said.
“If you’re pulling money away from schools and local governments, for example cities, does that harm public safety? Like Cleveland, I think more than 50% of their budget is public safety. How is that going to work? Same thing with schools, if you’re just peeling this away and giving it to property owners what then, they’re just going to come back and presumably try to get more levies on the ballot. If they can’t pass them, then what?”
On the issue of who should receive any potential tax relief, Lang has always been of the opinion that everyone should.
“Ohio has been punishing the wealthy for over 50 years and we have lost population because of that,” Lang said. “We used to have 24 congressmen, now we have 15 because we started driving businesses away and people went to where the jobs are. Now we’re turning that ship, we’re lowering taxes, we’re lowering regulations we’re showing the wealthy Ohio is a state where you can flourish and citizens can prosper.”
Fellow committee member Sen. Bill DeMora, D-Columbus, vehemently disagreed, saying they need “targeted relief to senior citizens, to veterans, to those making under a certain amount of income.”
“We want to see relief to those that need it, not blanketed relief, I’m sorry but the richest 10% of people in the state of Ohio do not need property tax relief. If you’re building a $10 million mansion you do not need property tax relief, you have enough to pay for that,” he said. “It’s the middle class and the lower income class that need property tax relief because these bills are driving them out of their homes.”
When asked if she thought everyone should get relief and who should foot the bill, Rep. Tracy Richardson, R-Marysville, replied: “To create ‘universal’ or macro reform to the system will require additional collaboration and decision making. This reform is something we should continue working towards. I agree with the Senator (Blessing) that deciding who will pay is a compelling question.”
The two other Republicans on the committee, co-chair Rep. Bill Roemer from Richfield and Sen. Sandra O’Brien of Ashtabula did not respond to requests for comment.
New legislative leadership
There is new leadership at the helm of both Statehouse chambers now.
Senate President Rob McColley, R-Napoleon, said during a recent podcast that property tax reform is a priority.
“Our property tax system needs to be way more transparent, it needs to be way easier to understand and I guess the silver lining of some of the property tax increases we’ve seen across the state is it’s caused us to take a very critical look at this,” McColley said. “Challenges present opportunities and this is an opportunity for us, rather than put a Band-aid on it as we have in the past, to really get under the hood and get it right.”
New House Speaker Matt Huffman, R-Lima, echoed McColley’s thoughts on the importance of bringing taxpayers relief.
“Property tax reform is important to many of our members and will be a priority for our caucus this General Assembly,” Huffman told this news outlet. “We continue to see a rise in these taxes, which, in large support our local governments. Finding a solution to these increases is certainly at the top of our agenda.”
Precise funding sources for property tax relief haven’t been at the forefront since legislators have been haggling over the who and how questions. There were 23 bills involving property tax reform introduced over the last two years but those were all expunged at the close of the 135th General Assembly.
Blessing and Sen. Kent Smith, D-Euclid, introduced a package of tax reforms and other initiatives in the waning hours of last year, including ways to render the expensive circuit breaker “revenue neutral.” Blessing said he is fine-tuning the “mini budget bill” for reintroduction now.
The bill would reform the business income deduction — saving the state approximately $600 million — and increase the severance tax on natural resource extraction — an estimated $480 million increase.
“Right there between those two reforms it’s totally paid for the property tax circuit breaker,” Blessing said.
Craig told this news outlet as others have that this problem hasn’t diminished as time has gone on and there are a host of things they need to attack, not the least of which is the severe housing shortage.
Credit: Jay LaPrete
Credit: Jay LaPrete
He said they all need to work together because this isn’t a partisan issue, it’s a universal one and people are suffering: “We need to take action but it needs to be reasonable and it needs to be thoughtful.”
“There may be multiple approaches we take, there may not be one silver bullet,” Craig said. “The simple truth is we’re looking at local government tax, we’re looking at how the state government can be more impactful to that process, there are a number of ways we need to look at this issue and we need to look at all of them.”
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